We simplified our estate planning years ago by updating our wills to split everything equally to our five children - 20 per cent each.
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Is this sufficient or is there more to consider with our estate?
Although it is only part of an estate plan, it's great to hear that you have a will in place.
The key to a full and effective estate plan is to understand that it is a plan, and requires continual review and assessment to validate what you intend to happen.
Whilst your intent may be to provide equally for each of your children, this may not always be possible pending the assets and liabilities you hold and the entities in which you hold them.
A question you need to consider is if the children holding an asset together (20 per cent each) provides an effective solution for your estate?
Quite often the answer is no due to the differences - age, personality, views on personal financial affairs - of each child, hence the need to think more broadly.
Outright ownership via an estate distribution of assets and liabilities generally provides the most effective result.
Your capacity to achieve this will be limited by the assets and liabilities available in the distribution pool.
We live in a world of continual change, and the pace of change now is faster than it has ever been.
This has a flow on effect on the complexity of business and financial affairs, and the ongoing changes in our daily lives.
Given this, estate plans can become outdated and should be reviewed regularly to assess their effectiveness to deliver the outcomes you desire.
MANAGEMENT
What does proactive estate management involve?
1. Ensuring you have a clear understanding of your net asset position.
2. Reviewing your business and investment structures.
3. Identifying how you would like your assets distributed upon administration of your estate.
4. Reviewing your existing estate plans and will to see if they still align with what you want.
5. Looking at any taxation implications of your estate plan and discuss strategies (in advance) to manage the impact.
Collaboration with your advisers is essential to help ensure all risks and consequences of options are considered and mitigated where possible.
What you plan for today may not be the reality in the future if you don't keep an eye on how it will happen.
Formulating your estate plan is important but managing your estate plan throughout life is just as important.
If you would like more information on this topic or have a question, please e-mail me at albury@findex.com.au
Cade Gow is an agribusiness specialist at Findex Albury.
While all reasonable care is taken in the preparation of this article, to the extent allowed by legislation, Findex (Aust) Pty Ltd ABN 84 006 466 351 (Findex) accept no liability whatsoever for reliance on it. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Findex assumes no obligation to update this material after it has been issued.
The information contained is of a general nature only and does not take into account your specific financial situation. You should seek professional advice before acting on any material.