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The
Need for Estate Planning
An
Estate Plan extends to asset protection and the ongoing tax
planning for your beneficiaries.
You
have estate planning issues and opportunities if you
have:
- Assets
such as property and valuable or important possessions
- Personal
insurance (e.g. death cover)
- Superannuation
and/or other investments
- A
current and/or former
spouse or partner
- Children
- Grandchildren
- Anyone
else you wish to leave money or other assets when you
die
What
is Estate Planning?
Estate
Planning is not just about Wills, it is much more than that.
It is about making sound and well informed strategic financial
decisions to benefit those you wish to receive your assets when you
die.
As
such it is substantially about financial planning involving the use
of traditional estate planning methods such as Wills, Powers of
Attorney and Trusts.
Very
importantly, superannuation is increasingly the major asset that
people have but it is not covered by a Will; its treatment on the
death of the owner is governed by different legislation and
policies.
This
means that estate planning may be complex and should not be done
without advice or by relying on commercially available Will
forms.
An
Estate plan is a strategy devised to give:
- Financial
security for a person and an ability to meet lifestyle
expectations over your life span
- A
seamless
cost-effective passing of assets to the person's
beneficiaries on death
- Include
both superannuation and non-superannuation assets
It
takes into account a vast number of factors and strategies
including:
- Setting
objectives
- Planning
to maximize lifestyle and effectively passing on assets after
death
- Advice
on how your assets can be best transferred, particularly where
minor dependents are involved
- Advising
where vulnerable dependents are involved, such as physically or
intellectually challenged
- Appropriate
investment strategies for individuals, trusts and the
like
- Appointing
capable and
trusted people to act as trustees, legal personal representatives,
guardians and to exercise powers of attorney
Serious
problems can arise if individuals ignore their estate planning or
act without advice. For example, payment of superannuation
benefits after death can incur tax up to the top marginal tax rate
if proper steps are not taken.
Estate
plans must be developed for the individual and reviewed regularly,
particularly where life events occur such as marriage or
remarriage, entering relationships, serious illness, death, changes
in financial or business circumstances.
Where
a person dies without a Will, i.e. intestate, the estate is divided
among beneficiaries according to a legislated formula. This
formula varies between states but in Victoria the first $100,000 is
given to the surviving spouse and any remainder divided between
that spouse and all children. This may not be a suitable
arrangement for many reasons.
Roles
and Responsibilities in Estate Planning
Financial
planners have a
crucial role in estate planning because it is an extension of their
primary role. In addition, only a properly licensed and
accredited financial planner is able to legally provide advice on
financial strategies and products.
Estate
planning requires the collaboration between you, your financial
planner and your lawyer, to achieve your goals and objectives for
your beneficiaries.
We
work with lawyers who are accredited specialists and experts to
ensure that a client gets the best result financially as well as
having the most effective and efficient structure for managing the
estate.
Your
lawyer will apply his or her technical legal knowledge to implement
the strategy and suggest ways in which the strategy may be
strengthened or can be protected.
One
sad fact of life is that death is irreversible and permanent.
People cannot come back to life to make the decisions they
should have made beforehand.
Powers
of Attorney
Much
more stressful and financially burdensome situations often arise
when a person suffers a major illness or trauma. These situations
need more financial resources, especially if the condition is a
protracted one and they also require someone else to have the
authority to make very important decisions on financial management,
medical treatment or accommodation. There are different types of
Powers of Attorney to manage these situations:- Enduring, Medical,
Financial and General, but each Australian state has legislation
that differs to varying degrees
These
circumstances require people to have adequate financial assets that
are readily available. They must also have granted authority,
via the appropriate Power of Attorney, to trusted, capable and
willing persons. The possibility of these situations arising
is often ignored or ‘put off until later’. Again, trying to
grant a power of attorney after the event is often too late and the
intervention of tribunals or courts may be required which can be a
lengthy process.
Continual
Review
As
peoples’ circumstances and assets change so should their estate
planning strategy. We view estate planning as an integral part of
your overall financial plan and essential as you grow your assets
and create more complex family arrangements. As such, it is part of
the regular review services offered to our retainer
clients.
Pentad
is ideally situated to not only provide a comprehensive estate plan
but assist and co-ordinate those other essential services
required.
Contact
us today on (03) 9813-0133 to find out more about Pentad's Estate
Planning Services and how Pentad can help you achieve your
financial goals. | 