Understanding estate planning
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Understanding estate planning Version 4.2
This document provides
some additional information
to help you understand
the financial planning
concepts discussed in
the SOA in relation to
estate planning.
Important information
This document has been published by GWM This document contains general information about
Adviser Services Limited AFSL 230692, some of the benefits, costs and risks associated
registered address 105-153 Miller St North with certain product classes and strategies
Sydney NSW 2060, ABN 96 002 071 749 for and should not act as a substitute for receiving
use in conjunction with Statements of Advice appropriate legal advice. It is designed for use in
prepared by its authorised representatives conjunction with a Statement of Advice that takes
and the representatives or authorised into account the circumstances and objectives
representatives of National Australia Bank of an individual. Before making a commitment to
Limited, Godfrey Pembroke Limited, Apogee purchase or sell a financial product, you should
Financial Planning Limited and Australian ensure that you have obtained an individual
Financial Services Licensees with whom it has Statement of Advice.
a commercial services agreement.
As legislation may change, you should ensure you
have the most recent version of this document.How to read
this document
Managing your There are all sorts of issues you need to
consider such as taxation, legislation,
finances to meet protecting your wealth and assets,
your day to day associated costs and the inherent
risks of investment. When undertaking
requirements a financial plan it is important you
understand how these issues will
as well as your impact you and what you should
long-term goals can expect over time.
be a complex task. Your financial adviser will provide you
with a Statement of Advice (SOA)
which sets out the details of the
advice and how it will meet your goals
and objectives.
This document provides some
additional information to help you
understand the financial planning
concepts discussed in the SOA in
relation to estate planning.
It is very important you read this
document to help you understand
the benefits of the strategies
recommended to you and the
associated costs and risks.
Please contact your adviser if you do
not understand anything, or need
further information or clarification.
Page 01 Understanding estate planningUnderstanding
estate planning
Estate planning Your Will Your superannuation
An effective estate plan includes tax Dying without a Will or an invalid Your superannuation is an asset
effective Wills to protect your estate and Will is known as dying intestate. In excluded from your Will. Any benefit
the interests of your beneficiaries in the such an event, laws are in place in payable upon death is distributed by the
event of your death. each State to determine how your superannuation trustee in accordance
estate will be administered. This may with the Trust Deed. This usually gives
Jointly held assets, trust assets and result in your estate assets being the trustee the discretion to decide who
superannuation however, are not distributed against your wishes as should receive your superannuation
necessarily dealt with by the terms of well as incurring unnecessary tax entitlements. Eligible beneficiaries are
the Will. These are usually considered liabilities for your beneficiaries. detailed in superannuation legislation
’non-estate’ assets for estate planning and include your legal personal
purposes. Note there may be specific Your Will is the document that directs representative and your ‘dependents’.
State legislation that classifies how your estate is to be distributed A dependent for this purpose includes
non‑estate assets as ‘notional estate’ for amongst your nominated beneficiaries. your spouse, your children, any
the purposes of a Family Law challenge. financial dependent or a person in an
Most people wrongly believe their
interdependency relationship with you.
It is therefore important to have a Will covers all their assets, so special
considered and comprehensive estate care should be taken to ensure the Death benefit nominations
plan to ensure all assets are transferred ownership and control of all your assets
according to your wishes in the most including ’non-estate’ assets, pass to A non binding death benefit nomination
effective and efficient manner. beneficiaries in the way you intend. is used only as a guide by the trustee
when deciding who should receive your
Outlined below are some factors You are required to nominate an death benefit.
to consider when developing your executor in your Will. The executor
estate plan. has the duty of carrying out your A binding death benefit nomination
wishes in the Will and is granted allows you to nominate who will receive
power to administer the estate. This your superannuation benefits in the
is likely to include collecting assets, event of your death and ensures the
paying off any debts and distributing trustee is legally bound by your wishes.
the benefits to those entitled. The nomination is able to be amended or
cancelled at any time and is required to
Careful consideration is required be renewed every three years.
when appointing the executor. It
is recommended you discuss the A non-lapsing death benefit nomination
appointment with that person prior is a binding death benefit nomination
to making the Will. In addition to that does not lapse. Unlike binding death
estate beneficiaries, executors benefit nominations which lapse if not
may also be your solicitor, renewed at least every three years, a
accountant or a public trustee. non-lapsing nomination will remain in
force until such time it is amended or
revoked by the client.
Page 02 Understanding estate planningUnderstanding
estate planning
Testamentary trusts Power of Attorney
A testamentary trust is a trust created If the gains derived by a trust are Granting a Power of Attorney means
pursuant to your Will and may have allocated to the beneficiaries, those you legally appoint a person or an
several significant advantages. There beneficiaries are liable to pay tax on organisation to make decisions, sign
are different types of testamentary those gains at their normal marginal tax documents and act on your behalf in
trusts, including discretionary trusts and rates. It is therefore a common practice various matters.
special disability trusts, which is a trust for the trustees of a discretionary trust
established for a vulnerable person. to distribute any derived gains to those When you grant a Power of Attorney you
beneficiaries who have the lowest may choose to limit the actions which
Testamentary trusts may assist marginal tax rate in the distribution year. the attorney can perform on your behalf
to distribute your estate to your This is one of the main advantages of (Limited Power of Attorney) or give the
beneficiaries in a more tax-effective using testamentary trusts. attorney wide powers to undertake
manner and may reduce the likelihood of actions on your behalf (General Power
a successful challenge to your Will. Normally if a beneficiary of a trust is of Attorney).
under 18 years of age, the trust income
As with any trust, the trustee must act that is distributed to that person is taxed Specific details as to the powers under
according to the terms of a trust deed at penalty tax rates. Under these rates, a Power of Attorney are determined by
and has the duty and responsibility to the child only has a limited tax‑free the state legislation to which the Power
look after trust property for the benefit threshold. However if the income of Attorney relates. This may present
of others. Appointing a trustee may derived by the trust was generated from difficulties if for example, you have
involve a financial cost and as the trustee inherited assets then the child will be property in more than one state.
will have discretion over the assets, taxed at normal adult tax rates.
you should carefully consider who you
appoint as trustee. A testamentary trust may also provide Enduring Power
asset protection for beneficiaries of your of Attorney
The terms of the trust deed of a estate who may face certain legal claims
testamentary trust are contained in One of the limitations of a Power of
on their assets, divorce or bankruptcy.
the Will. Attorney is it generally ceases when
Until such time as the trustee exercises
the person suffers a loss of mental
their discretion to pay an income or
As with most trusts, a testamentary trust capacity. This can be overcome
asset entitlement to a beneficiary, all
will normally give the trustee: with the use of an Enduring Power
trust assets and income remain the
• the discretion to allocate income and of Attorney. This type of Power of
property of the trustee. However, if the
capital among any of the beneficiaries Attorney does not cease on mental
trust is established in contemplation of
incapacity and can therefore provide
• wide powers of investment, and frustrating the claims of, for example,
an important tool in estate planning.
legitimate creditors, the courts may
• the power to wind up the trust at effectively unwind the arrangement.
any time.
These and other factors require careful
consideration by your solicitor in
conjunction with your financial adviser.
Page 03 Understanding estate planningUnderstanding
estate planning
Medical treatment and
lifestyle decisions
It is important to note different states
have different ways of dealing with
medical and lifestyle decisions for a
person who is mentally incapable of
making such decisions.
Such methods may include:
• Power of Attorney
(Medical Treatment)
attorney has the power to give and
in certain circumstances, withhold
consent to medical treatment on
your behalf.
• Enduring Guardianship
guardian has the power to make
personal and lifestyle decisions for
you should you lose mental capacity,
including decisions as to where you
live and who with.
• Enduring Power of Attorney
attorney has the power to act on
your behalf during your life, in relation
to your investments and other
financial matters.
• Advance Health Directive
a document in which you can
express your wishes about medical
treatment and how you would
like your body to be dealt with
in the event of an accident.
As state based requirements differ, it
is important to seek advice from an
appropriately qualified legal professional
on these and other issues when putting
together your estate plan.
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Page 04 Understanding estate planningYou can also read
