Estate Planning
Estate Planning
Estate planning is paramount. It is often overlooked by financial advisers and accountants.
Estate planning is specific planning to ensure:
- Your assets pass in an orderly and efficient manner on and before your death
- Someone can act on your behalf if you become incapacitated
- There are guardians and financial support for your minor children in the event their parents die.
Estate planning includes writing wills, setting up trusts, gifting to trusts, establishing Enduring Powers of Attorney, and planning ahead to avoid unnecessary consequences and taxes.
Successful estate planning is:
- Tax orientated - this is why estate lawyers, financial advisers and tax accountants should work in conjunction with each other
- Considers all assets including those that do not form part of an estate (superannuation, assets held as joint tenants, life insurance polices, etc)
Avoids undesired outcomes including:
- Your spouse meeting a new partner and losing some of your family wealth in a separation settlement
- Your children losing their inheritance in the family law court (ie separation settlement)
- Your children not being mature enough to use their inheritance wisely
- Your spouse and/or your children losing their inheritance through business dealings.
Estate Planning and Superannuation
It is important to note superannuation balances do not form part of a person’s estate, which is why superannuation estate planning is paramount. Moreover, it is not uncommon for a person's superannuation assets to be their greatest financial asset. This is even more relevant upon death if life insurance is housed in superannuation. There are two areas of superannuation estate planning that are often overlooked by financial advisers and tax accountants but are very powerful.
These include:
- Anti-detriment (refund of contribution tax in the event of your death); and
- Future service period deductions - in practical terms is only available to Self Managed Superannuation Funds (SMSFs).
Good superannuation estate planning
- Minimises tax on superannuation death benefits and future earnings of that capital
- Endeavours to avoid undesired outcomes (see above)
- Considers commuting Life Time Complying Pensions into market linked pensions if commenced after 18 May 2004 or market linked pensions and account based pensions if commenced before 18 May 2004.
Specific SMSF estate planning
Using a SMSF as a vehicle for estate planning presents the following advantages:
- Can be in the form of a SMSF Will rather than a Binding Death Benefit Nomination
- Considers inter-generational tax planning
- Ensures your trust deed allows your LPR on your death to replace you until your death benefit is paid
- Tailored outcomes may potentially be hard wired into the trust deed - tailoring includes non-transferable pensions, non-commutable pensions, pension maximums, etc
- Integration with investment strategies
- Possible future service period deductions.
Estate Planning and Insurance
Risk insurance cover should be determined having regard to tax and estate planning.
The main areas of tax include:
- maximising tax deductions of insurance premiums
- minimising tax on insurance payouts and future earnings of that capital.
Our legal network of estate planning experts can assist you now.
For a confidential free discussion about your estate planning issues call us on 03 9348 0188
We are a firm of superannuation accountants that provide administration services required to ensure that your self-managed superannuation fund (SMSF) remains compliant with government regulations. Our services cover hassle free compliance, tax and administration for individuals, professional advisors and their clients.
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Carlton VIC 3053
Postal Address
PO BOX 1086, Carlton VIC 3053
Phone: (03) 9348 0188
Fax: (03) 9348 0148
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