Tag Archive: business adviser

Estate Planning Step-by-Step – Rest Easy by Protecting Your Assets & Loved Ones

Posted on December 2, 2019
by Luke Bland

4 min 30 sec read


  • Questions to Ask Yourself in Estate Planning
  • Common Assets involved in Estate Planning
  • Drafting your Will – Who is involved?
  • Who is the Executor?
  • Testamentary Trusts & Asset Protection
  • Where Do You Start?

There are tasks in life that we never really want to undertake but know we need to. Two of these are your Will and Estate Planning, and we all know they really are some of the most important documents you will ever have drawn up.

You work hard throughout your life to buy a house, build a business and maybe even an investment portfolio. The assets that you accumulate mean something to you and the people closest to you. It should be you that decides what happens to these assets.

While most people realise they need to create a Will to distribute their belongings and organise an executor of their Will, they don’t realise how broad and complex estate planning can be. To ensure that your wishes are carried out, and to save your children, grandchildren or other intended recipients a lot of trouble and heartache, thorough estate planning is vitally important.

Questions to Ask Yourself in Estate Planning

  1. Assets – What do you own?
  2. Asset ownership – How are these assets owned? E.g. personally, in a superfund, via a family trust, joint tenants vs tenants in common.
  3. Asset inclusions – Which assets need to be included in your Will and which assets fall outside of your estate/Will?
  4. Asset beneficiaries – Who do you want to leave your assets to?
  5. Asset exclusions – In there anyone (such as an ex-spouse or estranged family member) that you specifically want to exclude?
  6. Unexpected beneficiaries – Have you considered all potential beneficiaries? Failure to do so could lead to your Will being challenged, which can be a costly and traumatic experience for the intended beneficiaries.
  7. Life insurance – Do you have a life insurance policy? Where or who will these proceeds be paid to?
  8. Executor – Who will be the executor (personal representative) of your Will? This can be an individual or multiple people jointly.
  9. Testamentary Trust – Do you want your assets to go directly to your beneficiaries or will you use a Testamentary Trust?
  10. Asset distribution – How can your assets be distributed to the intended beneficiaries in a tax effective manner?

Common Assets involved in Estate Planning

Family Home

If you own your principal residence (home) with your spouse as joint tenants, the title will automatically be transferred to your spouse on your death. If you own your home as tenants in common, your share will form part of your estate, to be dealt with in your Will. If you are the sole owner of your home, it will also form part of your estate.

If your home has never been used for another purpose (as an investment property or business premises) there are no tax implications when the title (ownership) goes to your spouse as joint tenants. If ownership of your home is transferred in accordance with your Will, the new owner(s) have up to 2 years to move in and make it their primary residence, or sell the property, for it to be exempt from capital gains tax (CGT). If they hold onto the property and sell it after more than 2 years, they may be liable for CGT. Their cost base for CGT is regarded as the market value of the property on the date of your passing.

Personal Assets – Cash, term deposits, listed equities, real estate and other investments

These assets will form part of your ‘estate’. In your Will, you can dictate how much should be allocated to each person (beneficiary) and whether specific investments should go to specific beneficiaries. If specific investments are referenced in your Will, it’s important that your Will is updated when these investments are sold or new investments are acquired. It’s common for assets to be allocated on a percentage basis, or to allocate specific amounts to specific beneficiaries.

For assets that have been acquired after September 1985, beneficiaries will inherit these with your original cost base. If any assets were acquired before that date, the cost base for the beneficiary will be the market value on the date you pass away.

Another option is for the estate to sell or realise the investments and instead distribute cash to the beneficiaries. However the estate will need to pay capital gains tax on any capital gains realised, meaning the beneficiaries will receive less value when the proceeds are distributed.

Family Trust Assets – Cash, term deposits, listed equities, real estate and other investments

If you have built up an asset portfolio within a Family Trust, you need to think about what you want to happen to this trust and these assets. The underlying assets will not form part of your estate, but the trust will usually have a trustee company. Your shares in the trustee company will form part of your estate.

You can leave these shares to one or more beneficiaries in your Will. The new shareholders will generally have the combined power to appoint/remove directors. This effectively gives them control of the trustee company and therefore control over the trust’s assets.

You also need to consider who the appointor of the trust is, as they have the power to remove the trustee and appoint a new trustee i.e. ultimate control of the trust. Your trust deed will contain provisions on how to change an appointor.

The trust may continue to operate, and the income and assets of the trust will be able to be distributed to the beneficiaries of the trust, in accordance with the trust deed. There generally won’t be any tax implications upon the shareholders of a trustee company changing.

Private Companies

If you own shares in a Private Company, whether it is carrying on a business, an investment company, or a dormant company, your shares will form part of your estate. Your Will should determine what you want to happen to these shares. The shares may represent a controlling interest in the company, allowing the new shareholder(s) to ultimately control to operations of the company.

The CGT implications and cost base provisions when transferring shares to beneficiaries in accordance with a Will are the same as if transferring listed shares (see Personal Assets above). However in some circumstances small business CGT concessions may be available to reduce the taxable capital gain to nil when the beneficiary or legal personal representative sells the shares. This can happen when the deceased would have been able to access the small business CGT concessions just prior to their death, and the shares are sold within 2 years of the date of their passing. These concessions also apply to other small business assets, not just shares.

Life Insurance

If you hold a life insurance policy, the proceeds will be paid out to the nominated beneficiary. This may be an individual, or your estate. If it’s paid to your estate, it should be considered in your Will. If it’s paid to an individual directly, you should consider the life insurance payment that this beneficiary will receive when you are deciding where to allocate your other assets.


Any superannuation interests you hold will be dealt with outside of your Will. The treatment of your superannuation upon your death will be determined by a combination of your superfund’s trust deed, any reversionary pension nominations you have made, and any binding or non-binding death benefit nominations you have made.

The rules regarding payment of superannuation death benefits are complex, but the key points are:

  • Any superannuation interests in pension phase can revert to another member of the fund (e.g. your spouse), thus remaining in the superannuation system. This is known as a reversionary pension. The recipient must be aware of their transfer balance cap, and may have to roll back some of their existing pension account to their accumulation account.
  • Superannuation interests in accumulation phase will be paid in accordance with a valid binding death benefit nomination (BDBN) if one exists. A BDBN can instruct the trustee to pay the amount to a specific beneficiary, or to your legal personal representative, where it will form part of your estate and be dealt with by your Will.
  • If no valid reversionary pension nomination or BDBN is in place, it is up to the trustee to determine to whom your superannuation death benefit is paid. In a self-managed superannuation fund (SMSF), the trustees (or trustee directors) will usually be the remaining member(s), or your executor if there is no remaining member. In complex family situations, such as your spouse having children from a previous relationship, your spouse could potentially transfer your super to those children, leaving your own children or relatives with nothing.
  • If paid out as a superannuation death benefit, to an individual directly or via your estate, in accordance with a BDBN or otherwise, there can be income tax implications. If paid to a death benefit dependent, the amount is tax free. There are a number of criteria that must be met for someone to be considered a death benefit dependent. Spouses and children under 18 will usually meet these criteria. Adult children often will not meet the relevant criteria, and could lose up to 17% of their payment in tax. In some circumstances, such as the diagnosis of a terminal medical condition, it may be worth considering withdrawing some or all of your superannuation as a lump sum payment, and gifting this to your adult children. This will fall outside of the superannuation death benefit rules.

Drafting your Will – Who is involved?

Any assets that pass to your estate on death will be distributed in accordance with your Will. It is therefore very important that your Will is drafted in a way that is clear and follows your wishes.

It’s wise to engage a lawyer that specialises in Estate Planning to draft your Will. You may want your accountant or business adviser to be present at any meetings with your estate planning lawyer, to ensure your lawyer understands your business and asset holding structures, and can provide for these appropriately within your Will.

Remember that a Will can be challenged. You need to consider anyone that could make a claim on your estate, such as someone who you have provided financial assistance to, or had a close personal relationship with in the past. If you don’t want to leave anything to a person that may expect something, or for your proposed distribution of assets to be viewed as ‘unfair’, you will need to document and justify why you want your assets to be allocated that way.

Who is the Executor?

Your executor will be responsible for administering your Will and distributing your assets in accordance with your Will. Your executor is also responsible for paying any tax liabilities from your estate. They generally have the power to appoint a new director to any companies where you held the sole directorship.

Given the importance of their role and the power they hold, your executor should be a trusted person, such as a relative, adviser or lawyer. You can also nominate a number of people to act jointly as executors.

Testamentary Trusts & Asset Protection

You can choose to set up one or more testamentary trusts in your Will. This means that instead of assets passing directly to a beneficiary, the assets are passed to the testamentary trust and controlled by the chosen trustee – usually a family member, accountant, adviser, solicitor or a combination – on behalf of the beneficiaries of the testamentary trust.

A testamentary trust allows a beneficiary to receive the income and benefits of an asset or group of assets, without having control of these assets. This is particularly useful in situations where you have an adult child that may not be financially savvy, or may be going through bankruptcy or a relationship breakdown, where introducing additional assets may leave these assets exposed to creditors or a recent ex-spouse.

You can also dictate who the beneficiaries are of a testamentary trust. For example, you may specify that all income is to be distributed to your grandchildren rather than your children.

As well as asset protection, testamentary trusts can provide tax advantages. The trustee will usually have discretion to distribute the income of the trust to various beneficiaries. This enables the trustee to take advantage of lower marginal rates of tax of one or more potential beneficiaries. It should also be noted that, unlike a standard discretionary or family trust, income from a testamentary trust that is distributed to minors is taxed at adult rates, including the full tax free threshold.

Where Do You Start?

Estate planning is complex and your needs are ultimately determined by your assets, your family situation, and your interests in any trusts, companies and super funds. In addition to the general rules outlined above, your trust deeds and company constitutions may contain special rules.

To get your estate planning organised, the important next step is sitting down with your lawyer and adviser to map out your assets and your structures, how you picture everything being allocated and who you want to have control over various areas.

If you don’t have a trusted lawyer or adviser, please speak to our team of business advisers who can take you through the process and put you in touch with an estate planning lawyer. We would accompany you to meetings with your lawyer to put in place the required documentation that ensures your assets are distributed according to your wishes with minimal risk of disputes.

While thinking about our death or what happens after is never pleasant, it’s worth planning for so the people you care about are safeguarded. Therefore if you have significant assets and don’t have an estate plan in place, we recommend organising one as soon as you can.

Wishing you every success!


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Succession Planning – How to Prepare and Protect Your Business and People

Posted on December 2, 2019
by Cem Ozer

All businesses have lifecycles. From humble beginnings, where your once peaceful evenings capitulate into countless sleepless nights, contemplating how you are going to pay your staff. To the satisfaction of achieving your business goals and helping your employees grow professionally and personally. To the inevitability that one day, your journey within the business will come to an end.

It can be a daunting task to think of the potential hurdles your business may come across in the future, along with what will happen when you are no longer running the business. It is only natural that you want your business to have a life after you. Whether you dream about handing over the reins to your children, consider it a great personal achievement to pass it over to an employee who has been with you since day one, or even if you sell your business to a third party during it’s prime, putting a succession plan in place now safeguards everyone involved in the business, including if the unexpected occurs.

What is Succession Planning?

Succession planning means setting up your business for the future, with strategies in place for when you exit the business.

From an organizational level, this can include developing the skills of the people in your business to more than just the bread and butter of their daily work. This can mitigate the gap in knowledge within a senior role in the unfortunate event a position is vacated unexpectedly. On a larger scale however it develops individuals who can take over at the point that you exit the business.

From a personal perspective, it involves having the necessary foundations, policies and structures in place, to allow for a smooth transition when you exit the business.

Key Components of a Succession Plan

For a business owner, succession planning can vary greatly depending on your individual circumstances. However, there are a few key components that are common and essential for it to be successful:

  1. Start Planning Ahead of Time

It’s important to note that succession planning should not begin at the point you decide to move on from your business. The issues around business succession planning are varied and complex. As such, the earlier this is considered, the greater emphasis you can put on ensuring that the plan suits your intentions and any issues can be resolved.

  1. Structure Your Business for Your Future

One of the key benefits of planning ahead, is being able to review the way your business is structured. This plays an important role in both your personal and business’s future. Business structures are not only important for managing your tax requirements, but your personal assets also need to be taken into consideration.

It’s not uncommon for a business structure to be overlooked, especially upon its establishment. As part of BLG’s review process for new clients, we’ll often find their business structures are not set up in a way that provides the best outcome for their individual needs. Identifying ineffective structures early on can prevent avoidable consequences in the future.

  1. Prepare Your Business for Life Without You

The years leading up to your exit are often crucial. Therefore, deciding what the plans are for your business when you do leave can make this period easier to manage. If you are passing your business onto family or an employee, it’s important those next in line have the complete range of skills and knowledge to keep the business running effectively, and for the transition to be as smooth as possible. Furthermore, if you plan on selling your business, it’s ideal to show a strong financial position for potential external purchasers to maximize your proceeds.

  1. Be Aware of the Tax Implications

For many business owners, the sale or transition of their business will represent the most significant part of their retirement funding. Maximising your after tax proceeds will be a key goal, so it’s critical to get advice on your exit strategy, the tax implications themselves and how to best structure your retirement assets to minimise your tax liabilities.

  1. Safeguard Your Assets

In the unfortunate event that you exit the business because you have passed away, it’s important to form a plan for what happens to your personal assets alongside your business succession plan. This is known as Estate Planning, and is usually established via a Will. It is always beneficial to consult a specialized Estate Planning lawyer to assist in preparing a Will for this purpose, and BLG can put you in touch with our network of professionals if required.

How to Get Started on Your Plan

Succession planning shouldn’t be a reactionary tool. It should be considered through all the phases of your business lifecycle, and requires you to be proactive in your planning.

Do you intend to hand the reins over to the next generation, to someone from within the business, or sell to a third party? To get you started with succession planning here are some of the questions to ask yourself:

  • Who will run the business when you are no longer there?
  • Does the next generation share your passion for the business? Do they have the skills to run the business?
  • How can you maximise the ‘value’ of the business ready for sale?
  • What are the tax and legal implications of selling?
  • What will happen to the business upon an unexpected exit?

Establishing your succession plan can be a daunting task. The amount of information that needs to be considered can be quite overwhelming. As such, we recommend you speak to a trusted accountant or business adviser to guide you through this process. If you don’t have an adviser to help, you may decide our team at BLG can be of significant value to you. Have a talk with our team so you can find out if our approach suits your needs.

Wishing you and your business every success!

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What You Need to Know About Bankruptcy

Posted on February 19, 2018
by Phil Grant

If the financial burden of managing debts becomes too difficult and onerous, there are some avenues you can consider, but one option for individuals is to declare bankruptcy.

This decision should not be taken lightly due to the number of consequences listed below, however it is an option for some people.

If you think this may be an option for you, your trusted business adviser can assist you in this process and if necessary contact the appropriate insolvency practitioner.

To give you more information on the area of bankruptcy, below I go through what it is, what other options there are and the consequences of declaring bankruptcy.

What is bankruptcy?

Bankruptcy is a legal process where you are declared unable to pay your debts. It can release you from most debts, provide relief and allow you to make a fresh start.

You can enter into voluntary bankruptcy. We refer to this as a debtor’s petition. It’s also possible that someone you owe money to (a creditor) can make you bankrupt through a court process. We refer to this as a creditor’s petition.

Bankruptcy normally lasts for 3 years and 1 day.

Know your options

Bankruptcy is just one formal option available under the Bankruptcy Act to manage your debt. Other formal options include 21 day relief and debt agreements. There are also other options available (such as coming to an agreement with your creditors).

Understand the consequences of bankruptcy

Bankruptcy may have a serious impact on you. Some of the more common consequences of bankruptcy are:

  • Bankruptcy may affect your income, employment and business – If you earn over a set amount, you may need to make compulsory payments to your bankruptcy trustee. There may also be some restrictions on your employment and running a business.
  • Bankruptcy does not release you from all debts – Most unsecured debts are covered in bankruptcy – this means you no longer have to repay these debts. There are however some exceptions to this.
  • It affects your ability to travel overseas – You must request permission from your bankruptcy trustee to travel overseas. It’s an offence to travel overseas without consent in writing.
  • Your name will permanently appear on the National Personal Insolvency Index (NPII) – The National Personal Insolvency Index is a searchable public register listing insolvency proceedings in Australia.
  • Bankruptcy can affect your ability to obtain future credit – If you apply for credit over a set amount, you must inform the credit provider of your bankruptcy. Credit reporting agencies keep a record of your bankruptcy for:
    • 5 years from the date you became bankrupt or
    • 2 years from when your bankruptcy ends, whichever is later.
  • Your trustee may sell your assets – Your trustee can sell other assets including your house and propertyYou must not dispose of any property belonging to the trustee. You must declare any assets you have when you apply for bankruptcy and any you receive during bankruptcy.
    You are able to keep:

    • ordinary household goods
    • tools up to a set amount used to earn an income and
    • vehicle(s) with a value up to a set amount.

While the decision to declare bankruptcy should not taken lightly due to the consequences outlined above, it is still on an option you may consider necessary to help you out in the longer term.

If you think bankruptcy may be an option for you, please get in touch with BLG Business Advisers so we can assist you in this process. You can contact us online, or by calling (02) 4229 2211.

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Buying a Commercial Property in a SMSF

Posted on June 26, 2017
by Luke Bland
A common question I get asked is “can I buy a commercial property in my self-managed superannuation fund?”
This is usually followed by a number of other questions about whether the property purchase can be financed, and if the property can be leased to a related party. So below we answer this question, along with more common questions about commercial properties.
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Act fast, Plan early – 2017 Tax Planning

Posted on March 20, 2017
by Luke Bland

Tax planning is critical to the long term success of any business. It provides you with the opportunity to assess your current business performance and current financial position, as opposed to the preparation of year end financial statements that are based on historic information.

As we approach the last quarter of the 2017 financial year, it is important to take stock of how your business and investments are performing. Some questions you might like to ask yourself are:

  • Is your turnover in line with your expectations?
  • Are your profit margins as high as you were hoping?
  • Are your investments providing the returns you were hoping for?
  • How does this year’s performance compare to last year?
  • What is your current financial position?
  • Are there any opportunities you should be taking advantage of?
  • Have you provided for any potential tax liability?
  • Are there any strategies you should be implementing prior to 30 June to manage your tax liability?

If you are unsure of any of the above questions, we encourage you to speak to an experienced Chartered Accountant. BLG Business Advisers can assist you and provide:

  • Feedback on your business performance compared to industry standards
  • A review of your year-to-date performance
  • A projection of your year end results based on our knowledge of your business
  • A projection of your net tax position

BLG will discuss with you potential strategies to manage your tax liability, such as:

  • Restructuring the remuneration packages of directors and related parties to be tax effective
  • Distributing income across your family group in the most tax effective manner
  • Maximising dividend payments to utilise available tax free thresholds and low marginal rates
  • Ensuring compliance with Division 7A in relation to directors loan accounts and unpaid present entitlements (unpaid trust distributions)
  • Reviewing your ledger for potential unrecoverable debts or obsolete items of stock or equipment to be written off
  • Maximising superannuation contributions following the recent reforms, and detailing any impact the reforms may have on you and your family group
  • Advising minimum pensions to be paid from your superfund for the fund to maintain its tax exempt status

BLG Business Advisers can assist you with the implementation of any relevant strategies and help you plan for the cashflow impact of any upcoming tax liabilities. Make sure you meet with a trusted business adviser prior to 30 June so that any necessary action can be taken before year end.

Act fast and plan early – get in touch with BLG Business Advisers online or call (02) 4229 2211 to discuss your requirements and one of our experienced team will set up a tailored tax planning solution for you.

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