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The seemingly rapid approach of a new financial year should serve as a timely reminder for people to review their personal succession planning, particularly their Wills. It is important to ensure that people have an up-to-date Will in place which reflects their wishes upon their passing. Not only will this ensure that their loved ones are appropriately provided for, but it will help to avoid any disputes arising after they pass away.
Given the increasing complexities of people's financial affairs, effective succession planning should contemplate all assets, whether owned personally or via other entities such as super funds, companies or family trusts. However, the cornerstone of any succession plan remains ensuring that a person has a valid Will in place.
This article focuses on succession planning and the 2 types of Will products offered through Cleardocs:
There can be various benefits of creating a Will with testamentary trusts, as outlined below. However, not everyone's circumstances justify a testamentary trust being included in their Will, in which case a simpler Will would be more suitable option.
Georgia Borg, Maddocks LawyersYou can use the 'ClearWill with Testamentary Trusts' product to establish one or more trusts (other than a minors trust) within a person's Will. Such a trust comes into effect upon the death of the willmaker, with certain provisions of the Will operating as the trust deed.
The 'ClearWill with Testamentary Trusts' product allows a willmaker to create a Will establishing any of the following trusts:
One key benefit of establishing a testamentary trust as part of a person's Will is asset protection for beneficiaries: it provides a flexible and long term approach to asset protection, limiting the risk of claims on a beneficiary's assets as a result of bankruptcy or relationship breakdown. A testamentary trust can offer greater protection against dissipation of assets by a particular beneficiary, creditor or trustee in bankruptcy.
A testamentary trust can be established to ensure that the income and capital of the trust passes to the beneficiary, with the terms of the trust as set out in the Will determining the extent to which the beneficiary has control over those assets. The willmaker can appoint an independent person in control of the testamentary trust to ensure that the trust assets are invested and managed for the benefit of the beneficiary, or alternatively, choose to give the beneficiary complete control themselves.
Another key benefit of this type of structure is that it provides an opportunity for sensible tax planning. Depending on the circumstances of each beneficiary of the trust, there may be significant tax advantages, particularly where the beneficiary has:
A testamentary trust has the significant advantage of enabling the trustee to stream or split income amongst the trust's discretionary beneficiaries in a way that minimises overall tax paid on the trust's income. The beneficiaries that receive the trust income then include this income in their own assessable income which is taxed at that individual's marginal tax rates. By streaming income to beneficiaries with low marginal tax rates, a trustee is able to minimise overall tax paid by the beneficiaries.
In summary, the 'ClearWill with Testamentary Trusts' product may be of assistance where:
If an individual's personal circumstances do not justify a need for a testamentary trust or trusts to be established within their Will, Cleardocs also offers a standalone Will product which does not establish testamentary trusts and caters for those with simpler personal circumstances.
Like the 'ClearWill with Testamentary Trusts' product, the 'ClearWill Online' product allows for various personalised clauses to be included in the Will, including enabling the willmaker to do any of the following:
The 'ClearWill Online' product also provides the option to create 'minors trusts', which protect a minor's inheritance upon that individual reaching 18 years or a later age nominated by the willmaker.
There is also the option to create 'mirror Wills' using the 'ClearWill Online' product, which can be a popular choice for married and de facto couples. Mirror Wills are 2 Wills that say the same thing, for example, that each willmaker leaves everything to one another and then upon the death of the second of them, the estate will then pass to their children.
In summary, the 'ClearWill Online' product may be of assistance where:
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.
You can read earlier ClearLaw articles on a range of estate planning topics here.
Qualifications: LLB, University of Sheffield, LLM(CL), University of British Columbia
Georgia is a member of Maddocks Commercial team and assists in a variety of commercial and corporate matters for private, public and not-for-profit clients.
Her expertise includes advising on general commercial law, wills and estates law, charities and not-for-profit law along with corporate law.
The legal information and commentary on this site is general only. Documents ordered through Cleardocs affect the user's legal rights and liabilities. To assess their suitability for the user, legal accounting and financial advice must be obtained.