Why your accountant needs to be involved in estate planning

Estate Planning

For many people, wills and estate planning discussions are something that tend to be put off until tomorrow, next week or next year.  However, when you don’t have a current will or estate plan, the decisions about who gets your assets will be made by someone else (often government legislation).  Even when you have a will, it may not apply to all of your wealth and assets. Complications can arise depending on where your assets are held.  For example, did you know that your superannuation may not even form part of your estate?

Estate planning is far more than just having a will.  A robust estate plan ensures your wealth transfers smoothly and tax effectively to your intended beneficiaries. Estate planning can be refined down to three questions:  What do I have, who do I want to have it, and, what will the implications be for that person?

Working out what you have is not as simple as it may seem and this is where accountants can provide assistance.  For estate planning purposes, we split your assets into three areas, which are each treated quite differently:

  1. Assets held in your own personal name (covered by your will),
  2. Assets held by your superannuation fund, and
  3. Assets controlled by other entities such as companies and trusts.

Many people overlook the fact that their will can only deal with the first of these three areas and relates to only some of the assets that you control.  One of the key roles of your accountant in estate planning is to ascertain who owns what so that the assets can be split into these three separate areas and dealt with accordingly.


Superannuation is not part of your estate


Superannuation is not handled via your will and it can only form part of your estate if it is directed there.  This is the case regardless of the super fund type – self-managed, retail or industry.  Superannuation funds can only pay out a ‘member’s benefit’ to a very restrictive list – spouse, immediate family members and to their estate.

There are also complicated tax implications on receiving a benefit from a superannuation fund.  The amount of tax payable will vary depending on who is inheriting it and how it is paid to them.  An effective estate planning strategy will take this into account and provide a tax effective method to distribute your superannuation assets.


Can assets owned by trusts be gifted?


One key item which is often overlooked is that assets owned by a company or trust cannot be gifted via your will.  This is because they aren’t yours to give away.  One option, if appropriate, is to give control of the entity owning the asset to your intended beneficiary eg. gift shares in a company, or control over the trust.  An important part of the estate planning process is to review trust deeds and company constitutions as succession issues can be complex and your existing deeds may restrict your options.


What is a testamentary trust will?


A testamentary trust will is a trust created by a will, where the distribution is held in trust for the benefit of an intended beneficiary.  They are more complicated than an ordinary will but have potential benefits such as: greater level of control over the distribution of assets and income generated by those assets, as well as providing possible tax advantages.


When was the last time you reviewed your wills and estate plan?


An estate plan should be done based upon today’s situation.  We generally recommend that you review your estate plan once every 5 years or when major financial / personal changes occur in your life (restructuring of business entities, marriage, divorce, etc).

If you died tomorrow, what situation does your existing will / estate plan create and is this really what you want to happen?

Further help:

Our tax consulting Partners, Terry Brauer and Cameron Allen, are specialists in complicated tax matters, superannuation and estate planning.  If you believe your situation has changed since your last estate plan we urge you to contact us for a discussion about your options. We can work closely with your legal advisors to develop a plan to protect your assets, minimise tax and ensure safe transfer to your beneficiaries.

You can reach us on 07 3023 4800 or at mail@marshpartners.com.au.

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