How To Avoid Problems Drafting A Will
Your last Will and Testament is perhaps the most important document you will ever sign. As the nature of this document is so important, it is necessary to ensure drafting a will is done correctly so any assets collected over your lifetime are properly accounted for. Assets such as superannuation, life insurance and shares of jointly held assets (such as the family home) do not automatically fall into your estate when you pass away. Furthermore, any assets you control through family companies or trusts (but do not specifically own) cannot be disposed of through your Will as part of the estate.
Avoid Problems. Seek Advice
To avoid any problems regarding the administration of an estate, it is important to formulate a plan to ensure the assets are distributed in the most tax effective manner.
Setting up a testamentary discretionary trust
One of the ways to do this would be to include a testamentary discretionary trust in your Will. These discretionary trusts come into existence upon your death and can have significant benefits, including protecting the beneficiaries who receive your assets in the event they:-
- Get into financial difficulties with creditors; and/or
- declare bankrupt; and/or
- suffer a breakdown of their matrimonial relationships.
Furthermore, income which is distributed from a testamentary trust to minors is taxed at a marginal rate. This means that thousands of dollars in tax can be saved annually if someone passes away with a young family as a result of the special tax treatment. A properly prepared estate plan will consider legal, taxation and financial issues. It is therefore important that you seek legal advice and inform your solicitor, accountant and financial advisor during this process. This will create a coordinated approach to establishing and reviewing your estate plan.