WILLS & ESTATE PLANNING
Prepared for the clients of Macarthur’s MSVDH
Every year, Australian tax payers voluntarily pay the Tax Office millions of dollars in “Death Taxes”. Proper Estate Planning ensures that your estate goes to those you care about and not the Tax Man.
Death Taxes: Capital Gains Tax, Income Tax and Stamp Duty. Careful planning can reduce Capital Gains Tax, Stamp Duty and other death taxes.
Did you know that the Government has already made a Will for you?
Unfortunately, you are never consulted over your Government default Will.Does it coincide with your wishes? Who benefits from your property when you die? A Government imposes Will never corresponds with your wishes as to how much you leave the Tax Man!
Protect your family:
1. The 3 Generation Testamentary Trust
The first line of defence is the 3 Generation Testamentary Trust. This is simply the opportunity for each beneficiary to form as many (or as few) discretionary trusts from you Will. They substantially empower your family to wash out Capital Gains Tax, Income Tax and Stamp Duty.
2. Superannuation Testamentary Trusts
What if you die with Superannuation? That Super is hopefully ending up with your loved ones. Under the Income Tax Assessment Act, “dependants” pay no tax. “Dependants” are your spouse, children under 18 and people you “maintain”. The others (like children over 18 that you are not maintaining) pay tax of 16.5%. This is grossly unfair and wasteful. Superannuation Testamentary Trusts can often wash out 100% of that tax for every beneficary- whether they are “dependant” or not.
3. Protect Trusts-protect from bankruptcy
Protected trusts are placed in your Will in case one of your children is bankrupt, a minor or suffering a disability at the time of your death. Your advisor works with the Executors to ensure that the money is properly invested during this period.
4. Capital Protected Trusts – divorce
Capital Protected trusts are testamentary Trusts that last for 80 years. No one can touch the capital -only income. They are good for the young, attractive spouse and spendthrift divorcing children. Your advsior can hold one of the trustee positions to protect and invest the money for those 80 years.
5. Disability Testamentary Trust
Leaving behind disabled children is heart rendering. If you leave them money, they can lose their Centrelink and government assistance. Thanks to recent laws, you can now leave your disabled loved one up to $500,000. You can do this in your Will or while you are still leaving. It won’t affect you or their Centrelink.
Can my Will be challenged?
Family Law and the Family Maintenance Provisions Acts affect married and de facto couples. Your spouse (and sometimes your ex-spouse) is entitled to make a claim on your estate. De factos are entitled to make a claim on your estate if you are “maintaining” them.
Also, your parents, children and grandchildren can take a claim to the court for your estate – irrespective of how little or how much you leave them in your Will. Some States go even further.
An Estate Planning strategy can reduce the chances of these people being succesful in their claim.
Pay Captial Gains Tax on your family home?
Up until 1980, the government had Death Duties and Probate Duties. During this time your Advisors structured your affairs so that you, died with a few assets as possible. With CGT, you generally want to die with as many assets in your estate as possible.
In 1985, Treasurer Mr Paul Keating introduced Capital Gains Tax. At that time Mr Keating said CGT would not be a de facto death duty and would not affect your family home. Sadly, it didn’t turn out that way.
In the 1995-96 financial year, the government “earned” more money from dead people using CGT than the cumulative history of death duties. Your family home is not even safe. The government has put out two booklets: “CGT and your home, for all Taxpayers” and “CGT and the Assets of a Deceased Estate, For all Taxpayers”. Ring the Tax Office on 132861 to get your copy. Your Advisors ensure that your financial matters are fully considered. CGT, Income Tax and Stamp Duty are all a de facto death duties.
How often do i review my Estate Plan & Will?
You should place a copy of your Will with your tax returns. Review it with your Advisor each year. You should review your Will with your tax lawyer every 4 years or when your situation changes.