With the wealth many now hold in real estate, superannuation and life insurance the idea that “I just need a simple Will” is out the window. Whilst most people have some idea about how they would like to leave their assets when they pass away, most don’t consider the tax implications.
In our latest article in The District Reporter, we discuss why you need the right advice when preparing your Will.
Read the latest copy of The District Reporter here
With the wealth many now hold in real estate, superannuation and life insurance the idea that “I just need a simple Will” is out the window.
Whilst most people have some idea about how they would like to leave their assets when they pass away, most don’t consider the tax implications.
Did you know that your superannuation, if left to a person who is not financially dependent upon you at the time of death, will be subject to tax? For example, if you wish to leave your superannuation to your two children, one of whom is 16 years old and living at home with you and the other is an adult living in their own premises, then the 16 year old will not pay tax whereas your adult child will. This may result in an unequal distribution of your estate, which is not what you wish to achieve.
It is also important to remember that, if you complete any forms with your superannuation fund directing how your super is to be left upon your death, only certain categories of people can be nominated. In addition, depending on the forms completed with your superannuation fund, the direction you have made for the distribution of your super may not be binding and so your superannuation fund will make the decision as to who should receive it.
Be careful to make sure that you your hard earned super goes where you want it to go.
For those lucky enough to have significant assets, there may be other options available at the time of your death for them to be managed in the most tax effective way for your beneficiaries. Testamentary trusts can be explored as they can provide a more flexible approach to the management and distribution of your assets and income following your death. As an example, a testamentary trust may provide a mechanism for your beneficiaries to distribute your assets or their income amongst their own families to minimise the tax they would otherwise have to pay.
As you can see, estate planning can be a complex field. If a solicitor does not spend the time getting information on all of your financial affairs and potential beneficiaries, how can they possibly be giving you the right advice? Sure they can give you a “simple Will” but what is that going to cost your kids one day? If it matters to you, get it done properly.
See a trusted advisor. If simple is all you need they will tell you – but if there is a better option you should be able to make the choice.
