Estate Planning & Administration

By its very definition, the word ‘estate’ means the whole of one’s possessions, more particularly, all the property and debts left by one at death.

When added to make the term ‘Estate Planning‘, it means you will attempt to ‘speak from the grave‘, and plan the process whereby your earthly assets are divided/distributed amongst those you deem worthy or in need.

In other words, trying to ensure the chosen beneficiary (the right person/entity) receives the appropriate gift (or asset), so that either the recipient has a great home and/or be looked after, or a share in a business, or other assets, end up in the right hands, so the enterprise may continue.

Whilst sometimes difficult in a corporate setting, it is usually problematic when regarding a family business, because of the emotion that may be attached to any discussions in this matter.

If you are merely discussing cash, furniture, cars, collectables and inanimate objects, that usually comprise someone’s bequest, it is usually a cut-and-dried matter for the testator to gift, in a properly written “Last Will and Testament”.

There are many opportunities to structure your estate planning to make sure your loved ones are looked after.

Our attitudes about what makes up a family have advanced well past the traditional concept of a mum, dad and two kids. The era of blended families and same-sex and single parenting has well and truly arrived. In contrast with our parents’ generation, there are a lot more factors to take into account when making a will.

Willing out of family disputes

While not the most pleasant of financial tasks, making a will with clear instructions and keeping it up to date can save disputes with grieving family members later. It will also give your loved ones certainty and clarity about their financial position.

A solicitor can draft and execute your will, and will likely suggest things you may not have already considered. They may also offer to store your will securely for no extra fee.

If your beneficiaries have more complex family, financial or business needs (for example if your child has a disability or you’re in a family business), a testamentary trust can protect their interests.

These trusts offer flexibility regarding the distribution of income and assets, and this structure may provide tax advantages too.

However, if it is a business, this process becomes a part of another process called ‘Succession Planning’, where likely individuals are tested to see if they have the strength, integrity and fortitude necessary to take over from the founder, or their successors.

Maybe the identified successor doesn’t have the necessary skills, and must be groomed, mentored, educated and tempered over a period of time. When that time passes, maybe this individual does not yet measure-up, and must stay in a sub-ordinate role until ready.

This may mean a search for others within the business, or an outsider, to come in and to continue the mentoring role until the person is ready.

There may be no likely family member. Maybe the best option is to sell to the staff as a Management-Buy-Out (MBO); or a Management-Buy-In (MBI), where you sell to a team from the outside. It may be a Leveraged-Buy-Out or a Leveraged-Buy-In. These deals are usually done with a higher, or lower , level of equity and/or debt, respectively. This is where you may control the process a little. Else, you look for a Trade Sale, where a competitor (looking for larger market-share), or a new entrant buys the business.

In this way, the business goes out of the family and the cash and other assets realised, may go where directed/needed.

However, if the business will stay in the family, in whole or in part, maybe a Corporate Will is necessary to ensure the right people receive the correct share holding.

If any of the above resonates with you, and you need to understand more, come in for a conversation with me, about what the options are for you, and a Lawyer with commercial nous will be contacted if necessary or appropriate, to take matters to the next level, and document the process.

Regardless, as individuals, please ensure your Will has been revised by your lawyer, to ensure it is current; at least within the last five years, preferably three.

You should review and change the plan whenever you circumstances change, such as:

  • You get married, divorced, begin living with or separate from a partner;
  • You have children, or they pass away;
  • You set-up, buy or sell a business;
  • You incorporate a company;
  • You set-up a trust;
  • If you have family members with special needs;
  • If you have a change in superannuation;
  • If you buy real estate or other valuable assets.

Other matters to consider are as follows:

  1. Have you planned to give your organs as a Donor to the transplant program?
  2. Have you discussed your wishes with your family members?
  3. If any dependent children under the age of 18-years old know with whom they will live in the event of your passing?
  4. Do you have a current and valid will?
  5. Have you appointed Limited and/or Enduring Powers of Attorney?
  6. Do you have a suitable executor, and have you spoken to this person(s) to tell them of their responsibilities?
  7. Do you have a plot to be buried in?
  8. Are there explicit instructions regarding your funeral?
  9. If you have a Self-Managed Super Fund, do you understand the effects to this structure, and the assets held within, upon your passing?
  10. Have you made a Binding Death Nomination in regards your superannuation; either to the estate or individual dependents?
  11. Should you set-up an actual Testamentary Trust for each dependent, like an Endowment, to look after their needs until age 25?
  12. Do you want to make an in-specie or cash gift to a particular charity?
  13. Do you understand the income and capital gains tax implications of your passing

What happens if someone makes a claim on your estate? Who might do this? How successful may they be?

The above is not an exhaustive list of the types of scenarios required to be considered in your estate plan. Estate Planning is more than just a will!

If you have any questions or would like to speak with one of our solicitors, please contact us.