Does your Will leave everything to your spouse, then, after your death, equally to the children? I would call this a poorly considered, or “lazy” Will, which often results in unnecessary Capital Acquisitions Tax (CAT) and family disputes.
The following are five of the most common mistakes made when drafting a Will:
1. Failing to Plan for Tax
Simply dividing an estate equally may seem fair, but it is not always tax-efficient. Common mistakes may include leaving investment funds to a spouse where the fund tax offset is not available and ignoring different tax thresholds. For example, there are tax-free thresholds for grandchildren and others that often go unused.
2. Ignoring Valuable Tax Reliefs
Reliefs, such as Agricultural Relief and Business Relief can save beneficiaries substantial amounts of tax but are subject to strict conditions which should be checked now to see who in your family might qualify.
3. Not Considering the impact of the Fair Deal Trap on an Estate
The impact of the Fair Deal assessment can dramatically reduce the value of an estate and potentially leave a large loan to be repaid by the beneficiaries. Proper planning can mitigate or avoid this trap.
4. Failing to Protect Vulnerable Beneficiaries via the use of Trusts
An outright inheritance may not always be appropriate for young beneficiaries, individuals with disabilities or those facing financial or relationship difficulties.
Appropriate trust structures can provide protection while still ensuring
beneficiaries are looked after.
5. Ignoring tax planning opportunities around Approved Retirement Funds (ARF’s) and Pensions
A will should be reviewed to ensure that Pension assets are mentioned separately and distributed to maximise tax efficiency.
The Bottom Line
A professionally drafted Will should minimise tax, protect beneficiaries, preserve family wealth and reduce the risk of costly disputes. Contact us now if you want your Will reviewed for Tax Efficiency and potentially take advantage of Fair deal and CAT savings for your family.
Could your Will be more tax-efficient? Contact us for advice tailored to your family circumstances. Click here to book a consultation.
This information should be treated as a guide only. Contact us for tax advice tailored to your needs.
