Why you need an Estate Plan to Safeguard your Legacy

 

Most of us spend our lives working hard to accumulate wealth for a comfortable retirement and to look after our loved ones after our passing. But your hard work may be for nothing if you haven’t properly documented your wishes.

Having a Will in place is simply not enough. To truly safeguard your legacy, you require proper documentation in the form of an Estate Plan that includes your Will, your Enduring Power of Attorney (EPOA) and arrangements for directing ownership or control of your assets after your passing.

In general terms, while your Power of Attorney helps you deal with your affairs if you lose the capacity to do so yourself, your Will helps your family deal with your affairs after your passing. However, a Will has limitations that business owners need to be aware of so that the arrangements for certain types of business assets accurately reflect your wishes.

Indeed, business owners with significant superannuation and substantial assets in a family trust should engage in an estate planning process that is coordinated by a trusted professional who understands your affairs. Further, the estate planning process should address these three key matters:

1. Leaving ownership or control of your assets

Many business owners have a family trust with significant assets. Some people incorrectly assume that it would be straightforward to leave their assets 50-50 to two surviving children, and that a statement to this effect in their Will would achieve this. In fact, this may not necessarily lead to the intended outcomes and here’s why … a Will passes control over assets and not ownership of assets.

So even where a parent’s intention is to give their assets to both children in equal measure, their use of a Will means they are actually leaving them joint control over the assets. In other words, instead of giving each child independent ownership of 50% of the parent’s assets, the parent is inadvertently leaving to them the onerous responsibility of collaborating and reaching agreement on how to jointly manage their parent’s assets going forward.

In summary, there is a critical distinction between leaving the ownership of assets and leaving the control over assets and it is a distinction that cannot be handled in a Will. What is required is an Estate Plan.

2. Appropriate structures for your assets

Your Estate Plan should identify and implement appropriate structures for holding your assets in ways that allow control to flow to the next generation for the benefit of your chosen beneficiaries. If your assets are not held in suitable structures, there may be tax implications for your beneficiaries. Also, claims from any debtors may impact the financial wellbeing of your beneficiaries in the future.

3. Regular review of your Estate Plan

With the only constant being change, it is essential to review your Estate Plan at least every five years, or at any time of major change, so that it can be updated if necessary to reflect any changes in your wishes for your legacy. This may require appointing a new executor and/or, if you have young children, their legally appointed guardian(s). At q4 financial, we see this regular review process as a central pillar in our commitment to providing for our clients long-term structuring that aims to keep them financially free and in control.

How q4 financial can help

While Estate Planning has traditionally been the domain of solicitors, your accountant, financial adviser and other aligned professionals have specialist knowledge that must also be integrated.

Acting as your trusted financial professionals, the team at q4 financial considers the complexities of your overall financial position and manages the collaboration among the other professional advisers whose input is critical for establishing an effective Estate Plan.

To find out more about the planning process involved in creating an Estate Plan that safeguards your legacy, please contact us at q4 financial on (07) 3171 4255 or Kelly Hill at kelly@q4financial.com.au

The information contained in this article is general and is not intended to serve as advice. No warranty is given in relation to the accuracy or reliability of any information. Users should not act or fail to act on the basis of information contained herein. Users are encouraged to contact q4 financial professional advisers for advice concerning specific matters before making any decision.