Estate Planning – Two things are certain in life – death & taxes!

The importance of estate planning, the roles of the executor and items the beneficiary must consider if they are to receive an entitlement from an estate.

What is Estate Planning? Long story short, Estate Planning is the preparation of tasks that serve to manage an individual’s wealth and asset base in the event of their death. Life insurance, real estate, personal belongings, shares, superannuation all form part of ones estate.

So how does one begin their estate planning? There are a few things you need to consider:

1. Have you got a valid Will? A Will (also called a last Will and Testament) is a legal document that sets out what you would like to happen to your assets in the event of your death. Making a legally binding Will is the only way to ensure your estate will be dealt with according to your wishes. Your Will should be clear and concise; remember you are not around to clarify any questions the executor and/or beneficiary may have!

A Will allows you to provide for you loved ones long after your death. We work our entire lives to accumulate wealth so make sure your legacy passes to the next generation how you want it to.

Find yourself a great solicitor to advise you on your Will.

2. Binding death benefit nomination – This may come as a surprise to some but your superannuation does not form part of your Will, regardless if you mention your super in your Will or not. For a specified individual to receive your super you need to have a Binding Death Benefit Nomination in place. A binding death benefit nomination is a legally binding nomination that allows you to advise the trustee of your superannuation fund who is to receive your superannuation benefit in the event of your death. If you have no such nomination then the surviving trustees simply have full-discretion to distribute the funds to your estate or any dependent they choose. If you want your super to go someone specifically it is crucial that you have a current binding death benefit nomination in place! Nominations can lapse after a certain period of time so it is crucial that you check yours is current!

3. Talk to your accountant! Let’s face it everyone wants to pay less tax! To maximize your estate pool and to save tax it is worthwhile to sit down with your accountant and talk through the following items:

– The assets you hold and where you would like them to go;

– Potential tax consequence for the estate & or beneficiary;

– Have you got all historical records ready and available?

– Are your personal taxes all up to date and current? Have you got any outstanding ATO debts?

– Asset protection and/or structuring post death;

4. The final step of a good estate plan is to talk to your executor and family about your estate plan. It is extremely important that the executor is aware that you have appointed them as the executor and that you’re both on the same page. It is also important that the executor knows where to locate a copy of your Will and personal/historical records. In most cases your solicitor will hold these details and will contact the executor in the event of your death.

Completing the steps detailed above will ensure your estate administration process proceeds smoothly.

Part 2 of this blog will discuss the executors duties upon death and how the above items discussed are dealt with. If you have any questions or want to make a start on your estate plan today please do not hesitate to get in touch with either Kerri Welsh or Adam Niemiec from Poole Group Accountants on 07 5437 9900.