The only things certain in life are death and taxes” Benjamin Franklin

Life does not stand still for long and eventually the time comes for us to hand over to the next generation, whether that be the sale or transfer of our business on retirement or our personal wealth on our final curtain call.

Let’s face it, death, incapacity, divorce and insolvency are events that most of us would prefer to avoid but the reality is these issues will impact us sooner or later. Preparation is the key to minimising the impact of these events both on ourselves and our loved ones.

Have you considered the following important questions?

  • Who will look after my personal and business affairs if I lose capacity?
  • Do I have an up-to-date will that covers all contingencies – including the myself, my spouse and children all dying at the same time?
  • Do any beneficiaries of my estate have special needs – for example, do I have child that is mentally impaired, or a child with a drug or spending problem or do they require asset protection?
  • Is there a risk that someone besides my intended beneficiaries that might make a claim against my estate?
  • Do I hold assets outside the Australia?
  • Who will control the family trust when I die?
  • How will my superannuation be dealt with when I die?
  • Am I interested in giving to charities?
  • Am I interested in tax-effective succession planning?
  • How will my business interests be dealt with when they die?

Unity Advisors are available to help you address all of the above issues through effective Estate and Succession Planning so you can relax and get on with living, know that your affairs are in order.

Estate Planning

Effective estate planning is the process of managing the transfer of wealth from one generation to the next with four specific aims:

  1. Minimising potential for conflict between beneficiaries
  2. Minimising the taxation impact
  3. Ensuring estate assets end up the hands of the intended beneficiaries
  4. Protecting the estate assets from claims by unintended recipients

The approach to achieving the above aims must reflect an individual’s personal and financial circumstances and therefore there is no one size fits all approach to effective estate planning

Australians have never been wealthier and as the baby boomers begin to reach their seventies, the next 10 years will be witness to the largest intergenerational transfer of wealth in this county’s history.

While the increase in wealth is undoubtedly a positive outcome for most it has also unfortunately this rise in wealth now means that disputes over the distribution of estates is now no longer the domain of Australia’s wealthiest families.  In recent years there has been a rapid rise in litigation between family members disputing Wills before the Courts. In some cases the legal fees resulting from these disputes consume significant portions of the estate assets and create lasting animosity between family members. Effective estate planning reduces the risk of misunderstanding and potential conflict between beneficiaries, especially now that blended families are more common place in today’s society.

Traditionally the estate assets of the average Australian consisted of their personal residence, a rental property or some shares and some personal effects. In modern times Australians now hold assets through a vast array of vehicles including joint ventures, partnerships, superannuation funds, family trusts, fixed trusts and companies just to name a few.

Many people will engage their solicitor to prepare their Will without consulting their accountant or financial advisor. Unfortunately many of the solicitors engaged had limited tax knowledge and therefore drafted Wills in accordance with their client’s instructions, while paying little or no attention to the taxation and asset opportunities available to their client.

As part of our estate planning process, Unity Advisors takes the time to carefully assess each asset class in conjunction with the tax profiles of all the potential beneficiaries to ensure clients are aware how assets may be distributed in the most tax effective manner.

We would encourage dialogue with potential estate beneficiaries to understand their future aspirations for assets that maybe passed to them and how affairs can be tailored to best suit these aspirations both from an asset protection perspective and a tax minimization perspective.

Estate Planning important at any age

Unfortunately, estate planning is not just for those in their twilight years. It is a harsh reality that death can come suddenly and unexpectedly to anyone at any age and when it does, it can be both emotionally and financially devastating.

If you have dependents such as a spouse and/or children, proper estate planning can really make difference to their future financial security in the event of your unexpected death. We hope this will never happen to us or our family, but getting your affairs in order now will give you complete peace of mind that if the unexpected does occur, your loved ones will be shielded from financial stress by having proper measures in place that clearly set out how assets are to be administered.

Where appropriate the use of testamentary trusts may offer significant taxation and asset protection advantages, particularly for young families in the event of the loss of one of the

It’s not just about the Will

Many people who hold assets within Superannuation Funds and Family Trusts are surprised when informed that these assets fall outside any directions contained in their Will.

In respect Family Trusts, the trust deed dictates who controls the assets held within the trust not the directions of an individuals Will.  Where families hold significant assets in family trusts, a review of the trust deed is essential to ensure appropriate succession clauses are effective.

Likewise, the control of assets held within a Superannuation Fund is dictated by the superannuation deed.  Where a member intends a specific beneficiary to receive their superannuation interests upon their death, the member needs to make a binding death nomination specifying that particular beneficiary.  The tax outcome will vary depending on whether the superannuation death benefits are paid to a dependent or non-dependent beneficiary.

Other serious issues

Effective estate planning is not just about the transfer of wealth. The reality is that we are living longer. The 85 and over age group is the fastest growing group in Australia and more have dementia.

Have steps been taken to avoid bitter battles between siblings over the care of aging parents and their money.  Of real concern were the findings of study by Monash University in 2011 that cited a consensus among professionals that one quarter of families failed to take care of their older members “within an environment of mutual love and trust”.

The mean age of victims of financial mismanagement was 80, women were more likely than men to be abused, and the perpetrator was “most likely to be a son or daughter”.

By planning ahead, instruments can be put into place to ensure your welfare is handled by persons you believe have your best interests at heart should you become incapacitated and incapable of managing your own personal and financial affairs.

You may want to consider the appointment of:

  • an Enduring Guardian; and
  • an Enduring Power of Attorney

When you execute an Enduring Power of Attorney you give the attorney (a person appointed by you) the authority to buy and sell your assets, to operate your bank account and spend your money on your behalf.  An enduring power of attorney does not give the attorney authority to make health or lifestyle decisions on your behalf.

An Enduring Guardian has power over your health and lifestyle and will make the decisions on where you should live, selecting a service provider and consenting to your medical and dental care.

The above appointments should reduce the potential for dispute over your affairs should you become incapable of managing your own affairs.

The above documents need to be prepared by a solicitor.  Unity Advisors would be available to work with you and your legal adviser should you decide you would like to appoint an enduring guardian and or enduring power of attorney.  If you do not have a legal advisor, Unity Advisors is able to recommend highly competent solicitors that specialise in drafting these types of documents.

Business Succession Planning

Sooner or later the time comes for every business owner to hand over the reins.  Each hand over has a unique set of circumstances and personal dynamics at play.

This process is usually about far more than negotiating the exit proceeds. Often business owners have invested their life’s work into their business and will want to ensure able stewardship is in place when they hand over the reins. This is often an emotional time, especially for business founders who have often spent a lifetime building a business from scratch and even more emotional where the successor is a family member or a number of family members.

The starting point for any succession plan is:

  • When to pass on the business?
  • How to pass on the business?
  • Who to pass the business on to?

Effective succession planning requires careful consideration of the following issues when addressing the above questions:

  • Taxation consequences of available options
  • Ownership structure
  • Asset protection
  • Suitability of buy/sell agreements and respective insurance

Unity Advisors

At Unity Advisors we understand that life does not stand still for long and that circumstances change. That’s why we regard estate and succession planning as a continual process requiring regular review of our client’s will, trust deeds and binding superannuation death benefit nominations to ensure they remain up-to-date and relevant.

So, if estate and succession planning is important to you, please contact us to help get your affairs in order.