Dead locks, shutters, guard dogs, alarms, CCTV, and security screens are common to most of us, but what about the ownership of your intangible property and assets? What are you doing to protect and preserve the inheritance you dream of for your chosen beneficiaries?
When structuring for inheritance, a well written will simply isn’t enough.
Protecting your assets and estate for the future takes serious and assisted planning now. To safeguard what you’ve worked so hard for, and pass it on to those you love, a combination of below options may be considered.
While those drafting a Will believe it is their human right to decide how their estate will be distributed, there is no guarantee of it being interpreted and administered the way you intended; Wills can be contested in court under State-based Family Provisions legislation, by disappointed relatives, and even carers are making claims against estates. The costs for your Executors to fight these claims in court, and the costs of the commonly “no-win-no-fee” claimant’s lawyer, (usually borne also by the Estate), can be enormous. With this, commonly comes a year’s delay in distributing the Estate, and ruined family relationships!
Executors are frequently compromised to make a payment to an unintended beneficiary or beneficiaries, simply to avoid expensive and lengthy legal proceedings.
While a will is a necessity, it should be seen as a part of your total wealth transfer strategy.
- John G.
It’s also important to note that while general practice lawyers may do their best to represent your wishes in a will, they likely don’t have a thorough knowledge or understanding of your entire and extended financial picture. Your best option is engaging a specialist Estate Planner such as EPI-centre, who collaborates on your behalf with specialist SAPEPA endorsed lawyers, staying abreast of statutory changes and ever emerging case law.
For a large Estate and where the testator has substantial potential superannuation death benefits, an estate plan can be very effectively supplemented by a ‘living trust’, where the same intended beneficiaries, instead derive their wealth distributions more from trusts, than from your estate.
The critical difference between living trusts, compared with a will, is that in cases where there is ANY chance of a dispute, like a Family Provisions claim, those claims can only be made against the Estate. If assets have otherwise been directed/diverted via living trusts, these can be structured so as not to be subject to Family Provisions claims, circumnavigating the estate! They can also release funds flexibly, saving in tax and safeguarding your long-term wealth distribution wishes.
Take a look at these two scenarios involving a ‘Traditional Will’ and a will with a ‘Testamentary Trust’ option.
Mum and dad had left $500,000 to their five children. They wanted each child to receive $100,000 of their hard-earned wealth to help them in meaningful ways. As you’ll see though, divorce, bankruptcy, and tax all can negatively impact the benefits bestowed from a traditional will.
Traditional Will
Out of the $500,000 gifted to their children, less than 50% made any material difference to the childrens’ or grandchildrens’ lives.
‘Testamentary Trust’ within Will
Consider this scenario, where the same amount of wealth is delivered to each child in such a way that they don’t stand to lose much of it from tax, creditors, predators, bankruptcy, or divorce.
This is the power of delivering your estate assets using a well-structured Testamentary Trust. In this scenario, the entire $500,000 will go to the intended beneficiaries such that the future annual earnings on these distributed sums, can be completely tax-free, disclosed in the tax returns of children of the named primary beneficiary, who themselves would otherwise face tax rates on such earnings of up to 47%.
EPI-centre Inheritance Planning
EPI-centre deploys all the tested structures and strategies, supplemented with the turbo charged SAPEPA Leading Member Functionality. Every client has a different family and business structure, different wishes, aspirations, and needs, necessitating a tailored estate or inheritance planning strategy. Our strategies may include a combination of the following products based on your unique situation:
The Family Asset Protector
An Asset Protection Trust is a strategy for safeguarding family or personal assets, particularly where the asset owner is in risky business circumstances, or a director of companies exposed to high risk.
We use similar concepts to safeguard business assets in the ‘Business Protector’.
Testamentary trusts
As shown in the above case study.
Discover Inheritance planning that provides security and tax minimisation for estate family beneficiaries across potentially three generations.
Leading Member Discretionary Trust.
The “Leading Member” concept, built on ‘bloodline’ and based on succession in the British monarchy, controls the inheritance through the Leading Member’s line of succession. This approach can be an effective way to pass your estate and family inheritance down through the generations and is commonly attractive for intergenerational farming families.
Leading Member
Upgrade existing discretionary trusts to multi-generational Leading Member bloodline-controlled trust.
Your long-established family or discretionary trust can be upgraded into a modern leading member trust without involving stamp duty or CGT liability.
Leading Member SMSF for bloodline protection
Super is often a large part of a Testator’s total controlled wealth. It is very common for ‘Super Death Benefits’ to be poorly structured in an estate plan, relying on a death benefit nomination and subjecting this wealth to unnecessary risks of Family Provisions Claims and tax at the rate of at least 17%
SMSF Will
Ditch the dangerous Binding Death Benefit Nomination, and opt instead for a secure SMSF Will with a drafted testamentary trust built outside of the estate, which can circumvent unnecessary tax and allow measured delivery of benefits to whom you want, when you want. The laws on intergenerational SMSF have just been altered to now allow up to 6 members, potentially allowing 3 generations to be a part of the one SMSF. This will be particularly beneficial at providing an enhanced vehicle for wealth transfer intergenerationally, especially in the context of the longer average life-spans Australians are now enjoying.
EPOA – Enduring Power of Attorney
Another important aspect of wealth protection is appointing a suitable Enduring Power of Attorney (‘EPOA’). In the unfortunate event that you’re incapacitated, your EPOA will make financial and other important decisions on your behalf. Careful consideration to who is appointed as your EPOA, and their abilities for financial access and distribution, need to be carefully structured, to safeguard your best interests.
Even loved ones, when given access to money have been known to suffer from ‘Inheritance impatience’. Don’t leave yourself open to becoming a victim of Elder Abuse later in life. Let us help you get your EPOA in order.
Reversionary Super Pensions
Don’t allow a SMSF to end upon the death of a member! Avoid or defer 17% tax on super death benefits by reverting a pension to a qualifying dependent or to grandchildren!
If you want to ensure safe passage of all your accumulated assets to the next generation, now is the time to structure, strategise and implement.
If you’re suddenly incapacitated, or legal action begins against you – even unwarranted, it’s too late to start acting to preserve your wealth for yourself and future generations.
At EPI-centre, we are strategising for the future. We believe that our Government will re-introduce death duties/inheritance taxes. More reason to review and plan your structure now, to preserve as much wealth as possible for your kids, and grandkids. With adopted SAPEPPA concepts like the ‘Leading Member’ ‘Bloodline protection’ we can design inheritance outcomes for family wealth.
Book your free initial EPI-centre consult now