So you have spent a lifetime building a life for yourself; – buying a home, started a profitable family business and made a few investments here and there. But what happens to all these things when you pass away? Unfortunately, there is no guarantee that your wishes will be fulfilled when that time comes. However, this can be managed with effective estate planning.
Estate planning is about anticipating and arranging for the management and disposal of a person’s estate during the person’s life and at after death. It aims to protect your estate and the interests of your beneficiaries when you pass away, and minimise tax obligations. In estate planning, there are 3 things that are put into place to help you manage your assets when the inevitable happens:
Creating a Will
A Will is a document that states your preferred distribution of your assets and an allocated person or organisation to be responsible for carrying out those wishes. There are different types of wills you will need to consider as well. Standard or simple wills do not consist of discretionary trust provisions and may not be executable enough for your estate plans. Instead, you will find that Melbourne’s best tax accountant would recommend a Testamentary Trust to be put in place. A Testamentary Trust is created within a will and is not a will itself. Fundamentally, it helps put in all the tools in a toolbox for your beneficiaries – the protected assets don’t have to be used but are there if needed.
Business Succession Planning
For every business owner who has built his or her business from ground zero, it is difficult to fathom the thought of one day leaving it behind one day. Whether it is due to retirement, disagreement, divorce or even illness or death, there are contingency plans you can put in place for such events. Particularly for family businesses, it’s always in the mind of business owners that their children will one day succeed in ownership but there is no guarantee. Or alternatively, you may have a business partner that may have rights to buy your share when you leave the business. These are just some of the considerations you will encounter in business succession planning.
If you are the main income earner for financial dependants such as family, there may be great pressures to continue meeting financial obligations when you leave your business or pass away. There are various personal insurance options that provide cover in sudden changes to your income earning capabilities – from income protection, life insurance, total and permanent disability insurance, trauma insurance and business insurance. Having insurance in place is an ideal way to alleviate the burden due to these unforseen changes in income.
Estate planning is the most effective when you are in a stable frame of mind. Understandably, there will be some sentimentality and highly involved decision making to be done, so be sure to have open discussions with family and business partners about it as well. You may wish to consider professional advice as well for a neutral perspective on your plan. Reputable tax accountants in Melbourne can assist you in creating a tax effective and executable estate plan that provide maximum benefits to your next of kin and successors.