It is possible to structure your Will in such a way that a minimum amount of tax is payable on the benefits.

Jointly owned investments

Jointly owned investments pass directly to the joint owner and do not enter the Estate. To ensure money is available on death it is often wise to have some cash held in a joint account. The funds automatically pass to the surviving account holder and can be accessed to pay for living expenses whilst awaiting probate (if applicable).

Discretionary Trusts

Establishing a Family Trust may have several estate planning advantages, especially if substantial assets are involved. Assets can be transferred into a trust without the former owner losing effective control, as he or she can become a trustee as well as a beneficiary of the trust. In a discretionary trust, the trustee can elect how to distribute the income - and assets - in the most efficient way for tax purposes.

Testamentary Trusts

A trust set up under a Will is called a testamentary trust and only comes into operation after death.

It has some particular advantages, especially where young children are beneficiaries under the Will. The trust structure allows them to take advantage of the normal adult tax threshold of $6,000, rather than the $416 per annum threshold which normally applies to minors. However, there is no obligation on the trustee to pay the capital of the trust to the beneficiaries.

Capital Gains Tax

In many ways, capital gains tax (CGT) is a surrogate for death duties. While the tax is not payable immediately, it will apply on any subsequent disposal of most inherited assets by the beneficiary or by the Executor. Death triggers reassessment of the CGT status of an asset.

For more information and advice regarding Tax Effective Structures in relation to Estate Planning, please contact our experienced Financial Planning Team.

For specific tax advice, you should refer to a registered tax agent.