Some legal advisors are good at drafting wills… they look at the legal aspects but don’t necessarily look at the tax implications.

We recently had a situation where a client’s family company owed one of the shareholder/director’s approx $600,000. This client’s legal advisor had proposed that the loan be forgiven in the shareholder’s will. The consequence of this was that the loan, which could be repaid to the shareholder at any time ‘tax free’, would now be a ‘taxable dividend’.

Had we not stepped in with our effective Estate Planning advice, the end result would have meant that when the loan was repaid, the tax payable would have been in the vicinity of $250,000!

And then there’s Super to consider…

One of the largest assets most people have is their superannuation payout, but what most people don’t know is that your superannuation doesn’t form part of your estate unless you give specific instruction that this is to be the case. Under normal circumstances, when you pass away, the trustees of your super fund have a legal requirement to pay any benefit to your family, beginning with spouse and children.

A recent case in point involved the sudden death of a young divorced father. He didn’t want his ex-wife to have anything to do with his estate or his assets, so he appointed his sister as the executor of his estate. Unfortunately he didn’t nominate that his super payout should be paid to the estate.

Upon his death, the super was legally and correctly paid to his dependent child who was under 18. This meant that his ex-wife, who was the child’s parent and guardian, became the trustee for those funds.

The super payout was in the hundreds of thousands and his other assets were in the tens of thousands, which meant that his ex-wife controlled the major part of his assets upon his death and his sister had only a small fraction of his assets under her control.

With the right estate planning advice, this problem could have easily been avoided.

Whilst anyone from the legal profession can draw up a will and any tax adviser can look at the tax implications, if those advisers haven’t got the right expertise and experience then they can do as much damage as doing a will yourself .

No one likes to dwell on the prospect of their own death but if you postpone planning for it until it’s too late, you run the risk that your loved ones may not receive what you intend for them. There could be nothing worse than introducing unintended beneificaries into your estate like the tax department, legal firms and some family members due to poor planning in your will.

This is why estate planning, no matter how small your estate may be, is so important. It enables you to ensure that your property will go to the people you wish, in the way you wish, and when you wish. It permits you to save as much as possible on taxes, court costs and legal fees; and it allows you to rest easily, knowing that your loved ones can mourn your loss without being burdened with unnecessary red tape and financial confusion.

Don’t delay any longer. Call us today to discuss your Estate Planning needs.