05 - 1 1 ESTATE PLANNING BM Ch 15; TJHM Ch 17; CCH Ch 18;...

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Unformatted text preview: 1 1 ESTATE PLANNING BM Ch 15; TJHM Ch 17; CCH Ch 18; Day et al Ch 13 Lecture 5 2 Learning Objectives After studying this topic, you should be able to: explain the need for having a valid will explain the mechanism for making a valid will identify areas of potential challenges to a will discuss the consequences of dying without a will understand the role of trusts in protecting estate assets and discuss the circumstances where the use of a trust would be beneficial 3 Analyze the impact of taxation on distributions from deceased estates and develop strategies to minimize taxation Discuss the purpose of a power of attorney Differentiate between the different types of powers of attorney and discuss when each should be used Demonstrate an understanding of how a power of attorney is executed Learning Objectives 2 4 Death Duties and CGT Death duties were abolished in Australia in 1981 Capital Gains Tax (CGT) has filled the void, and can be even more costly! The biggest transfer of wealth in Australian history will take place over the next few decades Combined wealth of those aged 65+ is estimated to be in excess of $150b So, the impact of CGT will be greatest over this period 5 Scenarios 1. Mrs Smith died last week, and left a will distributing the house and shares to her husband, rest of estate to 3 children. Shortly after drawing up the will 3 years ago, she and her husband became divorced. Her assets consist of a private residence, shares, money in bank account (held jointly with eldest child), superannuation (no nominated beneficiary). 2. Bill and Jane (2 children), separate (no formal divorce) and find new partners; Bill subsequently dies and leaves no will 3. Bob lives on a farm and has 3 grown-up children. One of the children will work the farm after Bob dies and so Bob wants to leave the farm to this son; Bob has no other funds within his Estate, but wants to ensure that all three children share equally in the estate 6 Introduction What is estate planning? A way of ensuring that a persons estate is passed onto their beneficiaries in the most equitable, financially efficient and tax effective way Aims of estate planning: wealth accumulated over a life time is protected for future generations wealth goes where it is intended to minimise family squabbles 3 7 Financial planner will not generally be directly involved with the preparation or execution of legal documents (e.g., wills) Should a client need assistance, the financial planner can provide related financial planning advice, and recommend the client seek further spet estate planning advice Legal issues of estate planning should be referred to the clients solicitor FP and Estate Planning 8 Do you, and your partner, have a will?...
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This note was uploaded on 12/06/2011 for the course ECON 101 taught by Professor Shen during the Three '11 term at Monash.

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05 - 1 1 ESTATE PLANNING BM Ch 15; TJHM Ch 17; CCH Ch 18;...

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