Traditionally estate planning was viewed as having a Will which documented how a person would like their assets distributed upon death.

In reality, estate planning is far more involved and the following issues are some that need to be addressed:

  • If you become unable to care for yourself, who will care for you and make decisions on your behalf? And if you become unable to manage your business and financial affairs, who will oversee and manage these affairs on your behalf during your remaining lifetime?

Powers of Attorney (POA)

An Enduring Power of Attorney is a legal document whereby an individual appoints another person to make decisions on their behalf if they lose the capacity to do it themselves.

A separate POA is required for each type:

 (a)   Financial:

 Authorises a person to make financial and legal decisions.

 (b)  Medical:

Decisions may include agreeing to medication, surgery, other medical procedures, life support decisions etc.

 (c)   Guardianship:

Decisions involve daily life issues such as where you live, type of health care (apart from medical treatment) you receive etc.

These are important documents and provide the only method of having someone you choose (and must) make decisions on your behalf in case of an unfortunate event.

* Who should be the guardian of any children who may be minors at your death?

* How should you and your spouse hold legal title to your assets (e.g., husband and wife, as joint tenants, or husband and wife as community property with right of survivorship, or as the separate property of one or the other of you)?

* Upon your death, who should administer your estate, i.e., who should act as the Executor of your last will and testament or the Successor Trustee of your trust?

* How can taxes of your estate be minimised?

HOW SHOULD YOUR PROPERTY BE DISTRIBUTED TO YOUR BENEFICIARIES UPON YOUR DEATH? OUTRIGHT OR IN TRUST?

DECEASED ESTATE

On death, all assets jointly owned by a couple, automatically pass to the surviving spouse. There is no immediate tax consequence at this point. However, depending on the asset, cost, date of purchase etc. there may be Capital Gains Tax payable, but only when disposed of in the future.

All assets owned personally by the individual form a part of their estate and are dealt with in the will and can be distributed once probate is granted.

Depending on the individual’s income, a tax return may have to be completed from the start of the financial year up to their date of death (final return). The estate would then prepare a return from the date of death up to the end of the financial year and beyond.

A deceased estate is taxed at individual rates for up to 3 years from the date of death, then at special deceased estate rates from that point until all assets are distributed.

* Who should receive the proceeds of your life insurance or your retirement benefits?

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