Making a Will is often the only time when you will consider your family circumstances, assets, liabilities, giving what you have away and the impact of our tax laws on your affairs as well as your own death. Wills are often considered to be unimportant and easily prepared documents not requiring professional advice. This is far from the truth.

Despite the knowledge that death is inevitable for all of us, it is often the case that greater planning and preparation is made for your next holiday than planning to minimise the effect and cost of death on your assets, family and friends. Lack of time or appreciation of the importance of thorough estate planning, fear of one’s own mortality or unwillingness to spend the money, all contribute to a lack of estate planning. This leaves the finalisation of your estate to chance. Poor planning may result in a failure to maximise the benefit of an inheritance to your beneficiaries in an efficient and cost effective manner.

Leaving no Will or a poorly drafted Will can be costly to your estate and your beneficiaries. At the very least it will cause a great deal of disharmony among your family and friends. The cost of estate planning (including making a Will) is often insignificant when compared against the potential tax liability in the hands of your executor or beneficiaries, or the extensive legal costs of litigating a disputed Will before the Court.

For example, Martha Jones wants to benefit her two children equally. In her Will, Martha left undeveloped land to John (valued at $500,000.00) purchased 4 years ago and her home (valued at $500,000.00) to Jenny which she bought last year when she downsized to a smaller retirement home. Martha is pleased with the result that each of her children will receive a piece of real estate of about equal value. Unfortunately for Martha, that may result in a very different outcome. If Jenny sells the home within 2 years of Martha’s death or uses it as her own home, any gain on the house from the original purchase is exempt from Capital Gains Tax. A sale of the land by John will, (depending on the figures) result in a Capital Gains Tax liability. There are options open to Martha which can be addressed in her Will.

Estate Planning involves more than just making a Will. It provides you with an opportunity to enhance the value of your estate and to maximise the benefit of the inheritance of your beneficiaries, however big or small the estate may be. Estate Planning allows you to identify the potential pitfalls to your estate and maximise the benefit of wealth transfer. Make the time to identify –

• The nature of your assets and liabilities (for example, will your superannuation or life insurance proceeds be part of your estate).
• Who are your beneficiaries and will their personal circumstances allow you to maximise any benefit they may receive (for instance, do you have mentally impaired children or children with differing financial needs or circumstances).
• The taxation ramifications attaching to any of your assets (ie. will the gift of an asset have a hidden CGT taxation liability attached to it resulting in an unequal distribution of your estate).
• Whether your Will, Enduring Power of Attorney, Family Trusts, and Superannuation directions are effective and valid. Do you have one at all?

Take the time, make the effort and minimise the financial cost and emotional strain on your family and friends.