43 – Death and taxes

Death and taxes is a complex subject, and one could write an entire book on it.

Indeed some macabre souls have. Death and Taxes: Tax-effective estate planning.

A very unhappy phone call

A few months ago a Dover adviser rang with the sad news that a valued long term client had cancer, the treatment has not worked and it was now just a question of time. The best medical advice had been sought and it was “get your worldly affairs in order”.

Financial planners often deal with clients who are not long of this world, to help them get their worldly affairs in order while they can. Obviously life insurance claims can feature in the process, and fresh wills, with everything thought through again, make sense. Other matters include:

  1. the advantage of completing a super re-contributions strategy to convert amounts to be paid to non-dependant adult children to non-concessional contributions, so there will be no tax (or at least a lot less tax) paid on the death benefits
  2. using carried forward tax losses before death, as these cannot be transferred to another person and disappear at death 
  3. similar to (ii), using carried forward capital losses before death, as these cannot be transferred to another person and disappear at death
  4. resign from any company directorships or similar appointments they may hold
  5. paying off all loans, if possible. This may require investments to be sold
  6. examining their profile for trusts that they may control: they may need to resign as an appointor and/or appoint a new person in their place
  7. considering whether a fresh will is needed
  8. considering whether a fresh binding death benefit notice is needed
  9. considering the sale of any co-owned assets, particularly co-owned businesses
  10. reviewing life insurances and make sure all relevant benefits have been paid (example income protection benefits or trauma benefits)
  11. considering whether a super proceeds trust is appropriate. You can read about super proceeds trusts here: Avoiding super tax on death
  12. considering whether there are any assets in other countries (this is common for clients who not born in Australia)

Moving away from tax, many wills and strategies are settled at a time when the will-maker knows his or her time is up. Nothing like a date with destiny to focus the mind.

Now is a good time to bring in a solicitor who specializes in wills to double check everything and make sure all is in order. A good professional knows the best interests duty means they may need to refer a particular task on to a specialist.

You cannot know or do everything.

Practice tip

Do not create a PDF of this page and send it to your clients. 

The Dover Group