We don’t plan to die, but we do need to plan to protect our assets for when the inevitable happens. For this reason, estate planning is something we should all consider.
As a Business Adviser, estate planning is something I am becoming involved with more frequently with my clients. It is a way to safeguard your loved ones and protect your assets when you are no longer around.
What is Estate Planning?
Estate planning is the process of ensuring that plans for the distribution of your assets are achieved after your death. We help define assets that are to be included in the estate planning process.
We also help to understand and address the potential issues within the estate and provide options for the effective distribution of it. This includes the protection of assets and being aware of the potential taxation outcomes and impacts of decisions within the estate.
Do I need Estate Planning?
To some degree, everyone should have some form of estate planning. This might be a simple will, an enduring power of attorney and enduring guardianship. It’s important for everyone to consider these things.
As Accountants we see the need for a greater level of thought in this area when clients have:
- Significant assets, or assets that are not easily able to be realised
- Are in small business
- Minor children
- Blended families and need to manage the expectations of potential beneficiaries in this situation
- Self-Managed Superannuation
Why is Estate Planning important?
Protecting your wealth and effectively passing your wealth onto your loved ones can be complicated. Everyone’s circumstances differ and have their own challenges. There is no one-stop solution to these matters. Careful estate planning helps to address the challenges correctly, identify potential issues while they can still be solved, and ensure your wishes are realised.
How can we help with your Estate Planning?
As Accountants, our role is not the legal and formal compilation of documents. However, due to our knowledge of our clients’ situations and our close and often long-standing working relationships we can help with:
- Information relevant to your financial affairs
- Identifying your notional estate
- Helping with putting together a distribution plan that is consistent with your wishes
- Reviewing the tax efficiency of your estate and the use of entities such as testamentary trusts
- And, in some instances, offering to act as joint executors or trustees to help ensure the estate is effectively managed and that your wishes are understood and followed.
Our role in estate planning is to raise awareness of the potential estate issues. We help assist clients in getting their affairs in order. We prepare a plan and provide it to your solicitor. This enables the necessary legal documentation to be prepared in a concise, effective and comprehensive manner.
Case Study: How Estate Planning can work
A young single parent client recently passed away. We worked with them extensively on their estate plan prior to them passing. Our client had three children and one of these children had a mental illness that needed additional protection. They also wanted to ensure there was asset protection for the other two children.
As a result of our estate planing, testamentary trust was established for each of the children and each of the children trustees of these trusts. The goal of the estate planning was to achieve financial freedom for the children, protect the assets they inherited and also ensure that the child with a mental illness was looked after and that her financial interests were protected against anyone trying to take advantage of the child. Through the estate planning process we were able to achieve these goals.