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Estate Planning to keep your Family Together

There is nothing more certain than death and taxes. We consult with our accountants to get our tax situation in order yet leave estate planning to chance and the ramifications can be dire on the family unit.

Many would know the name of Robert Holmes a Court. Robert Holmes a Court was Australia’s first billionaire and achieved national notoriety with his take over offer for BHP Billiton. He died in his early 50’s without a will whilst his children were young. His assets were distributed in accordance with the law of intestacy. His wife received one third of his estate and his four children received the remaining two thirds.

An ABC documentary revealed that it had taken 20 years for the legacy of their father and husband was finally in place. In the intervening years the family had been torn apart in dealing with the complex situation and their father’s legacy to them had been lost in the aftermath he left behind.

The reasons why his estate plan was not prepared are unknown; however the documentary revealed that the aftermath of the share market collapse in 1987 had put a strain on his health. It is also rumoured that he had carried with him an unsigned will. Frequently estate plans are started but not finished. This can be for a number of reasons including the complexity of the plan design and implementation – and also a lack of understanding around the objectives behind the estate plan. A clear understanding of your estate planning objectives can help you decide what legacy you wish to leave to your family and when.

The estate planning process should begin in understanding the following three objectives.

Financial: The first estate planning objective is to understand and attain what you need to maintain your financial independence for your lifetime.

Family: Once you define and achieve financial independence you are able to turn your focus to specifying an appropriate inheritance for each estate beneficiary – the transfer of not only wealth but family values.

Social Legacy: Once financial independence and your family legacy have been determined, you will be able to consider what your social legacy may be.

The priority each of these objectives for a family will depend on each wealth and values. This explains why estate plans differ between families and what works for one family may not work for another. The advantages of having a properly prepared estate plan with a focus on the human element as well as the financial elements are as follows:

  • Wealth passed onto the next generation successfully;

  • Family conflicts minimised;

  • Family story communicated;

  • Family values transferred;

  • Estate plans implemented without delay;

  • Opportunity to review and change;

  • Allow your beneficiaries to pursue their dreams;

  • Clarity regarding your “real” legacy;

  • Prepare your beneficiaries for what they will receive.

The Holmes a Court story highlights that the lack of estate planning was not only disastrous from a financial impact, but the emotional strain on the family has been enormous. The eldest son Peter remarked that he did not expect to lose his father when he was 21, but he did not expect to lose his family as well.

To preserve a family for the future, focus also needs to be made on the human element of estate planning. The human element is the key to preserving family wealth for future generations. Without understanding what is really important to you and your family, planning and implementation may result in family wealth diminishing.

If you would like to review what your estate plan and plan your legacy, please contact us to discuss.

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