Home > Updates > Estate and succession planning for modern families
Navigating complex family relationships and blended families can be challenging at times, particularly when a family member passes.
A good estate plan can help to make sure your wishes are carried out when you pass away. The most important part of an estate plan is a will, which outlines how your assets will be divided among your family.
These documents specify who will make decisions about your finances and healthcare if you become unable to do so. Having a well-crafted estate plan can give you peace of mind knowing that your affairs will be taken care of the way you want.
Professional advice is vital in estate planning to make sure that you have considered all matters, including tax, and that your loved ones are protected. It is also important to clearly communicate your wishes, particularly when there are complex matters involved so that your wishes are clearly understood.
Here are some of the things to think about.
If you have been married more than once and/or have children with more than 1 partner, your will helps to provide for those you choose effectively.
For example, you may wish to ensure that your children receive the proceeds of your estate rather than your spouse or ex-spouse. Alternatively, you may need to ensure your will protects your current spouse from the claims of previous spouses.
When it comes to the family home, the type of home ownership is important. If you have purchased as ‘joint tenants’, the entire asset will pass to the surviving spouse. On the other hand, if you have purchased as ‘tenants in common’, each spouse can distribute their share of the house to others.
You may also wish to include a ‘life interest’ in the home so that your current spouse can continue to live in the home until their death before it ultimately passes to your other beneficiaries.
It’s also important to remember that the relationship property rules interact closely with wills and estates, and intentions around jointly held assets and inheritances may need to be reflected in Contracting Out agreements (more informally known as “pre-nups”).
Any existing family trusts should be reviewed with a blended family in mind. Check that the trust deed provides clear instructions for succession, if you want to ensure your children from past relationships are catered for.
Your will can also establish new trusts, to provide for any dependents with disability, when you are worried that a child may waste or misuse your assets, or to allow for young children.
A trust can also help to protect your adult child’s interests if they were to divorce a partner or are facing bankruptcy. Any inheritance they receive from you would become part of their property and can be considered in a divorce settlement or called on by creditors.
It is also important to consider who will have Power of Attorney in the lead up to death (say, if you are incapacitated).
If you are in business and have a Trust as a shareholder you may need to consider what occurs if you pass away.
Generally, there are no tax consequences where shares are transferred to a spouse or partner on death, but there are tax implications where a will specifies that shares are to transfer into a family trust on death.
There are many options that we can discuss with you to ensure that the business will continue as you would like.
Professional advice is important when estate planning to ensure all matters have been considered. Navigating estate planning can be tricky and sometimes very emotional, particularly when your circumstances are a little more complex.
At Nexia New Zealand, we work closely with both businesses and individuals to ensure protection of their assets in the event of unforeseen events, or to enable an uncontested transfer of ownership from one generation to the next. Our team have the experience and expertise to advise you on how to plan for your future, and to create a comprehensive plan to ensure your loved ones are protected.
Estate planning is a way of ensuring that the assets you own and the wealth you have created are passed on to your beneficiaries in the most financially efficient and tax effective way possible. If you are in a blended family situation and want to ensure your estate plan meets your wishes and takes into account all aspects in a way that works best for you and your family, speak with your local Nexia Adviser.
Nexia is one of New Zealand’s best accounting and business advisory firms with offices in Christchurch, Auckland and Hawke’s Bay.
