When it comes to your wealth and assets, it’s important to plan ahead and ensure that they are transferred to your loved ones or beneficiaries in a tax-efficient manner. At BYRONS, we specialise in Legacy Planning and Estate Transfer, and we have helped many clients navigate this process successfully.

Our approach to Estate Planning starts with a thoughtful conversation about your goals and wishes. We understand that this may be a difficult topic to discuss, and it’s often the first time having to confront your morality and determine what your wishes are for your asset distribution after you pass.

Every person’s situation is unique which requires a solution to be tailored to fit your specific circumstances. To highlight some of the factors and considerations in play please see the real-life examples below.

MINIMISE BENEFICIARY TAXES AND SIMPLIFY ASSETS

Bill and Mary are in their late 60’s and retired. They have a retirement income need of $120,000 after tax, and wish to reduce tax and simplify their assets to make them easier to manage and pass on to their two children. They have many assets including shares, superannuation, an investment property which after expenses is returning less than 2% income on the property value, low interest-earning cash and in their specific situation their beneficiaries will be paying high taxes in superannuation.

A 5-year strategy to simplify assets included the sale of the investment property and non – concessional contributions to superannuation of $960,000 over two years with another $700,000 (cash and shares) to a new Family Trust. A strategy has been put in place to minimise beneficiary taxes in superannuation. All up the asset and investment restructure improved the income to $150,000 pa tax-free from just over $100,000. In addition, assets are now held in superannuation, family trust and home making transfers to the spouse or beneficiaries of their estates far simpler than previously.

AVOID ESTATES BEING CHALLENGED IN THE FUTURE

A couple for whom each was on a second marriage brings with it a discussion over which children should receive the inheritance. It was complicated as they have a child together and the husband has 3 children from a previous marriage with multiple grandchildren. Of these 3 children two rely on social security benefits to fund their lifestyle. So how do you split the $10m of the couple’s combined assets without causing a breakdown in the marriage?

A solution could be found involving an agreed value from the estates for each of the three children from the previous marriage and for their daughter. The beneficiary payments were partly achieved through the Will of the husband who gave the investment property in his name to the three children plus 85% of the home which was converted to tenants in common with his wife. The home has a life interest to the spouse which means it cannot be sold until she vacates. The husband’s superannuation goes to his wife and their daughter will eventually inherit the remaining super and 15% of the home value via the wife’s Will. This outcome has been communicated to all beneficiaries who understand what they are to receive and hopefully, this will avoid the estates being challenged in the future.

MANAGING ASSET CUT-OFFS TO ACCESS PENSION PAYMENTS

A client was concerned that her parents would lose the part-age pension when one of the parents passed. With a combined super of about $900,000 and a home, they received a small age pension and reductions in costs like their motor vehicle registration. On the death of one member of the couple, they are then asset tested for a single-age pension and will lose the part-age pension if assets are over $674,000. After considering tax rate implications and their total family situation, it was determined the best outcome was to amend their superannuation beneficiary nominations to have part of the departed spouse’s superannuation given to their children to enable the surviving spouse’s assets to remain below the cut-off and continue to receive a part pension.

 

The BYRONS Wealth Management team are sharing a series of articles on Legacy Planning. In our previous articles, we explored legacy planning is about more than just the distribution of assets; it’s about ensuring your values and wishes are carried down for generations to come and we also highlighted possible solutions for clients that are Asset rich but do not have enough cash.

At BYRONS, we have a team of highly experienced wealth management professionals, led by Director Jonathan Young. Jonathan has dedicated his career to financial planning and has accumulated over 20 years of expertise. He and his team specialise in aligning client objectives with their unique skills and expertise to deliver the best possible outcomes. Contact Jonathan today for an obligation-free meeting at no cost to you to see what options are available to you and your wealth.

 

Disclaimer: The information above is intended as general information only and should not be taken as advice. No action should be taken prior to taking financial advice tailored to your personal circumstances.

Byrons PWS Pty Ltd as Authorised Representative of Professional Wealth Services Pty Ltd | ABN: 58 174 609 776 | AFS Licence Number 312047

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