[Podcast] Estate Planning matters you really must understand, with Ken Raiss

They say blood is thicker than water, but when it comes to distributing your wealth on your death, human instinct can take on a darker side because money is involved.

So, no matter what your age is, planning your estate is an important matter.

Estate planning goes well beyond drafting a will, so no matter how young or old you are, I think you will benefit from my chat with Kevin Raiss today.

Estate planning involves arranging your assets and circumstances in such a way as to ensure that your beneficiaries after your death receive from your assets maximum use and enjoyment at a minimum cost in taxes and heartache.

And you can’t start this too early, so in today’s podcast, Australia’s leading property tax strategist Ken Raiss and I explain what estate planning is and what you should do about it.

What you really need to know about estate planning

Estate planning is different for everyone and especially in today’s modern environment of potentially blended families.

While you are alive, the estate planning process allows you to manage and preserve your wealth for those you will one day leave behind, and that's what we discuss today.

What is Estate Planning?

• Good estate planning aims to anticipate and plan for financial and personal problems beneficiaries of your estate may face after your death.
• What sort of documents should be included?
  • The first issue is to recognize that a traditional Will only looks after assets that are in your personal name. These are referred to as your estate assets hence estate planning.
  • The issues, however, are far greater than this as most people have non-estate assets such as superannuation, control of trusts, etc, which require different documentation to manage after your death.
• When you distribute your assets after death, there are many other issues to consider, such as:
  • Capital Gains tax and stamp duty
  • Effective tax management
  • How safe are the assets in that person’s hands
  • Litigation from disgruntled family members who miss out.
  • Your estate is still responsible for your debts
  • How easy will titles of various assets be transferred
  • And many more

Why should we be concerned about it?

• We find more and more people have significant assets that they do not appreciate, such as the family home, superannuation, life insurance proceeds, forgotten assets, and family heirlooms.
  • Unfortunately, too many unsuspecting executors and beneficiaries find out too late that these so-called simplistic wills actually make things complex, risky, and unnecessarily costly.
• A correctly implemented Estate Planning Strategy creates a will that reduces the risks faced by beneficiaries and their inheritances from costly disputes and seizures due to money problems, bankruptcy rulings, and family court orders i.e. via divorce or relationship breakdown.
  • In reality, it takes a tailored and detailed estate planning will to actually make things simple and efficient for executors and beneficiaries.

Is it paranoid to involve this level of administration in estate planning?

• There are varying reports that between 50 and 70% of people do not even have a basic will in place. We have also found that even those with a Will do not have what they thought they had or did not know that a more robust solution could have been implemented.
• The costs of a relatively robust estate plan are surprisingly realistic when you consider what you want to achieve.
• There are many instances of legitimate and unscrupulous litigations where one family member cries poor when they either miss out or receive less. 
• The law allows for litigation by an authorized person to be paid for out of the estate win, lose or draw and as such, it is unfortunate to say that some in the legal profession prey on this and either seek out clients or fight for clients who may not be as deserving.
• Ruling from the grave
• When preparing an estate plan, you want your plan to avoid as many pitfalls as possible. A better position may be that of “guiding from the grave,” which gives some flexibility while maintaining some rules.

Documents that should form your estate plan

• Will
• Testamentary trust
• Enduring power of attorney
• Medical directive
• Guardianship
• Control of trusts, including self-managed super fund if you have one
• Your superannuation death members benefits
• Special requirements
• Capital preservation
• Other aspects you should review
  • Homeownership structure
  • Taxation
  • Retention of super to surviving spouse. Unfortunately, over 90% of super accumulation payouts come out of super
  • Looking after financial dependents
  • Survival of your business
  • Management of business premises
  • CGT on some assets/beneficiaries (usually avoidable)
  • Payments to minor children

Who should be involved in your estate planning?

• Will lawyer
• Accountant
• Tax specialist
• SMSF specialist
• Commercial lawyer
• General council

Typical strategies and mistakes

Typically, people go and see their suburban lawyer for these strategies, but the lawyer does not understand the accounting, taxation, superannuation, and estate planning intricacies that all must be built into the final solution.

We typically see mistakes in three broad categories:

• Superannuation death benefits coming out of super into a less safe and higher taxing environment
  • It is extremely difficult to bring funds back into super, so a good estate plan will take into account super in the accumulation phase and implement documentation for the deceased funds to remain in super for the surviving spouse
• Assets going to children who are either in litigious professions or likely to be divorced, children where the 66% minor tax will apply to income.
  • An alternate approach to estate planning can protect the family assets from going to a child who, if divorced, would see the assets go to the ex.
• Assets go to a surviving spouse as opposed to a structure that allows the surviving spouse to distribute from on a pre-tax basis if deemed appropriate and then to children.
• We often see that a family home is in the name of the non-litigious spouse only to go to the litigious spouse on their death. There are several solutions to retain the family home in a safe environment without going to the litigious spouse and even retain the main residence exemption.
• Strategies are also available to assist grandchildren, including payments from super that could be tax-free to minors other than your

Links and Resources:

Michael Yardney

Ken Raiss, director Metropole Wealth Advisory

Have a chat with Ken Raiss to ensure you have the correct asset protection strategies in place – click here

In turbulent times like we’re experiencing, why not get the team at Metropole on your side to give you holistic property and wealth advice– find out more here

Some of our favourite quotes from the show:

“Estate planning is different for everybody, especially in today’s environment of so many extra blended families.” – Michael Yardney

“The accountant is going to speak very different languages to the solicitor, or the property people or the business partners, so you need somebody who can interpret them and speak the same language.” –Michael Yardney

“I would recommend people think about their future and invest in their future.” – Michael Yardney

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