The Inevitable- Death and Taxes

There are only two certainties in life; death and taxes.

While we all do (or should do) our taxes every year, we rarely spend any time planning how we would like our assets distributed upon our passing.

Like with taxes, it is inevitable that at some stage we may require an estate plan. As we never know when  it will be needed, it is important that we understand the importance of putting one in place as soon as possible and reviewing it on a regular basis.

There are many issues to consider when putting together your estate plan. Two such considerations include:

  1. How should my loved ones receive their inheritance, or how would I like to receive my inheritance?
  2. Whom should I have as my executor and how do I make their job easier?

How would you like your inheritance served?

While you may have thought about who you’ll receive an inheritance from, or who you will leave an inheritance to, we don't always think about how it should be received.

Receiving an inheritance can be problematic for vulnerable beneficiaries, such as:

  • bankrupts
  • at risk professionals (doctors, engineers or builders)
  • business owners
  • people with addictions (gambling/drugs/spendthrifts)
  • marital/relationship disputes
  • young children

If you are a vulnerable beneficiary or you are considering leaving an inheritance to a vulnerable beneficiary, you may choose to consider a Testamentary Discretionary Trust (TDT).

TDTs are created by a Will to provide a greater level of control and protection over the distribution of assets to beneficiaries. The trustee decides on when and how the beneficiary receives the assets so it is not accessed by creditors, ex-spouses or spent by spendthrifts. TDTs can also be used for tax planning purposes such as income splitting.

Executor- helper or intruder?

If you've ever been the executor of an estate then you'll know how difficult and time consuming it can be.

Whether you're searching through boxes and drawers for paperwork, or asking delicate questions of loved ones, you can feel as though you're intruding rather than helping.

Having done that once, which was more than enough, I decided I don't want to go through that again. I have now contacted any family and friends where I was executor, or could be an executor, to get them to complete an Executor Dossier. An Executor Dossier should list all the important information an executor will need to administer the estate. It should cover areas such as where your Will is kept, who your professional advisers are, your assets, your superannuation and where your title deeds are, just to name a few.

Save yourself time. Get all the information now while you can.

If you have any queries, please speak to your financial adviser.

Brad Sweeney - Associate Partner, Financial Advice