The importance of Team Us in estate planning

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Take a seat, relax. Unfortunately, I have some bad news for you. Your condition is terminal – you will die at some stage in the next 100 years! Now that you have that prognosis, it is time to do three things about it: get your emotional, spiritual and financial affairs in order.

It is disturbing to consider how many Australians do not have a will. One explanation might be that by ignoring making a will, the need to have one might not happen – or conversely, dealing with it might make it happen! Both are what psychologists call ‘cognitive distortions’. In other words, these reactions are just not logical.

Not having a will speaks to denial – and makes your family and your estate vulnerable. If you are in this situation, you need to act. Hold a formal ‘meeting’ with your partner – preferably this week – to discuss your estate planning.

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Getting it right from the start

In planning for the distribution of an estate, there are endless variables, ranging from multiple relationships to disabled children, to potential inheritances from aged relatives.

If you have assets beyond the most basic, I would recommend you build ‘Team Us’. Get your financial advisor, accountant and solicitor in the same room and working together for you and your family.

It is vital to ensure control of all entities is passed to the right people after your passing. If you have a family company, there may be estate planning benefits in the effective and timely distribution of dividends

Emergency or life expectancy crisis

In an ideal world, estate planning will occur when all involved are healthy – and there is a long time before the plans established are activated. But this is not always the case. In the event of an emergency or a life expectancy crisis, estate planning becomes even more urgent.

 

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Allowing for litigation

Not all potential recipients of your estate are likely to have the same financial maturity and expertise that you may have, and increasingly, courts are finding wills are not the ‘black and white’ instruments we all thought they were. This is where the experts can help enormously in your estate planning.

Given that the cost of legal challenges to a will are borne by the estate, it is wise to think about, firstly, maximising the financial pool available and then dealing specifically (and fairly) with each potential claimant. The financial, and dare I say, emotional benefits of having a clear plan for transferring your wealth to the next generation are substantial.

Anomalies

Bear in mind, however, not all assets are the same. A share portfolio of $1 million is likely to carry with it a capital gains tax (CGT) liability, which may reduce its worth to a beneficiary by hundreds of thousands of dollars, while a $1m home is likely to be CGT free. Most of us need advice on these sorts of anomalies.

 

Estate planning tends to be shrouded in fear and mystery – nobody likes to think about their demise. However, it is a fantastic way to ensure that the legacy of your hard work continues to benefit your loved ones in the way you had hoped.

Having a sensible and robust estate plan in place can be like having a huge weight removed from your shoulders. Have that meeting with your partner, book in a team meeting with your financial advisor, lawyer and accountant – and get a sensible plan in place

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