What is Estate Planning?

Estate planning is a well thought-out strategy to help you protect your assets and ensure that they are passed on to your beneficiaries in the manner you wish. Estate Planning can be complex and requires skill and an ability to simplify complex structures. Without the skilled advice, your assets could inadvertently face high taxes and lose the benefit of asset protection.

Estate planning can involve the preparation of the following documents:

1. A Will records your testamentary intentions and comes into effect after you die
2. An Enduring Power of Attorney allows you to appoint a trusted person as your attorney to make decisions about personal (including health) and/or financial matter on your behalf when you lose capacity.
3. A Binding Death Benefit Nomination allows you to appoint a beneficiary or beneficiaries for your superannuation proceeds. It is vital that the beneficiary or beneficiaries of your superannuation proceeds are “dependants” to ensure you do not get heavily taxed.
4. An Advanced Health Directive allows you to:
   1. Give directions about your future health care;
   2. Make your wishes known and give health professional directions about the treatment you want; and
   3. Appoint someone you trust as your attorney to make decisions about health care on your behalf.
5. To make an advance health directive, you must be 18 years or older and have the capacity to understand the nature and effect of the advance health directive.

Achieve effective tax outcomes through estate planning

1. Nobody wants to give a big tax bill to their executor or beneficiaries. Effective estate planning can ensure that your estate is structured in a manner which ensures the best tax outcome is achieved.
2. One of the most important things to understand is the property in your estate which attracts capital gains tax. Assets that attract capital gains tax include real property, shares in companies, units in unit trust. Capital gains tax is enlivened when that particular property is sold. Therefore, you must ensure that property that attracts capital gains tax is not unnecessarily sold so that your assets don’t get taxed.

Maximise asset protection through estate planning

1. Effective estate planning ensures that your assets, even after they are passed on to your beneficiaries, are protected from claims and other liabilities. The formation of testamentary trusts should be considered so achieve maximum asset protection.
2. Other things you must understand and consider are:
   1. If you control companies or trusts, how will you pass on the control to these companies and trusts to your beneficiaries?
   2. If you have any debts or capital losses available in your estate, how you want to allocate them?
   3. If you have children from different marriages or multiple partners, how will you ensure each beneficiary receives their intended share of your estate and is not left vulnerable to claims from other beneficiaries?
   4. If you have assets in multiple countries, how will you pass on assets outside Australia to your intended beneficiaries?