Estate Planning, it’s not just a Will

When considering estate or succession planning, people often only think about making a Will. However, a Will is only part of the plan.  A complete succession plan addresses not only the assets that pass by your Will but other assets held in entities that you control or that are outside your estate.

What assets can I give to beneficiaries via my Will?

Generally, only assets that you own in your sole name or that you hold as ‘tenants in common’ with other owners (such as land), can be gifted by your Will. Determining what assets, you can and can’t deal with by your Will is just as important as the provisions of your Will.

If you own real estate with another person as ‘joint tenants’ and you die, the property will transfer to the other joint tenant, and not form part of your estate. The same applies for shares or bank accounts in joint names. They are not assets that you can gift by your Will. 

Assets that are held in a trust or a company can’t be gifted by your Will. You may be able to nominate a person to take control of the trust by your Will, but your Will cannot distribute trust assets. Shares in a company owned by you personally, can be gifted by your Will, but if the shares are held by another company or by a trust, you cannot.

Superannuation is an asset that may or may not form part of your estate after you die.  It is important to get appropriate advice regarding the type of superannuation fund you have and what rules govern the fund regarding the treatment of your superannuation death benefits and any nominations. Taxation of your death benefits should also be considered. You can then make informed decisions for your superannuation death benefits as part of your estate planning strategy.

What if I run my own business?

If you run your own business, a significant part of your wealth may be tied up in the business. Your business assets may be held in various structures such as trusts, companies or partnerships or even a self-managed superannuation fund.

Careful consideration should be given to who will take control of the entities that hold the business assets after the death or incapacity of a key individual in the business. Successful continuation of the business can be put in jeopardy if appropriate succession planning has not been put in place.  Failure to consider the impact of your death or incapacity on your business can also create problems for your personal estate, particularly if there are loans between you and the business or you have provided personal guarantees for business loans.

So, the answer to the question as to what assets can you give to your beneficiaries by your Will, for some people might be “not that much”, because they don’t personally own a lot of assets.  However, they may have substantial wealth outside the estate that needs to be dealt with, just not by their Will. 

With careful planning, and the right documentation, including your Will, you can choose who will benefit from assets held both inside and outside your estate.

Some considerations for estate planning

• Who do you want to control your business, investment entity and assets?
• What assets do you own with other people and how?
• Have trust deeds been reviewed or updated recently?
• Have you reviewed your company constitution?
• Are business insurances up to date?
• Do you have a buy/sell or other business succession agreement in place setting out the process if a business partner is incapacitated or dies?
• Is your binding death benefit nomination for your superannuation fund up to date?
• Have distributions been made to you from a discretionary trust but remain unpaid or have you loaned or contributed substantial amounts to a trust?

The importance of regular reviews

A regular review of your estate plan is just as important as a regular health check. Changes in the assets that you own, the entities that you control and your family structure can have a significant effect on the distribution of your wealth on your death. Failure to properly consider what you have and how you own it, may result in your assets not being distributed in the manner that you wanted and control of your business and entities not going to your preferred successor.

The HHG Legal Group Estate and Succession Planning team can discuss with you how the structure and ownership of your assets may affect your estate planning and business succession strategy and will work with you to get your planning right. We can provide you with considered and holistic advice and prepare and implement a plan that is right for you, your business and entities and your beneficiaries.