A current estate succession and business plan properly governs and regulates what will happen to the management of your affairs, assets and the distribution of your estate and business when you die or if you become totally or permanently disabled.  

An effective estate plan includes a legally and tax-effective Will to protect your estate and the interests of your beneficiaries when you die.

With your Will, you can:

  • Make gifts of assets or money that form part of your estate (but be careful, as some of your assets, may not form part of your personal estate)
  • Establish testamentary trusts for asset protection, tax optimisation and the ongoing management of your legacy assets for your beneficiaries
  • Appoint an executor and trustee
  • Appoint guardians to look after your minor children
  • Include funeral wishes

 

Jointly held assets, company property, trust assets, insurance proceeds and superannuation are not necessarily dealt with by the terms of your Will as these are not generally considered to be personal assets.

It is therefore important to consider and implement a comprehensive estate plan to ensure all assets are transferred according to your wishes in the most effective and efficient manner.

In summary, having your estate plan up-to-date and in order will:

  • Provide your family members with guidance
  • Allow you to direct how your assets are distributed, having regard to succession and tax laws
  • Ensure that your medical care is dealt with in accordance with your wishes
  • Likely save your estate substantial costs, which means more for your loved ones and beneficiaries

An effective estate plan should also include the appointment of a person or persons you trust to manage your legal and financial affairs and make important decisions concerning medical treatment, hospitalisation or life-support in the event you become physically or mentally incapacitated.  This can be achieved by is preparing an Enduring Power of Attorney (EPA) and an Enduring Power of Guardianship (EPG).

A business succession plan outlines: what will happen and who will take over your business when you become incapacitated or leave, whether by choice or by circumstance. The aim is to preserve value and provide the business with a smooth transition so that disruption and any loss in profit is minimised.

PROCESS OF BUSINESS SUCCESSION PLANNING

Each business is different, but you will likely need to consider:

  1. Goals and objectives of all parties
    • Do you require an ongoing income from the business?
    • Will you have any future involvement in the business or the business entity?
    • Who is interested in taking over?
    • What impact will there be on family members?
  2. Identify your potential successors
    • Objectively assess their capability, needs, commitment, skills and experience
  3. Consider all the angles
    • Minimising Capital Gains Tax, Transfer (Stamp) Duty and Income Tax for you and your family and remaining partners
    • Retirement income planning
    • Financial implications of business transfer
    • Release of collateral securities (e.g. personal guarantees)
  4. Contingency planning
    • What happens following catastrophic injury or death?
  5. Corporate structure issues
    • Define roles and responsibilities of current family members and employees
  6. Business valuation
    • Plan to increase the value of the business particularly if sold
    • Consider valuation methodology
  7. Exit strategy
    • What are the training or mentoring needs of your successor?
    • How will you exit and when?
  • Advising clients about their Will and estate plans (including ‘Family Trust succession’) as well as appropriate EPAs and EPGs
  • Working with clients’ existing advisors, such as their accountants and financial & insurance advisors, to achieve a complete estate plan which meets each client’s wishes and requirements
  • Advising clients about the advantages of Testamentary Trusts (such as tax and asset protection)
  • Advising clients about the advantages of General Charitable Trusts including tax-effective gifting and donations
  • Creating Family Constitutions and Charters
  • Applying for Grants of Probate or Letters of Administration
  • Advising Executors and Trustees as to their duties and obligations towards beneficiaries under Wills and Trusts
  • Advising Trustees, members and dependent clients about their rights and compliance with superannuation legislation for Self-Managed Superannuation Funds
  • Varying the terms of a Will by a “Deed of Family Arrangement”
  • Interpretation of Wills and the “Passing of Accounts”
  • Business and Equity Holding structures;
  • Family Charters
  • Inter-generational aspects and family dynamics as well as management buy-outs;
  • Partnership, Shareholder and Unit holder Agreements;
  • Co-Ownership Agreements;
  • Insurance-Funded Buy/Sell Agreements;
  • Risk Mitigation and Asset Protection Strategies;
  • Deeds of Indemnity;
  • Equity Sales and Option Agreements
  • Succession Arrangements for Family/Discretionary and Unit Trusts as well as SMSFs;
  • Management Buy-Outs ; and
  • Charitable and Philanthropy Arrangements (including Charitable Trusts).

We can help

These are complex issues spanning many legal, financial and administrative arenas.  Balfour Meagher will make sure you have covered all bases and developed a specific plan addressing all known risks, issues and challenges.

Contact us to find out more or to arrange a consultation.