Estate Planning for Families and Business Owners

Kallan Lawyers prepares wills and estate plans for families, business owners, trustees and the accountants and advisers who work with them. Some of that work is straightforward. A person who owns a home and a bank account needs a clear will, not a structure. We say so when that is the position.

The work we are most often asked to do is the other kind: where assets are held through a discretionary trust, a company, a partnership or a self managed superannuation fund, and the question of who ends up with what is not answered by a will alone.

What a will actually controls

A will disposes of the assets you own personally at the date of death. That is a narrower category than most people assume. It generally does not, by itself, deal with:

• Assets held in a family trust. You do not own them. The trustee does. What matters is who controls the trust afterwards.
• Superannuation. A death benefit is paid by the fund trustee under the superannuation rules, not under your will, unless it is directed to your legal personal representative.
• Jointly owned property. Property held as joint tenants passes to the survivor outside the estate.
• Control of a company. Shares are estate assets, but who directs the company in the meantime depends on the constitution and on who is left as a director.
• Life insurance held outside super and paid to a nominated beneficiary.

An estate plan that only addresses the will can therefore leave the most valuable part of the picture unplanned.

The question is not only who inherits. It is who controls the structures that hold the assets, and whether the people left behind can work with each other.

Where the real decisions are

For clients with structures, the substantive decisions usually sit in a handful of places:

• Trust control. Who becomes trustee, who becomes appointor, and whether the deed lets those roles pass the way you intend.
• Company control. Who holds the shares, who becomes a director, and what the constitution and any shareholders agreement require.
• Superannuation. Whether a binding death benefit nomination exists, whether it is valid, and whether paying the benefit to the estate or directly to a dependant produces the better outcome.
• Loans. Money lent to or borrowed from a trust, a company or a family member, which is often the largest single item and the one most often overlooked.
• The business. Whether it is to be continued, sold or wound up, by whom, and whether that is documented and funded.
• The beneficiaries themselves. Age, capacity, relationship stability, creditor exposure and whether an outright gift is appropriate.

When a simple will is enough

Not every client needs a structured plan, and we do not recommend one where it adds cost without adding protection. Where the assets are held personally, the beneficiaries are adults in stable circumstances, and the estate is to be divided equally, a clear, properly executed will with sensible executor and guardian appointments is usually the right answer.

The case for doing more strengthens where there is a business, a trust, a self managed fund, a blended family, a beneficiary who should not receive capital directly, or a meaningful risk of a claim against the estate.

How we work

We start with what is owned and how it is held, rather than with a precedent. In practice that means looking at the trust deeds, the company constitution and share register, any shareholders or partnership agreement, the superannuation deed and existing nominations, and the loan accounts. Only then does the drafting make sense.

Where you have an accountant or financial adviser, we prefer to work with them. They usually hold the clearest picture of the loan accounts and the structure, and any plan that ignores the tax position is not a plan.

This page is general information about the kinds of matters we advise on. It is not legal advice, and your own circumstances and documents will change the answer.