Succession planning
Estate Plans vary in terms of detail and content
depending upon individual circumstances and objectives. Your
aims should be to:
- make the administration of your estate as easy as
possible;
- arrange your affairs so that there is the least likelihood of
conflict between family members;
- create the most cost-effective method of distributing your
estate among beneficiaries;
- avoid creating any unnecessary taxation consequences for the
estate or your beneficiaries; and
- make use of the available opportunities to provide financial
advantages for your beneficiaries.
The use of trusts is a key tool in succession
planning. From a financial perspective, the use of "Tax
Effective Wills" is an elementary level of Estate Planning.
They have broad application, however, they need to be reviewed at
regular intervals as circumstances change.
Read about "Tax Effective Wills".
"Tax Effective Wills" utilize testamentary trusts
and then a further level of sophistication is the use of a
testamentary trust which involves a full discretionary trust.
A full discretionary trust is generally to continue for a longer
period of time and can accommodate objectives beyond just being tax
effective.
Read about "Testamentary Trusts".
The skill of your adviser is to present the options
available to you and how best to achieve your overall
objectives. Any proposed plan would take account of the
present state of the law and in particular how the estate will be
administered and the special rules applicable to the taxation of
deceased estates. How best to achieve your objectives will
change during different phases of life. What you do in your
30s and 40s may well be different from what you do in your 60s and
70s, even though your overall objectives may remain the same or
similar.
The future is impossible to predict. However,
many of the problems that arise in practice in relation to Wills
were reasonably foreseeable at the time that the Wills were
made. As such, many of the problems that do arise are
preventable if quality professional advice is taken at the
appropriate time and acted upon.
In dealing with a deceased estate, there are
potential pitfalls as well as advantages that can arise. A
successful Estate Plan seeks to avoid the pitfalls and maximise the
financial advantages that are available.
An Estate Plan looks at the wider issues associated
with what happens as a consequence of someone dying. The Will
only deals with assets that form part of the estate. Your
Will does not necessarily deal with matters such as joint assets,
superannuation and insurance. It is appropriate to look at
the full ranges of the consequences of death and not just be
limited to the Will.
In order to devise an appropriate Estate Plan it is
necessary for your advisers to understand the following:
- your assets and liabilities, whether they are dealt with by
your Will or not;
- your proposed beneficiaries and their circumstances; and
- your overall objectives.
Succession planning is more than just making a Will
and involves the succession of other entities that you may control
including superannuation funds, family trusts and family
companies. It may involve making decisions about passing
control of businesses and other assets to some family members to
the exclusion of others. It is not limited to death and may
include the transfer of control during a person's lifetime in the
case of loss of capacity.
A well developed Estate Plan will capitalize on the
best opportunities to achieve your wishes and maximize the
opportunities available to your beneficiaries. In relation to
associated entities such as family companies and family trusts, a
succession plan should be developed for these entities and the plan
reflected in your Will to the extent that your Will can affect the
succession plan.
It is important that a succession plan is well
documented. It is also an ongoing process and needs to be
reviewed, updated and revised from time to time.