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How
hard we work to provide for our family, yet how little thought we give to
ensuring the protection of our work for our family’s benefit in the event of
an untimely disablement or death.
40%
of Australians die without a will! Many more have wills that are outdated and no
longer relevant to current circumstances. Don’t allow yourself to be one of
them - the effects upon your family and loved ones can be catastrophic.
In
addition to a current will, it is also important to ensure that a trusted person
(usually a family member) holds an Enduring Power of Attorney for you in the
event of you becoming incapacitated due to illness or injury. This will
allow for your affairs to continue to be managed in the way you want.
A
will is a legal document allowing you to direct the way in which your assets
will be disposed of after your death. An existing will remains in force unless a
new will is made or the testator (the person making the will) marries (or
remarries) or is divorced. In order to be valid, a will must be in writing,
signed by the testator and properly witnessed by a person who is neither a
beneficiary, nor the spouse of a beneficiary under the will.
Therefore
when preparing a will, you should consider who you would like to receive all or
part of your estate when you die, and who will benefit if any or all of your
beneficiaries should predecease you.
You
should also be aware of the impact of capital gains tax upon deceased estates.
Any assets sold by your executor could be subject to capital gains tax, which
may reduce the amount paid to the beneficiaries. If assets are transferred to
beneficiaries after your death, then they may have to pay capital gains tax when
they eventually sell the assets.
Once
your wills have been drawn up, it is essential that they be reviewed on a
regular basis.
The
executor is the person who has the legal responsibility to ensure that the
instructions in the will are carried out. It is therefore important that your
executor be someone who understands your wishes and has the capacity to see that
they are carried out. It is also important to nominate an alternative executor
in case your chosen executor predeceases you. The executor has a number of
responsibilities including obtaining probate, paying debts and taxes, compiling
financial statements and distributing assets to the beneficiaries.
A
beneficiary is any person whom you wish to benefit from your will. For example,
you can leave specific items of property or investments to specific individuals
either within or external to your family.
The
executor of your will is also the trustee of your estate, however it is possible
to appoint additional trustees as well. The job of the trustee is to implement
the terms of your will by making distributions to beneficiaries and ensuring
that any investments of the estate are appropriate and according to any
guidelines that you wish to establish. Funds can be held in trust for
beneficiaries who are incapacitated or minors.
A
testamentary trust is simply a trust established by a will. This means that part
or all of your assets need not be distributed after your death, but can instead
be held in trust for specific beneficiaries under your will. This means that the
testamentary trust could be used as means of providing income to certain
beneficiaries. If those beneficiaries are minors, they will not be subject to
the usual punitive levels of tax (at rates up to 66%) normally paid by minors.
A
testamentary trust also provides a safe haven in the event of bankruptcy as its
assets are not accessible to creditors.
A
power of attorney is a document, which allows one person to legally act on
behalf of another. The power of attorney can be quite specific in that it may be
limited to certain actions or to a certain period of time. Alternatively, it can
be unlimited, in which case it endures until, it is revoked by the person who
granted it. Thus enduring powers of attorney are often used in anticipation of
incapacity brought about by accident, illness and other reasons. A power of
attorney can be revoked at any time by the person who initially granted it.
In
conjunction with a professional legal advisor, we will help you design an
appropriate Estate Planning Strategy to ensure the continuation of your
family’s lifestyle should something unforeseen occur.
Something
as important as your Family’s future should not be left to chance.
Contact us: enquiries@directadvisers.com.au
