Estate Planning

Wills

A Will is an important legal document that is intended to outline your wishes and instructions for how your assets and property are to be distributed after you pass away. Without a Will, you have no control over the distribution of your assets which will be distributed in accordance with the laws of intestacy.

The two primary purposes of a Will are:

1. To appoint an executor that will manage your estate and carry out your wishes after you pass away; and
2. To provide instructions for how your estate is to be distributed and any specific gifts that you wish to be made.

Additionally, a Will can include provisions for appointing a guardian for your children, instructions as to your funeral and or burial and can include provisions as to any special trusts that are to be set up to deal with your assets following your passing.

As you won’t be around to oversee the management and distribution of your estate, it is important to appoint someone that you trust to manage your estate and carry out your wishes. It is also important to have a professionally drafted and well structured Will that not only sets out a clear plan for your executor as to how your estate is to be dealt with, but also includes the correct clauses that cover different contingencies to ensure your estate is carried out the way you intend it to be.

Estate planning

'Estate planning' is a loose term to describe planning in anticipation of significant life events, such as retirement, death, loss of mental capacity, marital breakdown, or major business or financial transactions. The goal of an estate plan is to ensure that the passing of your wealth, assets and entities is controlled, no matter what life throws at you.

In comparison to previous decades, the financial arrangements of the average Australian adult have become more complex. In addition to the family home, car and bank accounts, it is now common for people to have:

• Superannuation.
• Shares and property investments.
• Shares in private companies.
• Family trusts.
• Personal businesses or companies.
• Life insurance.

In most cases, a Will alone is inadequate to deal with these assets on your death. Special consideration is needed to ensure that these assets are transferred on your death legally and tax-effectively through a documented estate plan.

You also need to be sure that these assets are safe from risk while you are alive.

An estate plan will also deal with your circumstances and planning while you’re alive to protect your assets from creditors and avoid unexpected tax liabilities.

At Aitken Partners, we are with you through every step of the process and can assist you with the preparation of your Will, powers of attorney, death benefit nominations and setting up different types of trusts to deal with your assets and or superannuation.

Our Wills and Estates team take the time to work closely with each of our clients to understand their specific financial and family situation and provide them with a personalised service. We strive to provide each client with comprehensive but uncomplicated advice as to the structure of their estate plan, providing them with advice as to any modifications or updates their estate plan may require to ensure their Will and estate planning documents remain up to date and valid.

Superannuation

It is common for a review of your estate planning to incorporate advice in relation to your superannuation. We have significant experience in this area and can provide comprehensive advice with respect to your superannuation and death benefit nominations, including with respect to self-managed superannuation funds.

Testamentary trusts

A testamentary trust generally refers to a trust established by a Will, which comes into existence after the death of the Willmaker. It can be further described as a legal structure where a person (the trustee) owns and manages assets for the benefit of one or more people (the beneficiaries).

In Australia, it is common for a trust to be ‘discretionary’ in nature, meaning that the income and capital of the trust can be distributed to the beneficiaries of the trust at the discretion of the trustee. However, testamentary trusts can also be created to limit or completely restrict the distribution of capital for a period of time, or until a certain event occurs.

When a trust is discretionary, the beneficiaries don’t have a direct entitlement to the assets of the trust, which keeps the assets quarantined from many legal risks that the beneficiaries might face during their lives.

A trust is also a flexible vehicle for investment and producing income, allowing the trustee to use their discretion to minimise tax for the trust and the beneficiaries.

Testamentary trusts can:

• Last for up to 80 years (if established in Victoria) from the date of death of a Willmaker, allowing for long-term management of assets.
• Allow more tax-effective management of assets and can distribute income to minors without incurring penalty tax rates.
• Help quarantine the assets from claims made against beneficiaries, such as claims by creditors or family law proceedings.
• Put control of assets in the hands of somebody better suited to manage them, such as where:
• A beneficiary is disabled or is unable to manage their own affairs, or
• A beneficiary has addiction problems or is frivolous with money.

The lawyers in the Wills and Estates team at Aitken Partners are available to answer any questions that you may have about testamentary trusts and can provide you with further information as to the advantages and disadvantages of creating a testamentary trust, what assets can be dealt with by way of a testamentary trust and whether the setting up of a trust is appropriate for your personal situation.

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