Already a subscriber?One of BDO Australia partner Chris Balalovski’s eternal frustrations when advising clients on estate planning issues is the phrase “to be equally shared among my children”.
To illustrate, let’s say four siblings inherit an asset equally from their parents, and each of the siblings has a child of their own. If one sibling dies, instead of her share of ownership passing down to her child, it instead goes to the remaining three, who now own 100 per cent of the asset. “They will come up with some sort of arrangement, which may be completely contrary to the will maker’s original intentions and/or the wishes of the beneficiaries.”has she a will that stipulates who she wants her assets to go to once she passes on, but she has also outlined how those assets are to be dealt with and in what form they will be left to beneficiaries.
In the absence of a “magic formula” will makers need to take stock of their assets and work out how they want them to be passed on, and in what form. This is even more important for wealthy people if they have interests in various private companies and trusts.“I certainly think if you’ve got complex structures or a business, then there probably needs to be a bit of a clear plan from the will maker of what they want to do.
“It may be that there’s underlying CGT so when the beneficiary ultimately sells the shares, there might be a huge amount of CGT payable,” Monahan says. “Particularly for say Commonwealth Bank whose shares are currently trading at about $115. When they were first floated, I think they were about $5. There’s a large amount of unrealised capital gain there,”
An appropriation clause allows the executor to appropriate different assets to different beneficiaries. “If there is no appropriation clause, everyone just receives an equal share of everything,” Hacker says.A letter of wishes can provide your executors with directions and reasoning around why you have decided to leave certain assets to certain people.
But these can be difficult conversations and many family members choose to dodge them in the interests of avoiding conflict.“Involving all stakeholders in the process, not necessarily just with respect to wills, but in the whole succession planning process, can be really useful. It can really help ensure that everyone’s expectations are understood and are at times being met,” Becker says.
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