As busy professionals you understand the significance and priority of planning the financial future for yourself and your heirs, but so often once mechanisms ar in place the important finer details can be overlooked – details that could result in all your good intentions falling by the wayside. An example of this is your trust.
A trust is a favourable estate planning tool for those with noteworthy assets. Not only are they a common inheritance tool for intergenerational wealth transfer, the benefits include minimising estate taxes and protecting your estate from lawsuits and claims by creditors and are also renowned for their longevity.
Given that NSW common law generally puts the maximum life for trusts at 80 years, if often means the vesting date (i.e. the date the trust vests or in simple terms ceases to exist) is often forgotten or missed.
But as is often the case, there are exceptions to the rule with some vesting dates set for less than the standard 80 years. As trusts can pass through multiple generations it’s not surprising that the 80 year vesting date can become obscure, and too often arrive unexpectedly, inflicting beneficiaries with a potential double taxation scenario on distributions which is not a good outcome for anyone except the taxman.
By implementing simple mechanisms that alert you to approaching vesting dates and other important anniversaries, you can configure a controlled sell-off or transfer of the assets over a period of time ensuring the return for your beneficiaries is maximised and any tax liability is spread appropriately.
To remain one step ahead of expiring documentation, take the time to review and record all your current legal and financial documents including any trusts and record their vesting date is. Create a trigger by assigning the review to an anniversary such as your spouse’s birthday to prompt you to take action; it can be as simple as that.
If you require further information or just a chat about your options, please call BrentnallsNSW on 02 8252 5555.