Importance of Succession or Inheritance Planning

Succession planning is important since it involves decision regarding transfer of your wealth and property. A well thought out and executed succession plan helps in smooth transfer of your assets to your next generation.

Taxation Implications

Australia does not impose death duties. However, tax may be payable on certain income earned or capital transactions that ensue as a result of a person’s death. Transfer of wealth during succession attracts Capital Gains Tax (“CGT”).

How to Plan your Succession?

An efficient succession planning involves decisions on various aspects which encompass emotional, financial, tax, legal and equity issues. One of the primary steps will be to understand and answer the below mentioned questions:

  1. Who are the important people or key stakeholders in your life? 
  2. Do I understand the needs and wishes of all the concerned parties? 
  3. Is there a shared vision between me, other family members and other stakeholders? 
  4. What are the priorities and the most critical issues? 

The decisions regarding succession will affect you and your family in the future, thus extreme caution and attention should be exercised during the planning stage.
In case you wish to specifically allocate your wealth and resources, the safest and the best way is the preparation of a Will. In the absence of a Will, a deceased’s estate will bequeath upon their next of kin.
An executor plays an important role. An executor of a Will have certain responsibilities to fulfil on behalf of the deceased. The executor is required to notify the Australian Taxation Office (ATO) about the death of a person and lodge tax returns on behalf of the deceased. Apart from this the executor also needs to obtain the death certificate, locate the Will, arrange and pay for the funeral, apply for probate, distribute the assets accordingly, pay stamp duty, pay income tax and pay off outstanding debts and liabilities of the deceased. Thus, the decision regarding the appointment of an executor is also an important one.
You may also decide to form a Trust to protect the interests of your children or to make provision for children with special needs.
If you are planning to make your Will feel free to consult our team of experienced lawyers at Owen Hodge Lawyers and we will be happy to help you.

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