One of the things that comes up almost every time I meet with a prospective client, is estate planning.   Or, more to the point, the complete lack of it.

It is interesting that we are very involved in creating a lifestyle all through life and will make time to ensure it happens.  But ensuring the wealth moves tax effectively to the survivor and other family members is something that is ignored or perhaps put in the too hard basket.

I had a fellow tell me he didn’t want to make a will as he didn’t want to be blamed by his widow and her kids for not providing 100% for them but including his own children from an earlier relationship!  This is ludicrous.  Different states and territories have different rules on this but one thing is certain, not having a will almost always results in additional legal costs and a mess within the family.

Another question almost always asked when the topic comes up is “how do I stop a challenge to the will?”  The answer is you cannot.  However, you can structure your estate to minimise the likelihood of a successful challenge.  I won’t go into this today but welcome your enquiry.

A will is only part of the job.  A will that actually makes wishes cascade to subsequent generations and which ensures there is an ability to protect a child/grandchild from family law dealings is a long way down the road to a good estate plan.

But did you know that superannuation is not an Estate asset?  And life insurance isn’t either?  These are important points as the former is most likely the largest single asset outside of the family home but life insurance can bypass Probate and get straight to the right beneficiary.   Superannuation is able to move seamlessly to a spouse  or a dependent minor child but not so easily to non- dependents.  Tax comes into play.   Also the rules of superannuation come into play.

It pays to discuss superannuation with a qualified adviser who understands the rules and who also has an understanding of estate issues…..even more so for blended families and those with children or dependents with disabilities or addictions or whose partners have addictions.

Life insurance can also create your estate and so allow you to leave a legacy for example.   A trust can be established to benefit a group of society (eg disabled children) where the income is used to fund grants or awards and where the capital is invested to grow ahead of CPI and thus create a relevant income stream in perpetuity.

Life insurance can also be used to balance an estate – eg daughter takes over the business but the other children not in the business receive a lump sum of cash equivalent to the business value.

For business owners, ensuring that there is fair payment to the estate is important to the widow and again, life insurance, properly structured, can be the ideal method of doing this without as much financial disruption to the business and surviving owners.

This is a wide subject, so the above is just a snapshot to stimulate discussion.  Feel free to Ask Steve for more information on structuring your estate plans before you go to a solicitor for the documentation….you’ll be glad you did!