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September 26, 2017 | 01:48 PM
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Retirement

28.05.2008A proper estate plan involves more than a Will


For some, the thought that a surviving spouse may remarry and use their inheritance to support a second family would cause them to turn in their grave. In this situation, a Testamentary Trust could be used to provide for the surviving spouse only. Further reasons for using a Testamentary Trust are for children under 18, since it enables estate income to be distributed to minors in the most tax-effective manner (normally children under 18 are subject to penalty tax rates on investment income).

As already mentioned, the will is only one aspect of an estate plan. Setting up Testamentary Trusts, listing your beneficiaries for insurance policies and super accounts, electing someone to be your enduring power of attorney – a person who is empowered to deal with your financial, personal or health matters should you become incapacitated - and naming guardians for your children, are all integral functions of an estate plan. You should also give some thought to the ownership structure of the family home and any investment properties to ascertain whether joint tenancy or tenants-in-common is the preferable option. In most cases, joint tenancy is preferable since it means that the surviving spouse skips the delays involved in probate, which is granted by the Supreme Court to the executor of the will enabling them to distribute the assets of the estate.

Business owners in a partnership structure should also have special arrangements in place in the event of their own, or their business partner’s, death. People in partnerships are encouraged to have a buy-sell agreement in place, which involves each partner taking out life insurance on the other partner’s life. Basically, this means that should one partner die, the surviving partner’s life insurance is used to buy out the remaining stake in the business – providing much needed funds to the deceased’s family, but just as importantly, ensuring the continuation of the business for the surviving partner.

Estate planners, financial planners and lawyers can be called upon to design an estate plan for you. Remember to update your estate plan – not just your will, but also your life insurance and super policies - after significant events such as separation, divorce or the birth of a new child.

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