Good to Great: How to Scale With an Outsourced CFO

Before we dive into estate and non-estate assets, it’s helpful to review why estate planning is important in the first place. Estate planning entails much more than just creating a will, although a will is certainly an important part of estate planning. A solid estate plan will structure your estate so all of your assets can be distributed according to your wishes. Additionally, a good estate plan will protect your family’s interests and minimise the amount of taxes they’ll have to pay. Do you have any assets? If so, you need to consider creating an Estate Plan. 

How do estate and non-estate assets play into the creation of your Estate Plan? Let’s start by defining them.

 

Estate Assets

Individual assets are those assets that have your name (and your name only) on the title. Assets owned with another as tenants in common are also considered estate assets. Common estate assets include bank accounts, real estate, investment accounts, stocks, bonds, cars and trucks, boats, airplanes, and business interests.

 

Non-Estate Assets

Non-estate assets don’t need to go through the probate process after you die because they pass directly to your heirs. For example, if you jointly own a bank account with your daughter, it will pass 100% to her after your death. Other non-estate assets include assets owned by trusts or companies, life insurance, and jointly owned property.

 

Estate Planning Strategies

As you work on your estate plan, it’s important to consider the status of your estate and non-estate assets. If you’re trying to minimise taxes to your estate, your adviser may suggest a restructuring of certain assets. 

For instance, your adviser may suggest nominating multiple beneficiaries to your life insurance policy to keep it out of your estate. In Australia, there’s no legislative limit on the number of policy owners, although insurers may restrict the number. By keeping the proceeds of your insurance from being paid to your estate, you could make sure the funds are passed directly to your beneficiary, especially if there may be challenges to your estate.

On the other hand, some situations call for the protection afforded by estate assets. This can be helpful in cases of divorce or separation or when there are children from first marriages who could miss out on their inheritances if assets don’t go through the estate.

 

Estate Tax

Fortunately, there is no inheritance tax in Australia, but assets acquired from estates may be subject to Capital Gains tax. 

Most people strive to maximise the after-tax value of their assets in order to leave their heirs as much as possible. This helps to secure a strong financial future for your family and makes it easy for your family to handle the estate.

Because people’s lives, family situations, and estates vary so widely, it’s impossible to give one-size-fits-all advice about the best estate planning structures for minimising taxes. This is why it’s so important to construct a custom estate plan for your unique situation.

 

Estate Planning Documents

Talk with your Altus Adviser about the tax implications of your vital documents like your will, guardianship, testamentary trust, and power of attorney. These estate planning documents provide the framework for your estate.

When your estate planning documents work in conjunction with one another as well as with your estate and non-estate assets, you build a plan that safeguards the assets you’ve worked so hard to accumulate.

For more information about estate assets and non-estate assets, or to speak with an adviser about your personal estate planning, contact us at Altus Financial. We’re here to help.