Tax Effective 3-Generation Testamentary Trust Mutual Wills
Tax Effective 3-Generation Testamentary Trust Single Will
Is it legal to build your parent’s Wills in Australia?
Children are worried about the defacto death duties of CGT, income tax and stamp duty. Adult children, in particular, don’t want to pay the 32% Super non-dependency tax. Basic Testamentary Trusts and Super Proceeds Trusts are out of date. The 3-Generation Testamentary Trusts in Wills are necessary.
A client telephoned me…
His Dad died.
His Dad left no Will for his family, which included children and stepchildren. The family is tense. Defacto death duties such as CGT, income tax and stamp duty are appearing. The ATO ends up one of the beneficiaries. The financial planner calculates a 32% tax on superannuation. Some of the assets are offshore. No one is sure who is in charge. It is denied by all, but his mum has a touch of dementia.
Three-Generation Testamentary Trust Wills protect my client and his wife. But his parents do not have even simple Wills. On reflection, he told me that he felt uncomfortable having that conversation with his mum and dad. His parents never bothered to get a Will of any sort. He feels that mum and dad left a mess behind. He is right.
Dying without a 3-Generation Testamentary Trust Will means the estate takes longer to settle and is more expensive. The estate is riddled with long term death duties.
Talk to your parents before they lose mental capacity or die
No one wants to talk about building a tax-effective Will. But this is a conversation that you need to have with your parents – sooner rather than later. If your mum or dad die before they make their wishes known, tension and trouble erupt between family members. Right at the time when everyone needs to stick together.
Additionally, what if mum and dad lack mental capacity? If they have not built a Power of Attorney or Medical POAs, no one knows if they want their life artificially prolonged (or not). And, no one has the authority to enforce those wishes. This adds stress for the children.
How to talk to parents about Wills
Talk with your siblings
Talk with your siblings before approaching your parents. How do they feel about starting this conversation? It is best if you are all in it together. If possible, hold a family meeting about your parent’s Estate Planning.
What are your motives?
Why are you broaching the subject? Make it clear that you and your siblings are not bringing this up to define what you gain. This has nothing to do with you. Your motivation is:
- to reduce the 4 defacto death duties payable on their estate – print out and share this Estate Planning Manual. Your mum and dad have paid enough tax during their lifetime.
- avoid the 17% or 32% non-dependency superannuation tax payable by adult children
- honouring your parents’ wishes
- maintaining harmony in the family during a challenging time.
The Will defines and protects your parent’ wishes.
Do your homework
Before you sit down with your parents, do your homework. For free, start building their Wills online here. Read the hints, watch the training videos. Print out the Summary Page. All for free. Also, print out the hints that may interest them. Telephone us if you need a hand.
Building their Wills means your parents are considering their own death and their finances. Be sensitive and empathetic. Their trusted adviser and accountant stand ready to help.
Let them know that you have completed your Estate Planning
It doesn’t matter if you just turned 18 or 81. If you have money and possessions, especially if you own a home, then you need to build a 3-Generation Testamentary Trust Will. Completing your own estate planning is a fantastic way to open the topic with your parents. Let them know you have built tax effective Wills. Show them the covering letter you received when you built your Wills on our website.
Talk about the death taxes on their assets and superannuation. Ask if they want to build their estate planning documents as well. Or, ask them to review what you have done. This is a less threatening way to get them to think about death and taxes. If their children have a Will then they should have one too.
Can you build Wills for your parents?
Yes. You, the accountant and financial planner are legally able to build 3-Generation Testamentary Trust Wills on our law firm’s website. This is for your parents. However, be careful that you are not in a position of conflict:
- Get two witnesses to your parents’ Wills. They must not be well known to you or your siblings. The witnesses must have no loyalty or interest to you or your siblings.
- The two witnesses are beyond reproach – pillars of society.
- Make sure that no one is in the room when your parent’s sign the Wills in front of those two witnesses. If your parents are in isolation because of ill health, then follow this procedure.
- If you tick the box when building the Wills one of my lawyers telephones your parents to explain the Wills.
- Get a Doctor’s Certificate for each of your parents. This confirms that your parents are of sound mind. The covering letter that comes with their Wills gives the wording.
Free legal advice from a law firm
At no charge, you, your parents, accountant or financial adviser can telephone Legal Consolidated. One of our specialist taxation and superannuation lawyers helps you answer the questions to build Wills on our website.
I am an Adjunct Professor lecturing both the Estate Planning and Superannuation units at a number of universities. I have done so since 1999.
I have 7 degrees, 4 of them are in law including my doctorate. My research was on Estate Planning and succession planning. Estate Planning is my passion, especially given the opportunity to reduce the four defacto death duties: income tax, Capital Gains Tax, transfer duty and the 32% death tax on your superannuation.
I author both of Australia’s leading Estate Planning books: CCH Australian Estate Planning and Thompson Reuters Australian Financial Planning Handbook.
You can build your Estate Planning documents online.
Start building the Estate Planning documents, read the hints, watch the training videos. If you need a hand answering any of the questions please ring me or any of my lawyers.
The 3-Generation Testamentary Trusts include:
- 3-Generation Testamentary Trusts – reduces CGT, income tax & stamp duty
- Superannuation Testamentary Trust – reduces the 17% or 32% tax on Super going to adult children
- Bankruptcy Trusts – if a beneficiary is bankrupt
- Divorce Protection Trust – if a child separates, stops the Family Court from getting your money
- Maintenance Trust – where beneficiaries under 18 years of age or unstable
The Estate Planning bundle includes 1. 3-Generation Testamentary Trust Wills 2. Power of Attorneys and 3. Medical POAs.
ADDITIONAL ESTATE PLANNING DOCUMENTS:
After you have built the bundle, you may also wish to consider for your parents:
1. Contractual Wills Agreements – for 2nd marriages
Plus when you have a Family Trust:
Plus when you have a Self-Managed Superannuation Fund
Complete these training courses online (currently free):
Again, if you need a hand answering any of the online questions, just telephone me or any of my lawyers.
If you need help then you can telephone our Estate Planning 24/7 hotline and speak to a lawyer who will help you. Obviously, this service is only available if you built your 3-Generation Testamentary Trust Wills on our website.
Telephone us for legal advice on building this document.
Adjunct Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australian law firm
Toll free: 1800 141 612
Mobile: 0477 796 959
Email: [email protected]