Succession and Estate Planning

Transcription

1 Succession and Estate Planning David Foulds Director - Estate Planning and Superannuation Andrew Gray Director Estate Planning and Business Succession CPN Road Show 2018

2 Today s Agenda Succession and Estate Planning 1 Introduction and Welcome Disclaimer 5 Succession Planning Business Transition and the Family 2 Estate Planning What is It? 6 Questions and Answers Raise your thoughts 3 Estate Planning Hot Topic - Superannuation 7 Horizon by Pitcher Partners For additional resources 4 Estate Planning Key Risks and Pitfalls 8 Thank you Thank you for attending 2

3 Introduction and Welcome Section One

4 Introduction and Welcome Disclaimer - Any information provided by us is only our opinion based on our understanding of the current law, administrative practice and our knowledge of particular circumstances and limited understanding of the relevant facts. Any such information will not necessarily be beyond challenge by the taxation authorities or others. Accordingly, we do not accept responsibility to anyone for any loss suffered in connection with the provision of information and make no warranties or representations about the information we provide. If you require greater certainty, we recommend the seeking of a formal engagement of our professional services which understandably will allow us to better consider the facts and the various issues. 4

5 Estate Planning Section Two What is It?

6 Estate Planning what is it? Making a plan now to protect and pass on your wealth in a way and at a time that you want. 30 years ago, estates were much simpler Your Will is limited Does not deal with wealth in Trusts or Superannuation, or potentially assets overseas 6

7 Estate Planning what is it? Estate Planning is becoming increasingly more about passing on control of assets, rather than ownership. 7

8 Estate Planning what is it? Client addresses What? they want We address How? to achieve 8

9 Estate Planning Hot Topic Section Three - Superannuation Post 1 July 2017

10 Superannuation in Estate Planning - post 1 July 2017 A key reason to review a client s Estate Plan Long Time Practice Keep money in super for as long as possible Pay out benefits to the estate of the last to die All Changed Now 10

11 Superannuation in Estate Planning - post 1 July 2017 $1.6 Million pension Transfer Balance Cap Caps level of tax free earnings in the Fund Death Benefit Pensions count towards the recipients Transfer Balance Cap On death, forces benefits in excess of the Cap out of the superannuation environment 11

12 Superannuation in Estate Planning - post 1 July 2017 Tom Christine Aged Reversionary Pensions BDBN to spouse Super Comprises: Pension $1.6M $1.6M Accumulation $3.4M $2.6M 12

13 Superannuation in Estate Planning - post 1 July 2017 First dies Deceased s pension passes to the survivor Survivor commutes their own pension Deceased s accumulation paid out as a lump sum Death Benefits are always Death Benefits How / Why? 13

14 Superannuation in Estate Planning - post 1 July 2017 Tom dies - Tom Christine Reversionary Pension $1.6M +$1.6M Commutes own Pension -$1.6M to Accum +$1.6M Accumulation $3.4M $2.6M existing =$4.2M Death Benefit out of Fund -$3.4M to Christine per BDBN 14

15 Superannuation in Estate Planning - post 1 July 2017 Money pushed out of super earlier To surviving spouse tax free Security vs Tax Superannuation Proceeds Trust (form of Testamentary Trust, created by the Will) Receives death benefit, - tax free Surviving spouse the only capital beneficiary, Range of potential income beneficiaries?? Remaining capital to surviving spouse s estate. 15

16 Estate Planning certainty Binding Death Benefit Nominations Provides certainty to direct Trustee APRA Funds Certain conditions apply includes Lapsing in 3 years Reversionary Nominations probably SMSF s 16

17 Estate Planning Section Four Key Risks and Pitfalls

18 Estate Planning key risks and pitfalls Topics to be discussed Ownership of key assets Sophisticated Structures Control of entities Loan balances Binding Death Benefit Nominations Digital Assets Powers of Attorney 18

19 Estate Planning key risks and pitfalls Wills pass Ownership of your assets, Shares in Companies or Trustee Companies etc If assets are owned by Trusts, You can only pass on Control of the Trust 19

20 Estate Planning key risks and pitfalls Consider succession of: Trustee Appointor Guardian day to day control of trust assets can remove and appoint the trustee Ultimate Controller approves certain decisions of trustee or appointor Blocker Are these successors to be individuals or perhaps a company? 20

21 Estate Planning key risks and pitfalls Check the rules in each Trust Deed Specific rules to vary Appointor Rules to vary Trust Deed Vesting Date? 21

22 Estate Planning key risks and pitfalls Dealing with Loan balances How will loan balances be unwound / repaid? If calls are made on the loan balances, do assets have to be sold? Settle loan on the Trust Other complications? 22

23 Estate Planning key risks and pitfalls Binding Death Benefit Nominations SMSF Must be Drafted correctly in accordance with the Fund Deed Are the BDBN Current? Do they Lapse? Reversionary Nominations 12 months to arrange affairs Does the BDBN or Reversionary pension prevail? Check the Deed 23

24 Estate Planning key risks and pitfalls Digital Assets Listing of your User Names and Passwords Safely Stored or Encrypted Computers, Tablets, Mobile Phones access Banking Personal and Business Memberships and Subscriptions 24

25 Estate Planning key risks and pitfalls Your online footprint Social Media Online cloud Photo Albums and their storage Websites Domains, Hosting Digital Libraries for Music, Books, Movies How do you access, close or unsubscribe? Consider a clause in the Will with explicit instructions 25

26 Estate Planning key risks and pitfalls Powers of Attorney Personal Matters (previously Guardianship) Financial Matters or both Medical Treatment one person at a time Enduring Powers of Attorney continues after you lose mental capacity 26

27 Estate Planning key risks and pitfalls Powers of Attorney Take care as to who is granted the Attorney alternatives? Not effective for decisions relating to: Directorships, Appointors, Guardians, Trustees, etc 27

28 Estate Planning complex range of issues Complex Issues addressed by: Framework comprising: Understanding the client s desired outcomes audit or confirmation of the wealth, ownership and control Thorough, logical, documented Estate Plan Easily read with reasoning 28

29 Succession Planning Section Five Business Transition and the Family

30 Succession Planning Transition of Wealth is Upon Us Source: Succession Reset Family Business Succession in the 21 st Century,

31 Succession Planning Meeting Objectives Managing the needs of each individual Objectives of the Succession Plan? Retention of the Business in the Family? Sale of the Business and Manage the Wealth? Meet Family objectives Meet Commercial objectives 31

32 Succession Planning Family Family Constitutions / Family Charter Preamble Family vision and values Family membership - definition Family commitment How the family members and company supports family vision and values How the family will act and make decisions Source: OMBI 32

33 Succession Planning Family Family Council Be the Owner Formal scheduled meetings Clarifies the boundary between family and business Helps create an overarching family plan Who are the members? family head, during their lifetime member(s) from each family independent external advisor with a potential casting vote Facilitates education of family members 33

34 Go ahead. Don t hesitate. Q & A Questions & Answers 34

35 Bringing the right team together Profiles David Foulds Director Estate Planning and Superannuation E david.foulds@pitcher.com.au T Andrew Gray Director Estate Planning and Business Succession E andrew.gray@pitcher.com.au T

36 Horizon by Pitcher Partners For additional resources Horizon by Pitcher Partners offers a range of complementary succession, wealth management and asset protection services to ensure that the wealth clients have worked so hard to create is passed safely to future generations. This enables clients to have the lifestyle they want whilst growing family wealth and maintaining family harmony. 36

37 Horizon by Pitcher Partners For additional resources 37

38 Horizon by Pitcher Partners For additional resources Additional resources are available from: Feel free to download a PDF copy of this Presentation from: 38

39 Thank you For your attention Thank you! 39