Businesses can involve a number of complex structures. When drafting your Will or undertaking estate planning it is important to consider several issues.
Businesses can be structured using one or a combination of some or all of the following:
- Sole Trader
- Family Discretionary Trust
- Unit Trust
- Self Managed Superannuation Fund (SMSF)
When preparing your Will you should be clear of any financial entitlements or otherwise you receive from the entity or entities and, just as importantly, who controls them.
trusts, companies and smsf’s
Often your reasons for using structures such as a Trust, Company or SMSF are varied. These may include risk management, asset protection, wealth creation, tax minimisation, flexibility and family involvement whilst maintaining control. However, assets held by a Trust, Company or SMSF are not assets that can be encompassed within an individual’s Will. Rather, you may have a financial entitlement from a Trust, a shareholding interest in a company or a member’s benefit entitlement from a SMSF. It is these entitlements that need to be specifically addressed in your Will.
For example, in the event of your death, ownership and control of companies you are responsible for come into question. Effectively control can be transferred to a nominated beneficiary and as such provision should be made as to who you want to inherit the shares in that company. With respect to Self Managed Superannuation Funds, it is the trustee of the SMSF who has the responsibility of determining how to distribute a member’s death benefit in accordance with the SMSF Trust Deed.
Furthermore, should you exert control of these entities by way of being trustee and appointer of a trust, a director of a company or a trustee of a SMSF, your Will should nominate who should assume these roles and take control in the event of your death.
The use of Testamentary Trusts to maintain flexibility, control and income tax advantages should also be considered in preparing your Will. Where you are involved in business structures involving trusts, companies or superannuation funds, careful consideration of all issues is necessary. Work with estate planning lawyers to ensure appropriate provisions regarding transfers of ownership and control with maximum income tax flexibility are put in place in your Will and to ensure your wishes are appropriately addressed. Your accountant should also be a helpful resource during this planning.
Your Will should be reviewed regularly to make sure it addresses the proposed distribution of net assets including any ownership, entitlement or control issues with respect to business structures, especially if these have been amended in any way over time.
Call us on 07 3833 3999 if you need to review your Will or develop a plan for your estate.