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Asset & Wealth Protection | R.B. Flinders

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Estate Planning

Asset & Wealth Protection

Trusts

Everything you need to know about the benefits of Testamentary Trusts, Discretionary Trusts, Unit Trusts and Special Needs Trusts.

Self-Managed Superannuation Funds

With streamlined establishment and maintenance requirements, it’s never been easier to be in control of your future.

Buy/Sell Agreements

Not your typical estate planning tool – but essential for anyone who owns or operates a business.

You’ve spent a large portion of your life establishing yourself and building your wealth, sometimes more than once over. So why wouldn’t you take appropriate measures to protect your assets and loved ones?

Trusts

There are numerous types of trust arrangements which serve as flexible estate planning tools for many different purposes, including:

  • Help protect your assets from creditors;
  • Ensure preservation of your assets for your beneficiaries;
  • Protecting minor children and grandchildren;
  • Providing for someone with special needs without causing the beneficiary to lose access to Government benefits;
  • Minimise tax exposure for the assets in your estate.

We’ve already discussed the benefits of Testamentary Trust Wills here, and recommend this solution for a number of our clients. However, there are a number of trust solutions that are available to protect and manage your wealth and assets in the most efficient manner possible, while you are still alive.

Discretionary Trusts

As the name suggests, although the same trustee/beneficiary relationship exists as any other trust, the beneficiaries do not have a present entitlement to a fixed interest in the trust fund, and it is the trustee who decides what each beneficiary receives. In fact, there may not even be named beneficiaries in the trust deed, but rather a “class” of beneficiaries. E.g. “all the children and step children of Mr and Mrs Smith”.

The trustee does not have absolute discretion in relation to the distribution and management of trust assets, and at all times must adhere to the terms of the trust deed.

These trusts are most common among families or family groups as there are a number of tax efficiencies and asset protection strategies to be gained from such a structure.

Unit Trusts

Unit trusts have specific, fixed and allocated portions or “units” of the trust fund to each beneficiary (such beneficiaries may themselves be a number of discretionary trusts), so it is clear at the outset what portion of the trust fund each beneficiary is entitled to at any given time. For this reason, unit trusts are often used in real estate transactions and business structures, in order to take advantage of tax and franking credit benefits, however, care should be given to the income streaming provisions of the trust deed in this regard.

Special Needs Trusts

Also known as special disability trusts, this trust arrangement is typically for the benefit of one beneficiary only, who must be defined as having a severe disability in order to take advantage of the numerous concessions and benefits associated with the trust.

This type of trust sets out provisions for the accommodation, personal care, medical and financial arrangements for the beneficiary, providing peace of mind for the parents or carers of a disabled dependent, in the event of their passing.

Typically, this type of trust benefits from a formally appointed corporate trustee, whose service and continuity can generally be guaranteed more so than appointing an individual friend or family member. There are also numerous specialist skill sets that a corporate trustee offers in this area, that many friends and family members would not be able to offer.

If you think that you may benefit from establishing a special needs trust, we recommend discussing your circumstances with the R.B. Flinders estate planning team, who have a broad range of experience in the benefits and intricacies of establishing these trusts.

Self-Managed Superannuation Funds (SMSFs)

As financial technology advances, more and more working Australian’s are establishing a SMSF to manage the investment of their retirement funds.

Also popular for holding investment properties, including corporate premises, with rents going into the SMSF at a marginal tax rate, a SMSF allows a greater range of investment options, with a more responsive turnaround time than many of the larger funds.

SMSFs are relatively quick and easy to establish, however care should be given to ensure trustees of the fund are fully educated as to the ongoing requirements of the fund.

If you have considered establishing your own SMSF, it is worth having a conversation with the R.B. Flinders estate planning team, to discuss the statutory and reporting requirements involved in administering a SMSF.

Buy/Sell Agreements

Often a forgotten part of estate planning, the business partner relationship is frequently overlooked, or assumed that it can be dealt with by your Will. When asked, many people can’t answer the simple question; What happens to your business when you die? Will your spouse have to take over, even though they know very little about the business? What will happen to your employees and business relationships if everything came to a grinding halt?

Often linked to an insurance premium on each partner’s life, a buy/sell agreement is a written agreement between the partners of a business, pursuant to which the surviving partners are required to buy out the other partner’s interest should a specific event such as death, retirement, bankruptcy or long-term disability, occur.

Generally the agreement will be structured so that it does not matter what business structure has been used to establish ownership of the business, and allows a much smoother transition between owners with minimal interruption to business operations.

Click here for information on how to appoint someone to make your decisions should you lose capacity to do so.

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