estate planning
Estate Planning is often like life insurance, we do not think about it until it is too late.
A solicitor is needed to draft your Will and Powers of Attorney, but KmacD Financial can assist in structuring your assets to be passed to your family in the most tax effective manner.
We can also assist in drafting a ‘What-if’ document that provides instructions to your family for things that your Will and Power of Attorney does not cover.
A ‘What-if’ document may help your family make the right decisions for you.
what can a financial planner do to help with my estate?
When you invest, a Financial Planner will consider your personal situation first. We may also ask who are your potential beneficiaries to make sure any assets will pass how you intended.
A Financial Planner can assist you with considering the tax implications of selling or passing your assets to your beneficiaries. There are often strategies that you can undertake now that will minimise tax for your beneficiaries.
What outcomes are we trying to achieve when discussing estate planning?
We are trying to fulfill your wishes.
If assets are not structured correctly this may not be possible.
questions clients always ask about their estate
This is best answered with a very simple example.
In your will you have indicated that you want to leave your $500,000 superannuation account to your oldest child, your $500,000 share portfolio (purchase price $250,000) to your middle child, and your home worth $500,000 to your youngest child.
If your superannuation is all taxable component, the oldest child may have to pay tax of 17.5% ($87,500) on receiving your superannuation as a non-dependent.
If your middle child decides to sell the shares they will have capital gains tax will be paid.
If the middle child’s income is $80,000 they will have an approximate tax bill of $50,000 on the sale of the shares.
Your youngest child will pay no tax, as they inherit your home.
What seemed like a fair and equitable split of assets is not.
why do i need to consider tax implications when deciding my will?
A Power of Attorney is the legal document needed for a trusted person to act on your behalf when you lose capacity. However, a Power of Attorney does not give explicit instructions on what you want to happen when you lose capacity.
Usually your loved ones are given this power at a time of great stress and often they do not know what you really want and where to find necessary information on your financial affairs. This is becoming increasingly difficult with most things being stored online.
The What If document is designed to give guidance of perhaps what assets you are happy to sell to pay for Aged Care, which bank your accounts are held with, who your doctor and specialists are. It can also be used to outline your funeral arrangement and who to invite.
Creating a What If document can be a very emotional experience but worth consideration to assist your loved ones.