Leaving your ideal legacy

After working hard all of your life to create the wealth you have, it is essential that your wealth transfers smoothly to your chosen beneficiaries. Estate planning involves managing the transition of wealth between generations. This may require setting up Wills, Powers of Attorney and, possibly, Testamentary Trusts to ensure your assets are dealt with in accordance with your wishes.

At Strategic Wealth, we believe that estate planning is an important part of your financial plan, addressing the issue of appropriately distributing your wealth in a tax effective manner.

Yet, sound estate planning is equally important while you remain alive. It can have a major impact on how your affairs are managed in the event that you are mentally disabled either temporarily or permanently. A well constructed estate plan will enable your chosen, trusted relation or friend to provide guidance on important financial matters and other issues.

There are a number of important areas to consider including:

  • Preparing Wills (both simple and complex, which may include the incorporation of Testamentary Trusts)
  • Selecting the Executors of the Estate
  • Developing Superannuation Death Benefit Nominations
  • Arranging Enduring Powers of Attorney (Financial, Medical Treatment and Guardianship)
  • Creating philanthropic strategies.

 

Trust in Strategic Wealth Estate Planning

By the end of the financial planning process, we have developed considerable knowledge of your personal circumstances, your aspirations and your key objectives. These are all important when developing an integrated estate plan. Each asset that you own must be considered carefully and the overall plan should consider both short and long-term issues and objectives. We can assist you in further developing your thoughts and wishes on your specific estate planning objectives.

We will also develop recommendations on areas including your Will, Powers of Attorney and other tax effective structures such as Testamentary Trusts. In addition, we can refer you to a legal adviser specialising in estate planning to implement the recommendations provided. Alternatively, you may call on your own legal adviser to assist you in implementing the appropriate recommendations.For more information, please click on the above link or refer to our Understand Estate Planning article.

 

Wills

Your Wills are the documents that transfer the assets owned in your individual names to your nominated beneficiaries. Most people wrongly believe that their Will covers all of their assets, so special care should be taken to ensure that the ownership and control of all of your assets, including ‘non-estate’ assets, pass to beneficiaries in the way you intend. Your circumstances may be straight forward so a simple Will document may suffice. However, your circumstances may be more complex and involve a larger than average estate, second marriage or other complexities among the beneficiaries.

In such cases, you may benefit from the inclusion of a Testamentary Trust in your Will document. A Testamentary Trust is a trust created pursuant to your Will and can help distribute your estate to your beneficiaries in a more tax-effective manner, reducing the likelihood of a successful challenge to your Will. A Testamentary Trust may also provide asset protection for beneficiaries of your estate who may face legal claims on their assets. However, if the establishment of the trust is done to frustrate the claims of legitimate creditors, for example, the courts may effectively unwind the arrangement. There are other variations, including Protective Trusts, which are tailored for specific circumstances.

Strategic Wealth can help you understand whether your Will document can be simple or whether you should consider a more complex document, including the incorporation of a Testamentary or other similar trust.

 

Executors

The executor of the estate is entrusted with the responsibility of ensuring that the wishes contained in your Wills are carried out. It is an extremely important role and should be given to a spouse or trusted and competent personal friend or family member. If your estate is complicated or likely to be challenged, then you should consider the appointment of a professional trustee company. If you only appoint one executor and that person pre-deceases you, then the administration of the Will is likely to be delayed until an appropriate executor can be appointed. Therefore, you must keep the executor updated in your estate plan.

 

Superannuation Death Benefit Nominations

Your superannuation funds may ultimately form a significant part of your financial portfolio. Payments of proceeds upon your death are usually not governed by the terms of your Will, with the trustees of the superannuation fund generally having discretion in this matter. This can be superseded by completing a ‘binding nomination’. (SMSF funds have additional flexibility, as the members are the trustees.)

A binding nomination allows you to direct the trustee to distribute your proceeds according to your wishes. This binding nomination must be kept current and updated every three years or earlier (if lapsing), and/or if your situation changes (if non-lapsing).

It is important to consider where your superannuation funds should be distributed upon your death. Some beneficiaries will receive the benefits tax-free, while others may incur tax at a rate of up to16.5%. Asset protection concerns should also be considered when developing your nominations.

Our team can help you understand where your superannuation proceeds should be distributed to and what pre-emptive actions can be taken to minimise any future tax liabilities. We can also assist you to implement the appropriate recommendations in this area.

 

Enduring Powers of Attorney

Granting a Power of Attorney means that you legally appoint a person or an organisation to make decisions, sign documents and act on your behalf in various matters.

When you grant a Power of Attorney, you may choose to limit the actions that the attorney can perform on your behalf (Limited Power of Attorney) or give the attorney wide powers to undertake actions on your behalf (General Power or Attorney).

You may wish to appoint a trustee company as your attorney, either in conjunction with a family member or an alternative should the appointee be unable or unwilling to act. You may think this advisable particularly where your attorney will be dealing with your financial affairs.

Powers of Attorney are governed by state law. In Victoria, you have the following types of Enduring Powers of Attorney available:

 

• An Enduring Power of Attorney (Financial)  

Allows you to appoint someone to make financial or legal decisions for you in the event of losing, at some time in the future, the capacity to make those decisions for yourself.

• An Enduring Power of Attorney (Medical Treatment)

Allows you to appoint someone to make medical treatment decisions for you in the event of losing, at some time in the future, the capacity to make those decisions for yourself.

• An Enduring Power of Guardianship

Allows you to appoint someone to make lifestyle decisions for you, such as where you will live, in the event of losing, at some time in the future, the capacity to make those decisions for yourself.

A current and comprehensive estate plan, which is regularly reviewed, will help you to ensure your finances and assets are managed or transferred in accordance with your wishes in the event of incapacitation or death.

 

Philanthropic strategies

You may also wish to distribute part or all of your estate to a charity or other special interest entity. It is important that you have a sound understanding of structures available for philanthropic giving, if you plan to incorporate charitable giving into your overall wealth management plan. We work with specialist advisers in this area to ensure that your goals can be effectively implemented.

For further information, please see our Understanding Estate Planning document.