Estate Planning Awareness
As the old saying goes the only sure things in life are death and taxes. What it doesn’t say is that with the right planning you can reduce those taxes applicable to your estate.
In the United States they have identified this planning need, and from 19th to 25th of October they are staging Estate Planning Awareness Week, a joint initiative between the Lawyers and CPA’s. This week is a media awareness campaign to highlight the need for proper advice in estate planning and administration. From our experience this type of initiative should also be adopted here in Australia.
To this end we are seeking support from the Law Society and the Institute of Chartered Accountants in Australia to implement a similar public awareness campaign. Further to this, we have prepared a Guide to Estate Planning and Administration for our clients to use.
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Why every person with a SMSF needs a will
Approximately 60% of Australian’s die without a will in place. The average age of people with a will is 82 and the average age of people who die without a will is 62. Apparently, the majority of us believe that we are going to die of extreme old age.
Dying intestate can be complex enough but if you have a Self Managed Superannuation Fund the situation can become even more complex.
Dying without a will in place is likely to mean that there will be a significant period of time before your beneficiaries can access your superannuation – even if you have binding death benefit nominations in place. The reason is that once the trustee dies, there may not be anyone with the legal authority to approve the payment of your superannuation to your nominated beneficiaries. If you are a Director of a trustee company with multiple directors, it will depend on whether the trust deed and the company constitution allow the other directors to act without you.
With many of us building a significant amount of wealth within SMSFs, it’s important that these funds are not unnecessarily tied up when our families most need them.
Click here for more information about how Hayes Knight can assist or speak to your Hayes Knight Adviser today.
Death and Taxes are certain… but you can RIP (and reduce the tax) with Professional Estate Planning
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!
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