In today’s complex world estate and business succession planning is a process which requires careful consideration of the full ambit of a person’s legal and financial circumstances. We must take into account assets owned personally, owned by companies or held by trusts, taxation implications, asset protection, complex family scenarios and a range of other legal and financial matters.
A modern and balanced estate plan is not limited to the preparation of a will to ensure assets are managed and distributed in accordance with your wishes. It involves much more. A proper plan might include consideration of the following;
1. a Will;
2. shareholder and partnership agreements which address current management and ownership issues, and the future succession of management and ownership;
3. integrated company, trust, and superannuation structures;
4. the use of devices to avoid assets passing through your estate such as family trusts, insurance, joint tenancy and superannuation;
5. an enduring Power of Attorney;
6. tax planning which addresses income tax, capital gains tax and stamp duty implications of transferring assets and/or managing assets upon death or other keys events;
7. a range of critical events – not just death. There are many events which you may wish to consider when formulating a plan. They include events which may occur whilst you are alive and others which might occur after your death – all of which have the potential of impacting upon your financial welfare or that of your future beneficiaries. A few of the more common examples are the possibility that you or one of your beneficiaries may be affected by:
- the desire to leave a close relative out of your will;
- your mental or physical incapacity or the mental or physical incapacity of a beneficiary;
- your bankruptcy or business failure, or the bankruptcy or business failure of a beneficiary or a spouse of a beneficiary;
- your own or that of a beneficiary;
- retirement; or
- a dispute over the will.
8. the use of a testamentary trust/s in your Will to enable maximum flexibility so that a beneficiary can enjoy the maximum benefit of your estate. In addition to flexibility, testamentary trusts potentially afford ancillary benefits such as the minimisation of taxes payable by a beneficiary and the protection of estate assets against failed marriage, bankruptcy and dispute;
9. the use of insurance coverage as an asset in your plan;
10. business Buy/Sell Deeds to provide options for departing and remaining stakeholders;
11. balancing the rights of different categories of beneficiaries to receive income and/or capital and the right to control income and/or capital, and
12. a financial plan.
Not all of these of course will necessarily be relevant in every case.
Ideally an estate plan should be developed, coordinated and linked with a financial plan which includes a retirement plan, investment and wealth accumulation strategies.