Generational Wealth Planning
The area of advice that often causes the most headaches is estate planning. We have seen families lose millions of dollars in legal battles and lost tax savings simply because the estate plans were poorly done, or not done at all.
Most people don’t have a last will and testament. If they have a will, they often don’t have a very good one.
Only a fraction of people have lineal descendant testamentary trusts, which is a trust established under your last will and testament that provides for your family who are your bloodline only. This can protect against marital separation, creditor issues, wayward spending from dependents and other potential issues.
The tax savings of a well-structured estate plan can be huge. Testamentary trusts can stream income to minors at adult marginal tax rates, making use of the $18,600 tax-free threshold.
Super is tax-free to dependents, yet taxable to non-dependents. Those who have both financial dependents and non-dependents have the ability to reduce potential tax payable to zero, if structured correctly. Equally important is reviewing this annually, as dependency can change year by year.
We had a client who recently passed away from cancer. Through quick and simple planning we were able to reduce tax to the estate by nearly $60,000 by simply getting the money out of super before they passed.
An enduring power of attorney allows someone who becomes unsound of mind to have their assets looked after to provide for them or their family as appropriate.
An enduring guardian gives another person the ability to make medical and care decisions for a person after they are no longer able to.
Including pets in your estate plans can also be very important for those who love their animals. Many people don’t think of these things, and the consequences can be quite sad.
An area where many estate plans fail is regular review. Life is not static – superannuation laws change, estate laws change, beneficiaries change, executors change – and you can miss out on hundreds of thousands of dollars of potential tax savings by not reviewing your estate regularly.
As part of our full service offering, we provide documentation for lineal descendant testamentary trusts, enduring powers of attorney, superannuation lineal descendant trusts, binding nominations, reversionary pensions and enduring guardian. Most importantly, we review it every year. While others charge many thousands of dollars for this service, we now incorporate it into our fees.
What would happen if you died or lost mental capacity today? Have you got your estate plans sorted?
Rob Shears is an Authorised Representative of Valor Financial Group (AFSL 405452). This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.