Estate planning: Estate planning encompasses building an estate throughout life, designing a program for the effective enjoyment, management, disposition of assets at the minimum possible cost, and ensuring that the wealth you have accumulated over your lifetime is not eroded by tax.

There are some basic elements that should be considered when addressing your estate planning needs.  These include: Whether you have a properly drafted will; whether an enduring power of attorney is needed; whether a testamentary trust is appropriate.

Wills: A will is a legal document that allows you to choose who should benefit from your estate and the person most suitable to administer it according to your wishes. If you die without a will (known as “intestate”), the law prescribes which persons benefit from your estate.  A statutory formula is used to decide how much of your estate is to be distributed to them. Assets are capable of being disposed by the will include: real property, personal chattels, shares, cash investments, loans by the will-maker to the trustee of a trust, income or capital allocated to the will-maker from a trust, and interest in assets held as tenants in common. Non-estate assets that cannot generally be disposed of by a will include: jointly owned assets that are held as joint tenants (e.g real estate or investments), unallocated assets owned by a family trust, superannuation (subject to member direction and trustee discretion), life insurance proceeds, allocated pensions or annuities that have a reversionary beneficiary.

 

Your will(s) should be reviewed at least every 5 years or whenever your circumstances change in consultation with your solicitor.

Enduring Power of Attorney: By signing a Power of Attorney, you give someone authority to act on your behalf.  The Power can be unlimited, in that your Attorney can do whatever you can do legally; or, the Power can be limited to certain things (e.g., to dealing with your shares only) or limited in time. With an Enduring Power of Attorney, if you become ill or disabled and do not have the capacity to make decisions, it will provide your nominated Attorney with the power to act on your behalf in managing your affairs.  If you become incapacitated without an Enduring Power of Attorney in place, the Public Trust Office can step in and administer your affairs. You may appoint two or more attorneys to act jointly. They should have equal authority and if one attorney dies, the remaining attorney can exercise the power.

Testamentary Trusts: A Testamentary Trust is simply a trust set up under a will. Some of the reasons for setting up a Testamentary Trust are: To split income in a tax effective manner; To protect pension entitlements of spouses; To shield a beneficiary’s entitlement from creditors; To relieve certain beneficiaries from asset management responsibilities (e.g., minors, the elderly, the incapacitated person).

An Executor also needs to be appointed. This can be an individual or a trustee company who is chosen by you to carry out your wishes in the event of your untimely death. The executor is responsible for the entire administration of the estate, from funeral arrangements to ongoing management of the estate assets, until the final distribution is completed.

If you would like more information on any of the above, we would be happy to discuss it with you and if you wish, to co-ordinate the specialists’ advice. Please note the above discussion of testamentary trusts is meant as a guide only and you should discuss these issues with your legal adviser.

This information is of a general nature only and does not take into account your personal situation. We advise that you seek advice from a professional adviser before making any decisions about a financial product.