Top 7 Considerations for the Preparation of an Effective Estate Plan

Putting an estate plan in place is one of things business owners often push to the side for “another time”. In reality however, having a strategic estate strategy in place is the only way you can ensure that everything you’ve worked so hard for is secure and that your wishes are carried out. We’ve explained the Top 7 Considerations you need to prepare your estate plan to ensure the continuity of your family harmony and your business.

Effective estate planning for business owners is more than just having a will prepared. It’s about having a plan in place for what happens to your assets as well as your corporate and trust structures after you pass and deciding who is given control of your affairs.

These decisions are sensitive, but they are also necessary to ensure that control and ownership of your business, as well as your personal assets and interests, is passed to the right people in a timely and tax efficient manner.

When putting together your estate plan, key considerations for you to think about include:

  1. Who you want to nominate as your executor. Your executor is the person who administers your estate after you pass and makes sure your instructions are followed. This should be a trusted person and often a spouse or a parent are given this role.
  2. To whom you wish to distribute your personal assets. When making this decision you need to keep in mind how these assets can be protected from  bankruptcy or a marriage breakdown. You may also need to consider the impact your distribution could have on beneficiaries who receive government benefits.
  3. Whether you want your children or grandchildren to be a certain age before they receive their inheritance. There are safeguards you can put in place to limit access to inheritance funds until you think certain beneficiaries will be at a stage in their lives to responsibly and appropriately manage their inheritance.
  4. Is a testamentary trust is necessary to include to ensure the tax effective distribution of your estate? If you have assets in your personal name that are income generating or a significant amount of money will be left to your beneficiaries, a testamentary trust can provide a tax efficient means of distribution of your estate to beneficiaries, especially if they are minors. Testamentary trusts allow capital and income to be to be distributed to beneficiaries at your trustee’s discretion and can be a useful asset protection vehicle for beneficiaries, including in instances where beneficiaries divorce or where they  may be subject to bankruptcy other risks.
  5. Whether everyone is included. If you leave someone out of your will, and they consider themselves entitled to an inheritance, they may challenge your will. Also, if you fail to adequately provide for the proper maintenance, support, education or advancement in life of certain people, a Court has the discretion to make an order for that provision after your passing. Your will must be appropriately drafted to avoid potential litigation after your passing and to provide you with peace of mind.
  6. Your business assets and interests might not actually fall within your personal estate. Your Will only deals with the assets in your personal name and does not deal with assets owned by a company or held in a trust. Your business and investment structures need to be carefully reviewed to ensure that control and decision making about your business and asset holding entities passes to the right person(s) on your death.
  7. How your Super will be dealt with. Your super is an asset that is not necessarily dealt with by your Will. Your super fund can only pay out funds to specified beneficiaries, such as your spouse or children, if you have made a binding death benefit nomination (BDBN) directing the trustee of the fund to whom to distribute the super upon your death. If you don’t make a specific nomination, you may nominate your personal legal representative to deal with the funds in accordance with your Will. You should ensure your BDBN is current.

An effective estate plan also includes current enduring financial Powers of Attorney and Medical Treatment Decision Maker documentation. These documents can enable another person to make financial and medical decisions for you once you are unable to make them for yourself.

There is a lot to think about. We’re here to help.

We create a strategic estate plans for our clients, prepared in the context of both personal and business circumstances and asset holding structures. We can help make this process easier to navigate and make sure you understand how personal and business estate plans interact to take care of your affairs on the home front as well as in terms of your business and investments.

All of our estate planning documents are legally binding, and tailor drafted by a lawyer to fit your circumstances. We work collaboratively with your accountant and other relevant advisers to ensure that your estate plan also addresses all of your needs in the broader context of your asset, tax and business structures. Our strategic approach and fixed fees will provide you with certainty that money cannot buy.

Don’t take shortcuts with your estate planning. It’s too important. We’ll get you organised and give you peace of mind.

Contact us via our Prisma Axess  page for an obligation free discussion about getting your affairs in order.