Estate & Succession Planning

Estate Planning

As we go through various stages of our lives, we can all take steps to simplify the management of our financial and personal affairs. We can predetermine the type of health care we are comfortable with, and ensure our hard-earned assets are structured to our greatest advantage.

Different Powers of Attorney

In brief terms a Power of Attorney is a legal document authorising one or more trusted family members or friends to manage certain matters on your behalf for convenience, or if you are unable to do so yourself. The scope of authority is set out in the Power of Attorney document and may be limited to a one-off transaction or provide for a range of matters.

A General Power of Attorney is usually made for legal and financial matters and can operate for a limited period. For instance, an attorney may be authorised to sign contracts and act on your behalf to sell property while you are overseas. Once you return, and / or the property transaction is complete, the authority ends.

More commonly, an Enduring Power of Attorney is granted if you want to ensure your financial and personal affairs are in the hands of those you trust should you lose mental capacity. In this case the attorneys may be authorised to manage your financial affairs (paying bills and selling property) and personal matters (including some health matters) and must perform their duties in your best interests.

Enduring Guardian

An appointment of enduring guardian appoints a person to make lifestyle, health, and medical decisions on your behalf if you lack capacity to make those decisions yourself. A guardian acts as a substitute decision-maker and may consent to medical and dental treatment and living arrangements.

The appointment also authorises health care professionals to share your personal information with your guardian.

Advance Care Directives

An Advance Care Directive enables you to give directions about special health and personal matters when you can no longer make these decisions yourself. You can decide in advance the types of health treatment you will consent to and include appropriate directions. Directions may also be included about the use of life-sustaining measures for certain medical situations.

Do not put things off!

You cannot grant a Power of Attorney, or an Enduring Guardianship, or make an Advance Care Directive if you lack mental capacity. These documents are invaluable and:

• provide reassurance that your affairs will be left in the hands of those you trust when you cannot ‘speak for yourself; and
• give certainty and simplify processes for those you have chosen to help you.

Estate and Succession planning involves more than just a Will. Today it is more common that one’s wealth, property or business may be part of a more complex structures such as companies, trusts, self-managed superannuation funds.

Business succession planning

If you are in business an ‘exit strategy’ is essential to determine what happens if an ‘exit event’ occurs. An ‘exit event’ includes divorce, death, permanent disability, retirement, or bankruptcy. Without clear processes to deal with these events, the value of your share of the business may be in jeopardy as well as its ongoing operations, risking loss of profit and reputation.

A business exit agreement or buy-sell agreement is a contract between business partners setting out what happens when an exit event occurs.

The agreement acknowledges the goodwill and value of the business and the respective interests held by the partners. Typically, the agreement will include:

• the definition of an exit event;
• buy / sell options for partners to acquire and dispose of shares;
• the process for valuing the business and each partner’s share which can be reflective of their respective financial and non-financial contributions;
• terms to release the exiting partner from guarantees and future business liabilities.

Business buy-sell insurance

Taking out buy-sell insurance can minimise the impact of losing a business partner by providing lump sum funding towards a deceased or incapacitated partner’s share.

The payment enables the continuing owner/s to acquire that partner’s share rather than being forced to wind up the business or transfer the outgoing partner’s share to an unknown party.

The obligations for partners to take out buy-sell insurance, the terms required, and how the policies are to be held may be included in the agreement. Provisions for maintaining and increasing cover proportionate to the growth of the business should also be included.

When we work hard to acquire and build assets and personal wealth, it makes sense to invest in sound advice to ensure they are protected.

For initial discussion or advice contact us at info@legallysmart.com.au or call 02 6108 3683.