Services

Business Succession Factsheet: The importance of preparing a comprehensive will and personal estate plan

Most people want to have certainty about what will happen to their assets when they pass away. While a valid will is crucial, and it is important that your will is as up to date as possible, a will on its own may not provide the certainty you would like, depending on the type of assets you own or control.

If your will is not up to date and reflective of your circumstances or wishes when you die, or you die intestate (that is, without a will), your wishes as to who your assets should go to may not be addressed, and there can be unintended consequences that lead to disputes amongst your loved ones.

A will only deals with those assets you hold personally. If you jointly own assets with another person, or if assets are owned by a company or trust, those assets are not held by you personally. As a result, your will does not give you the ability to control where these assets go when you die.

Proceeds of life insurance and superannuation payable on your death may or may not be paid to your estate and pass under your will. Your superannuation may include a life insurance policy, meaning that benefits payable from your superannuation fund on your death can substantially increase. Who those proceeds are paid to on your death depends on a number of factors, including how the life insurance policies are structured and whether you have made a nomination of beneficiaries which is binding on the trustee of the superannuation fund in question.

There are a myriad of questions you need to ask when putting in place a comprehensive estate plan, including:

  • Have you appointed the best people as the executors and trustees of your will? Executors have a great deal of responsibility in administering an estate. You should give special consideration to the appointment of your executors. Have you included alternatives or backups?
  • Have you considered the pros and cons of establishing a testamentary discretionary trust or granting 'life interests' in your will?
  • Who could make a claim against your estate? You may need to give particular attention to potential beneficiaries such as disabled or elderly relatives, defacto spouses and children from different relationships. You should consider putting in place a separate document in which you explain why you have structured your will in the way you have, and provide guidance to the executors and trustees of your will. This will enable you to 'speak from the grave' and minimise the chances of a claim against your estate.
  • As only assets you own personally will pass under your will, have you considered the succession of assets not personally owned, such as assets held in companies or trusts?
  • What happens if you lose the capacity to manage your own affairs? Have you appointed an enduring attorney for personal, health and financial matters? Have you made an Advance Health Directive?
  • What taxation implications do you need to consider? Capital gains tax issues can arise - a form of hidden 'death duty'.

Because you work hard to accumulate wealth, an appropriate estate plan is important to ensure your assets end up with your intended beneficiaries and to minimise the tax that needs to be paid from your estate.

For more information about preparing comprehensive estate plans, please contact HopgoodGanim's Estate Planning and Administration team.