Estate Planning

By Forrest Private Wealth

In short, estate planning records what you want done with your assets after your death.

An Estate Plan consists of a number of documents to ensure that your family are able to easily work through your wishes on death or if you become incapacitated. These documents generally include:

  • Your Will
  • A testamentary trust (as part of your Will)
  • An advanced healthcare directive (what you’d like done with your body)
  • Your Superannuation binding nominations
  • Insurance policies
  • Any Powers of Attorney

Often the Estate Plan will also consider what directives you would like to give in the event you can no longer make any decisions of sound mind. This covers how you would like to be cared for both medically and financially. This part of your Estate Plan may include:

  • A power of guardianship (the right to choose where you live and make decisions about your medical care)
  • Any anticipatory directives (for future medical treatment)
  • Any Powers of Attorney

Not everyone will have the same requirements. There are a lot of documents mentioned above to create an Estate Plan. It doesn’t need to be expensive. There are two ways to work through these documents. You can get advice from a financial planner, or, gather the documents yourself and use an online Will creator. Creating your Will and collating your superannuation binding nomination and insurance policies is the best place to start.

What happens to your Business?

Estate Planning should also be considered as part of your overall succession plan for your business. Generally specialist advice is required on the most appropriate estate planning strategy. This is generally in the form of partner or shareholder agreements and appropriate levels of insurance.

You should also have a process in place to periodically review your strategy in conjunction with your advisers and business partners.

What about Tax Implications of my Estate Plan?

Tax is a major consideration in estate planning. An effective tax governance framework includes processes for evaluating various arrangements and the tax risks involved.

Special capital gains tax (CGT) rules apply to the transfer of any CGT assets from a deceased estate. There are CGT implications of passing on or disposing of the assets of a deceased estate. Specialist advice is required on dealing with CGT Assets.

As part of an Estate Plan you should retain complete records of CGT assets. These will be needed by the executor and any beneficiary who receives a CGT asset from the estate.

A testamentary trust is a trust established under a valid will. A well governed testamentary trust will ensure that effective tax outcomes are achieved.

Testamentary Trusts

A testamentary trust is a trust established under instructions contained in a valid will. A testamentary trust functions in a similar way to a discretionary family trust, with certain provisions of the will operating like a trust deed. Like any trust, a trustee of a well-governed testamentary trust will: 

  • understand the tax profile of beneficiaries taking into account intended tax outcomes,
  • lodge a tax return until the trust is terminated,
  • maintain proper trust account records,
  • fully document capital gains tax events, cost bases, and rollovers and other concessions claimed.

A Trustee of a testamentary trust will need to be a high level of co-operation between family members to ensure that necessary tax, financial and other information is shared to the trustee for the trust to operate effectively. Often the trustee is not a family member.

A testamentary trust can name minors, or children as beneficiaries. In this case the deceased’s assets are paid out only when they reach a certain age. This age can be set as 18, or 21, or any other age desired.   

A trustee will also need to navigate often complex family or legal matters to ensure that disputes can be prevented.

Power of Attorney

 An enduring power of attorney is often called an EPA. It is a legal document that gives another party authority to make decisions on your behalf. This can be a person or an organisation and the decisions under an enduring power of attorney can be financial and / or property related decisions.  

 To make an enduring power of attorney you must be over 18 years old and have full legal capacity. It is important to make a power of attorney as part of your estate plan in the case that you lose the capacity to make informed financial decisions in the future.  

Advanced Health Directive

 An Advanced Health Directive is a legal document which records your decisions about future medical treatment. This covers what you either want, or do not want should you be injured and unable to communicate your desires. They also now (since Aug 2022) include a section on medical research decisions.  

 The Advanced Healthcare directive form can be found on the West Australian Health website at this link.    

Forrest Private Wealth are Perth Financial Planners that want to make your life better through the provision of financial advice. 

Talk to a Financial Planner at Forrest Private Wealth, or your accountant, to learn more on this topic.


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