Tag Archive: estate planning

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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Protecting your Superannuation Benefits for Future Generations

Posted on September 11, 2017
by Glen Bower
Superannuation now often represents a significant proportion of an individual’s assets. A number of factors have contributed to increases in superannuation including compulsory employer contributions (superannuation guarantee), taxation concessions / incentives, the removal of compulsory cashing of superannuation benefits upon retirement and default levels of insurance coverage.
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Superannuation Reforms – Key Questions To Consider Now

Posted on May 25, 2017
by Glen Bower

The most extensive changes to Australia’s superannuation system in 10 years will come into effect from 1 July 2017.

As highlighted within our previous online articles, a majority of the superannuation reforms initially announced within the 2016/17 Federal Budget have now become law and will impact on most areas of superannuation including, but not limited to, contributions, pensions/income streams, taxation and estate planning.

Whilst these reforms will not apply until 1 July 2017, it is critical that all individuals review their personal superannuation position now and reassess their retirement plans, as the impact of the upcoming changes can be substantial (depending on each individual’s personal circumstances). For example, individuals with greater than $1.6 million within superannuation will be restricted from making further non-concessional superannuation contributions from 1 July 2017 (subject to limited exceptions).

Below are some key questions that should be carefully considered in advance of 30 June 2017 to ensure that there is sufficient time to address any necessary changes and / or implement any appropriate strategies in light of the reforms:

  • Do you have in excess of $1.6 million within superannuation (including accumulation and pension accounts)?
  • Are you planning to make large non-concessional (after-tax) superannuation contributions within the future?
  • Do you have a defined benefit pension (i.e. lifetime, fixed term / life expectancy, market linked) with pension payments in excess of $100,000 per annum?
  • Do you expect your personal adjusted taxable income to be in excess of $250,000 per annum in the future?
  • Do you have a salary sacrifice arrangement in place with your employer for additional concessional (pre-tax) superannuation contributions?
  • Do you have a Transition to Retirement pension?
  • Will the transitional capital gains tax relief measures apply to your superannuation fund (CGT cost base reset rules)?
  • Are you planning to utilise limited recourse borrowing arrangements within the future?

If you answered YES to any of the above questions, you are likely to be impacted by the upcoming changes to superannuation and it would be prudent to review your personal superannuation and retirement plans as soon as possible.

Further, if you are unable to answer any of the above questions, it is important that you source up-to-date information on your current superannuation position to assess the impact (if any) of the upcoming changes to superannuation.

You do not have to navigate the superannuation changes on your own.

If you are unsure of how the upcoming superannuation reforms will impact on your personal circumstances, please make sure you contact BLG Business Advisers on (02) 4229 2211 or online so one of our experienced advisers can assist yo

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A fresh look at your Business Structure

Posted on April 24, 2017
by Peter Ryan

Choosing a business structure is one of the key decisions to make when starting a business.  Most people choose the structure with the lowest set-up ‘hassle’ and cost, for obvious reasons.

It is important to realise that you are not locked into your current business structure for life.  As your business grows and changes, your opportunities and risks also change.  Revisiting your business structure can provide greater asset protection and give you greater flexibility for distribution of profits.

Thinking of changing your structure…

When considering making changes it is important to:

  • understand the key differences between alternative structures
  • consider the broader impact of any changes, such as impacts to estate planning
  • seek advice from professional advisers, such as accountants and solicitors
  • make a plan to implement the changes

Different structure options

There are advantages and disadvantages to each of the structure options.

Business Structure Table

Changes to your business structure don’t just impact you.  Your employees, customers and suppliers are all impacted by the change.

What’s important is to ensure the structure you choose is the most relevant to you and your business now, and into the future.

What to do next

Getting the right advice will give you piece of mind that your business structure meets your needs today and into the future.  BLG Business Advisers can provide up-to-date business advisory and tax advice to assist you make the best decision for you and your business.

Is your business structure right for you? BLG Business Advisers can provide specialised advice about managing your individual situation to avoid unforeseen difficulties. Get in touch with us online or by calling (02) 4229 2211 to find out more.

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Estate Planning – Why is it important?

Posted on November 14, 2016
by Angela Bernardi

It is important for all of us to ensure that the assets we have accumulated over our lifetime are left for the benefit of those people or institutions we wish to support, and left in the way that is most beneficial to the recipient.

Your Will plays a large part in your estate distribution, so you need to make sure it is up to date, valid and correctly reflects your wishes. Having a well drafted and thought through Will can save your beneficiaries a lot of trouble and heartache.

Points to consider when drawing up your Will

  1. What do you own? And will these assets pass through your estate?
  2. Who will be the executor (personal representative) of your will?
  3. Who will be the guardian of your children?
  4. Who do you want to leave your estate too?
  5. Do you want your estate to go directly to your beneficiaries or will you use a Testamentary Trust?

What is a Testamentary Trust?

This is a trust created in a person’s Will, which is activated upon the death of that person. Instead of assets passing directly from one person to another, the assets are passed to the Testamentary Trust and then administered by the designated trustee – usually a family member, a trustee company, accountant or a solicitor. A Testamentary Trust has a number of benefits including:

  • Asset protection
  • Keeping assets within your family line
  • Managing tax liabilities through income flexibility – The trustee of the Testamentary Trust can choose how to distribute income from year to year. This enables the trustee to take advantage of lower marginal rates of tax of one or more potential beneficiaries.
  • Marginal rate of tax for minors – Minors qualify for tax concessions on income they receive from a testamentary trust.

Some items to consider outside your Will

  • Superannuation – Is a Binding Death Benefit Nomination to the trustee of your superfund appropriate? If so, is this in favour of a particular beneficiary or your estate?
  • Life insurance – Have you designated a beneficiary in your policy? If so these funds will not pass through probate.
  • Owning property as Joint Tenants – If you own a property as a Joint Tenant, upon your death the surviving Joint Tenant(s) acquires the whole property automatically and as such the property does not pass through the estate.
  • Small business or partnership – This may be subject to a buy/sell arrangement with the other partners. In these circumstances your share of the business may automatically pass to the remaining partners (usually in exchange for the proceeds).
  • Power of Attorney/Enduring Guardianship – This is a legal document that appoints another person to make legal and/or medical decisions on your behalf. This power is particularly useful should something happen where you are temporarily unable to sign documents.

These are only a sample of considerations surrounding estate planning. Estate planning can be complex and it’s a good idea to seek the professional advice and assistance of both a financial adviser who understands your affairs and a solicitor experienced in such matters.

Contact BLG Business Advisers online today or call (02) 4229 2211 to discuss your estate planning needs.

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