What is Estate Planning?
The aim of Estate Planning is:-
- To ensure ongoing financial security for you and your spouse during your lifetimes; and
- To secure a cost effective and seamless transition to your nominated beneficiaries after your death in such a way as to maximise the value of your estate.
Each estate plan needs to be tailored to the individual needs and requirements of the client. However the process would usually involve:-
- Obtaining an overview of your goals and objectives both during and after your lifetime
- Reaching an understanding of your assets, liabilities and affairs. It must be understood that many "assets" would not automatically pass under your Will, for example Superannuation, joint tenancies, businesses or investments held in Companies or Trusts will all need special attention.
- Reaching an understanding of the Constitutions and other documentation relating to any Company or Trust entities in which you hold assets or in which you may have an interest.
- Reaching an understanding of the financial and emotional needs of your family, dependants, business associates and other relevant parties and as to your level of concern in respect of those needs. This will be of particular concern especially in the case of blended families.
- Advising as to particular concerns about dependants who are vulnerable because of physical or intellectual challenges or other problems.
- Advising on techniques which might be used to quarantine assets for the long term benefit of family members notwithstanding that they may at some time in the future encounter problems such as bankruptcy or matrimonial disputes.
- Advising as to ways in which assets might be left for the benefit of your chosen beneficiaries in such a way as to minimise the effect of income, capital gains, or other taxes.
- Arranging for the preparation and execution of the documents required to give effect to the Estate Planning.
The estate planning process will usually involve collaboration between ourselves and your other advisors, such as accountants, financial or business advisors.
Traditionally clients made Wills which simply provided for the estate to be left to the surviving spouse or in the event of the death of the spouse the estate to be divided between the children. While there is nothing inherently wrong with this approach it ignores many of the benefits which would be available to beneficiaries if a carefully constructed estate plan had been executed – for example
- Under the traditional form of Will where you are leaving assets to a Beneficiary who subsequently has financial or matrimonial problems, those assets will be at risk. This risk can be minimised or avoided.
- Clients sometimes want to leave assets to children who are young at the date of the Will. Unfortunately those children frequently encounter financial, emotional or other difficulties as they grow up and, depending on the individual circumstances, the benefit of those bequests can be totally lost. There are a number of ways in which these concerns can be minimised.
The typical "one size fits all" approach to Will making would usually not cater for the particular problems or concerns both present or future of individual beneficiaries. For example a Will leaving a comparatively small legacy to a beneficiary who happens to be obtaining some form of pension could result in the loss of that pension.
Estate Planning is ongoing
Estate Planning is not a static process. An estate plan must be reviewed and revised at intervals to meet changing circumstances such as fluctuations in the financial circumstances of the relevant parties, the impact of legislative changes or other relevant factors, such as a deterioration in health of one or more of the individuals involved in the process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.