Estate Planning and Property
Background
We are on the verge of witnessing the largest inter-generational wealth transfer in the history of Australia. Billions of dollars in property will be transferred and not having the right plan or even the right understanding can be costly. A lot can go wrong that will lead to both an undesirable estate planning outcome and excess tax being paid by estates and/or beneficiaries.
When an individual dies, depending on how their interest in the property is structured, this will determine how they are dealt with. This in turn will be determined by:
- If the asset is owned jointly or individually
- The structure of ownership – if owned by one or more personas or entities
- The term in the will of the deceased
- State/territory based legislation
Understanding the right ownership and structure is important when considering all the implications of death and how to make appropriate arrangements so the estate can deal with the transfer in accordance with the deceased wishes.
Property can be considered to either be part of the estate or a non-estate asset. Property can be structured as owned by one or more individuals or entities. The property will be structured as either “Joint Tenants” or “Tenants in Common”. The individuals or entities will determine this when they purchase or change the ownership of the property and is documented on the title of the property. Joint tenants will apply in equal proportions and when one of the individuals passes the other automatically inherits the other portion. Tenants in common on the other hand assigns a percentage interest in accordance to the ownership.
Tips:
- We suggest talk to a specialist when it comes to constructing a will. You can save money by doing a will pack from your local agency but many things can go wrong.
- Before meeting with a solicitor, have a think about how you would like your assets to be distributed in the event of you death.
Traps:
- Estate planning is only for the rich – common mistake.