Estate and Tax Planning -Snapshot Guide
Estate and tax planning is important for everyone, but its importance is even more evident for those who have been diagnosed with a terminal illness. Good planning can minimise the stress and effort of administering your estate and can also maximise the chances of your wishes being carried out and your loved ones benefitting from your estate.
Your Will sets out your wishes in relation to your assets. It is important to have a valid, up-to-date Will. Old wills can be invalidated by a subsequent marriage or divorce, or may no longer accurately reflect your wishes or adequately deal with all of your assets. It is important to review your Will every few years and also on any major change in your family or personal situation. Finding out you have a terminal illness can be a good reminder to review your Will and make any necessary changes.
There are many extra considerations for those involved in a business. Different business structures need to be dealt with differently and personal advice should be sought from your advisors about how best to exit from your business. Often, a business cannot be simply dealt with under your Will and separate business succession agreements should be made.
Insurance can provide for peace of mind. If you have insurance policies outside of superannuation you should check that you have nominated the appropriate beneficiary. You can also check whether there are any time limits or other conditions about making claims.
Tax Considerations – Donations
If you are planning to donate to a charity in your Will, it may be worthwhile considering instead donating while you are alive because a deceased estate cannot claim a tax deduction for such donations.
Tax Considerations – Superannuation
Superannuation provides scope for tax planning. Depending on who receives your superannuation benefits after your death, tax may be payable on the taxable component.
A “tax dependant”, such as a spouse or minor child can receive the benefits tax free, but an adult child cannot. In such circumstances, it may be worthwhile seeing if you can receive your superannuation tax free before your death. Generally, a terminal illness will qualify as a condition for release, although you will need to provide certain documentation to your super fund.
If you do not have any “tax dependants”, it is much more tax-effective to seek release of your superannuation before your death.
Good tax and estate planning can make life much better and easier for you and your loved ones. Taking the time to plan can be a very worthwhile exercise.