Getting more than just a will – Estate Planning insight
When you come to Duffy Lawyers for a Will, you have the opportunity to experience a thorough and holistic approach to life planning. We can help you to make a Will that matches your specific needs and those of your family. You can also choose to look at the things that are most important to you – your health, wealth and family – from a legal perspective.
Your Health
Do you want to ensure that a person who you know and trust will have authority to look after your affairs if you’re not able? For example, if unable, overseas, seriously ill or become incapacitated.
We can help you make an Enduring Power of Attorney which will allow your health, personal and financial affairs to be dealt with in the way that you wish. Without one, if you were to become temporarily or permanently unable to make decisions, the Public Trustee may make financial decisions for you for a scale fee, and health decisions are decided by your “Statutory Health Attorney”.
Also, you can clearly state what sort of medical treatment you do and do not want to receive
if you are seriously ill, by making an Advance Health Directive. You can also clearly set out your preference about organ donation and life sustaining medical treatment.
Your Wealth
If you have the foresight to get your finances in order with your accountant or financial planner, do not let it all go to waste in one unforeseen event. Many people plan for life’s stages, such as education, marriage and having children. But
sometimes it’s hard to imagine, let alone plan for other things happening, like death, serious injury, bankruptcy and divorce.
But it’s wise to plan for all possible eventualities. Engage Duffy Lawyers to ensure you are best placed to:
- accumulate assets in a tax effective manner
- protect your assets during your lifetime from
- the unexpected
- distribute your assets, upon your death, to
- the people you intend and in a tax effective
- manner
By working with your accountant or financial planner, Duffy Lawyers can help you to develop an asset strategy to provide you with the benefits of:
- asset protection
- tax minimisation
- succession planning
- protection of an inheritance against divorce
- and bankruptcy
Once a plan is in place, your mind can be at ease, and you are free to get on with the joys of life.
Your Family
Do you want to give your children’s guardian written directions as to how you wish them to look after your children? Do you want the trustee of your children’ s trust fund to understand how you would like the income and capital of the fund to be distributed?
We can help you prepare guidelines for your children’s guardian and/or financial trustee that set out your preferences as to education, extracurricular activities, overseas study and the like.
Experience to address the major decisions
Some people may avoid addressing their estate planning because their affairs seem complicated. Business interests, blended families, competing obligations to make provision for your spouse, children and future generations, can all seem overwhelming when you think about it.
It doesn’t have to be that way. Duffy Lawyers have extensive experience in dealing with these matters and can work with you to generate options to meet your particular requirements. Discussions can be facilitated with family or other interested parties where necessary to protect interests and preserve relationships.
Succession in life
Duffy Lawyers have vast experience in all commercial areas including the establishment and restructuring of businesses, corporations and trusts to assist with succession planning for retirement or the transfer of control of entities at the time of your choosing. Whatever your interests, it is important to have your individual wishes documented and carried out through the development of a thorough succession plan.
- Published in Estate Planning
Understanding powers of attorney
What is a power of attorney?
There are two types of powers of attorney:
- an Enduring Power of Attorney
- a General Power of Attorney
A General Power of Attorney is given to someone to make financial decisions on your behalf when you are absent, for example, if you are overseas and need someone else to pay your bills.
An Enduring Power of Attorney is given to someone to make personal/health and/or financial decisions on your behalf, even if you lose the capacity to make decisions for yourself. You may not always be able to make decisions when you need to, for example, you may be too ill to make choices about your medical treatment or where you should have the power to make decisions in your interests and to sign all the necessary legal documents. There are some limitations (discussed below) on the types of decisions your enduring attorney will be able to make for you.
When does the power begin?
For personal/health matters, your attorney’s Power will only begin if you are incapable of making decisions yourself. For financial matters, you can specify whether the power is to begin immediately, on a particular date or on a particular occasion.
What types of decisions can an attorney make?
You can give your attorney power to make decisions on your behalf about:
- financial matters (a General Power of Attorney), for example:
- doing your banking
- paying bills
- deciding how your income should be invested, including purchasing property on your behalf
- under taking a legal matter relating to your property on your behalf
- financial matters and personal matters, including health care (an Enduring Power of Attorney). These matters include:
- deciding where you live, and with whom
- giving consent for medical treatment
- day to day issues including diet and dress
- health care
What types of decisions cannot be made by an enduring attorney?
An attorney has no power to make decisions about
special health matters, for example:
- special medical research or experimental health care
- blood or organ donations while you are alive
or special personal matters, for example:
- making a will on your behalf
- making or revoking a power of attorney on your behalf
- voting in an election or referendum
- obtaining probate of a deceased estate
- acting as a director of a company in their capacity as attorney
What happens if you do not have an enduring power of attorney?
Without a valid Enduring Power of Attorney, if you were to temporarily or permanently lose the capacity to make decisions:
- the Public Trustee would step in to make financial decisions for you (for a scale fee); and
- health matters would be decided by your “statutory health attorney”. This could be your spouse, a carer, a relative or a close friend.
What are an attorney’s responsibilities?
An attorney can only act in your best interests and must act with honesty and care. It is an of fence not to do so.
In relation to your health care, your enduring attorney must ensure that any decision made for you contributes to your health and wellbeing and must take into account the advice of your doctor or health care provider.
Your attorney also has a duty to keep records of financial dealings and transactions and must keep your property separate from their own unless it is owned jointly.
When should a power of attorney be registered with the Land Titles Office?
In Queensland, you are only required to register your Power of Attorney with the Land Titles Office if you attorney will be buying or selling land on your behalf.
How should an attorney sign documents when acting as an attorney?
If an attorney is executing a Land Titles Office document, the attorney should execute the document as:
“Signed by [insert principal’s full name] by his/ her attorney [insert attorney’s full name] under Power of Attorney [insert registration number] who certifies that at the time of execution he/she has received no notice of revocation of the Power”.
When executing any other document, an attorney should execute the document as:
“[insert attorney’s full name] as attorney for [insert principal’s full name]”.
- Published in Estate Planning
Understanding testamentary trusts
What is a testamentary trust?
A Testamentary Trust is a discretionary trust which is created in your Will. A discretionary trust (when created during your lifetime is commonly called a family trust) is where a person or company (trustee) holds property, business or investments on trust for the benefit of a number of people and related parties (beneficiaries). The trustee has the total discretion to distribute the income and capital of the trust to the beneficiaries. Creating a Testamentary Trust in your Will is often a more effective alternative than making a direct gift to a person under a standard Will.
What are its advantages?
Protection from divorce or separation
If a beneficiary (say your child) separates and is involved in matrimonial property proceedings, it is possible by using the Testamentary Trust to keep your child’s inheritance separate from his or her own assets, and therefore quarantine it from a claim by the separated spouse or de facto partner. In this way, your estate is left to your direct descendants, rather than being divided between in-laws.
Protection from bankruptcy
If a beneficiary gets into financial difficulties, even though he or she may be bankrupt, the gift given to them via the Testamentary Trust will be protected from that bankruptcy. These days, with more and more people involved in financial activities (such as giving guarantees for business, borrowing or investment etc) this may be an important protection for your surviving family.
Protection for a person suffering from an incapacity
If a person develops some incapacity, such as an intellectual handicap, alcohol or drug dependency, or just may not be able to handle money, rather than give a gift directly to that person, you can have other people control it through a Testamentary Trust.
Exercising control of your estate
Although a standard Testamentary Trust has total flexibility so the trustee is able to invest in whatever property or assets they wish, and may draw on capital or income from time to time as they desire, you may wish to exercise some control over this. So, with a Testamentary Trust, the capital of the gift may be held ultimately for the children of the beneficiary so that while that beneficiary is alive, he or she has access to income only.
Tax Minimisation
A testamentary trust can provide taxation advantages where there are minors who are beneficiaries under the trust, as children enjoy the normal personal tax-free threshold per annum. Therefore, in a situation of a surviving wife and say three children, rather than the wife alone paying tax on the income generated from the inherited property, she can lessen the “tax hit” by distributing to other family members who are lesser income earners.
What assets are included in the Testamentary Trust?
Only assets that are in the deceased person’s name at the time of his or her death are included in that trust. Therefore, it’s important that insurance policies are the ownership of jointly owned properties is reviewed by a lawyer to ensure that they will form part of the trust. Sometimes it is preferable that superannuation money is received by surviving spouses or children, rather than being paid into a trust. It is appropriate to have options in your Will to enable superannuation funds to be paid either to the trust or to individuals.
- Published in Estate Planning, Tax, Trusts
Understanding Family Trusts
We all want to keep more money in our pockets. Family trusts provide one very popular way to legally minimise your tax and protect your assets.
What is a family discretionary trust?
A family trust is actually not a separate entity like a company. A trust is more correctly a legal relationship between the trustee (which may be a person or a company), assets (the trust property) and other people (the beneficiaries). A properly drafted trust deed provides flexibility in deciding
who benefits from the income the trust earns and from capital gains.
These days trusts are used for two main purposes – income tax minimisation and asset protection.
So what can be done to minimise your tax?
Income tax minimisation is all about ensuring that the income of an entity is taxed at the lowest possible legal rate. So, if you are earning an income and your spouse is not, a family trust opens the door to dividing the income, and therefore being taxed at overall lower rates between you.
While all of your tax issues should be referred to your accountant, an example of tax minimisation may be that if your business is conducted through a trust rather than via a company, then the trust may distribute its income to individuals (for example your spouse or partner) whose marginal rate may only be 15% as opposed to paying income tax at the company rate (if your business was owned by a company) of 30%. In this way you can take advantage of your partner’s low marginal tax rate and tax-free threshold.
What about asset protection?
A family discretionary trust puts a firewall between you and your hard earned assets, and the possibility of them deteriorating in any unforeseen legal action. It is particularly useful if you have a high-risk business venture, and is an ideal option for entities from farmers to small business owners, professionals to self-funded retirees.
How can we help?
At Duffy Lawyers we pride ourselves on our holistic approach to client care. Our clients value our good service, availability and down-to-earth practical advice. We see you as someone with a complex array of needs and requirements, rather than a person who presents with just one legal issue. We will work with you and your accountant to decide if a trust structure is what’s best for you. Items we address include:
- making sure it’s correctly set up from the start;
- making sure the trustees are aware of exactly what’s in the trust fund and of their responsibilities;
- what happens if there is a debt and so on.
What costs are involved?
There are some ongoing costs which vary in addition to the initial establishment costs and depending on the ultimate structure chosen. The ongoing costs will include annual account and record keeping fees as well as an annual fee payable to ASIC, if a company was established to be the trustee of the Trust.
A structure consisting of two entities – a corporate discretionary trust with a corporate trustee and a separate investment company – may provide the ideal structure for a small business that will also make some investments, but will obviously be
more costly to administer than a single entity.
The costs really need to be weighed up against the possible tax savings and asset protection that a trust may provide.
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