Will health checks for High Net Worth individuals

Wills & Deceased Estates

Wills often need a health check to see that they are still suitable, and no more so than for high net worth individuals.

 

The appropriateness of a given Will is only assessable in the light of a person’s overall financial affairs and family situation. These can change over time.

Most importantly, anyone with stand alone trust structures such as a family trust, self managed superannuation fund or both has special considerations to take into account.

Control issues for stand alone trust structures are rarely properly dealt with and that leaves the succession plan exposed.

Many High Net Worth individuals have these trust structures because they promote asset value and minimize tax, but very little regard is paid to planning for post death control. It is rarely the case that people with family trusts even understand the different levels of control that they can put in place or that they risk control of these trusts passing to someone unintended after they die.

Furthermore, control issues in regard to self managed superannuation funds need to be balanced with the need to retain compliance with the SIS requirements otherwise the fund may become non-complying and loose its special tax benefit status. Such a loss would have horrendous affect on the value of the fund.

High Net Worth individuals who have family trusts and self managed superannuation funds need a succession plan that covers all aspects. In many cases that means more than just having a Will – other documents may be needed to deal with Appointor rights in trusts, directorships & shareholdings, and binding nominations just to name a few. In some cases trust deeds or company constitutions may need to amended or updated to provide the ability to achieve what is needed.

If a High Net Worth individual’s Will has been prepared without regard to the documents set out in the paragraphs below, there is a real risk of unintended results occurring when the individual dies. An immediate health check is required.

 

Flow diagram

A flow diagram showing the various companies & trusts of the client and the functions of those companies and trusts. This is essential. As well as providing an overview it also helps identify possible cross-collateralization issues for borrowings, which in turn helps identify where the wealth might be actually repose. Asset holding alone does not tell the whole story.

 

The Family Discretionary Trust

This would include;

  1. the complete trust deed for the Trust;
  2. any variations of the trust deed; and
  3. any deeds dealing with the powers of appointment for the Appointor or the Guardian of the trust.

 

The company being the trustee of the Family Trust

This would include:

  1. the current constitution of the trustee company; and
  2. copies of the minutes of resolutions (if any) of the trustee company that are contingent on the client’s death for their operation.

 

Financial Reports

This would include the last set of balance sheets for;

  1. the trustee company;
  2. the operations of the trustee company in its personal capacity (and not in its capacity as trustee of the family trust);
  3. the operations of other business enterprises of the client.

 

Superannuation with a Retail or Industry Fund

This would include;

  1. the last member statement sent by the fund trustee regarding membership benefit; and
  2. a copy of any nomination forms completed and sent to the Fund.

 

Superannuation held in a Self Managed Superannuation Fund

This would include;

  1. the complete trust deed for the Trust;
  2. any variations of the trust deed;
  3. a copy of any nomination forms completed;
  4. the current constitution of the trustee company;
  5. copies of the minutes of resolutions (if any) of the trustee company that are contingent on the client’s death for their operation; and
  6. the last set of financial statements for the Fund

 

Family Law issues

This would include;

  1. a copy of any pre-nuptial or post-nuptial financial agreements;
  2. a copy of any legal advice from the lawyers given at the time the agreement was entered into as to the circumstances in which the any such agreement might be set aside or subject to variation by the Family Court; and
  3. a copy of any Family Court orders affecting the client’s superannuation.

 

Business Succession buyout agreements

This would include:

  1. a copy of the agreement(s); and
  2. a copy of any insurance policy being relied upon by the survivor of the business arrangement to fund the purchase of the deceased person’s interest.

We can help

We will respond within the next business day. You can also call 03 9670 9691.