Estate planning
Estate planning is a process which ensures that your property, money and other assets are distributed according to your wishes after your death.
Estate planning is a three-step procedure:
- Review your current financial situation.
- Decide what you want for your intended beneficiaries in the event of your death.
- Put in place the appropriate arrangements to realise your wishes.
Effective estate planning can help minimise potential tax consequences for your loved ones.
The cornerstone of estate planning is a watertight will that formally sets out how to divide your superannuation, property and assets among your dependants and relations.
But a well-constructed estate plan is much more than just making a will. It may include:
- appointing a power of attorney – one person or a group of people you trust to look after your financial and business affairs
- establishing a discretionary or family trust to protect your wealth
- establishing a testamentary trust to reduce your family’s tax liability after the main breadwinner’s death
- appointing a trustee and/or executor to carry out your wishes as per your will.
Other useful estate planning tools include:
- Testamentary trust – generates significant tax advantages for your beneficiaries and protects their assets from financial difficulties.
- Binding nomination – creates a framework for your superannuation death benefit.
- Life insurance – provides a lump sum for your beneficiaries.
What is the effect of tax on my estate?
Tax can be an enormous burden on your estate.When you leave an asset to another person upon your death, the asset may be subject to capital gains tax (CGT) when the beneficiary disposes of it. If you don’t take CGT liabilities into consideration, your beneficiaries may need to split up property or compensate for the depreciation of certain assets, watering down their entitlements.
Without adequate estate planning, your beneficiaries may find much of their inheritance vanishes due to CGT.
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As at 30th March 2011, AXA Asia Pacific Holdings Limited and all of its Australian and New Zealand subsidiaries ceased to be members of the Global AXA Group and became members of the AMP Group.
