estate planning

What is a trust? A trust is simply an agreement where a person or a company agrees to hold an asset for the benefit of others. This article deals with family trusts set up during a person’s lifetime, as well as testamentary trusts set up through a Will. It examines why trusts are set up, and their advantages and disadvantages. It also explains the tax consequences and discusses the selection of beneficiaries.

The Academy Awards ceremony (The Oscars) was on Sunday,26 February 2012.  Here are 84th Annual Academy Awards Winners:

 When was the last time you reviewed your Wills and sat down with a financial planner to review your estate planning?  Do you have adequate life insurance?

A Fund trustee can pay death benefits as:

• A lump sum equal to your account balance; or

• A pension.

You may nominate beneficiaries to receive your remaining account balance. Any valid reversionary nomination will override any binding or non-binding nomination.

If you cannot make your own lifestyle decisions because of an accident, illness or disability, you cannot always be sure that informal support networks or people important to you will be available or recognised when significant decisions need to made on your behalf. Enduring guardianship allows you to legally appoint a substitute decision-maker of your choice to make those crucial lifestyle and health care decisions should you lose the capacity to make your own decisions at some time in the future.

An enduring power of attorney is an important legal document that you prepare to give someone else the power to make personal an/or financial decisions on your behalf. An Enduring Power of Attorney lets you appoint the Public Trustee, a trustee company, and individual or individuals to take care of your financial affairs if you lose capacity or in the event that you no longer want that responsibility.

Testamentary trusts are established to benefit children under 18 years of age, and can be extremely beneficial for parents wanting to establish “education trusts” for their children. A testamentary trust my also be appropriate in cases where the individual has grandchildren, brothers, sisters, aunts, uncles, nephews, nieces, cousins or even long time friends under the age of 18 or whose extended families include members under the age of 18. A testamentary trust created by your Will offers certain tax benefits to the beneficiaries of the trust who are under the age of eighteen.

The person responsible for carrying out all of your directions, and ensuring that your assets and liabilities are properly accounted for is your executor. It is advisable to designate both a primary and alternate executor since it is possible that your primary executor may be deceased or physically unable to perform their duties when the time comes to do so. It will be left up to the Court to appoint an alternate executor in the event that your primary executor is deceased if no alternate has been designated.

In simple terms, a Will helps to ensure that your family's needs are met according to your wishes when you die. Aside from distributing your wealth and assets to family members, a Will can also be designed to encompass a range of requests including:

• Provide for children from a previous relationship or children with special needs.

• Provide for children outside your immediate family.

• Guardianship of your children.

• Assets that do not form part of your estate (such as family trust assets).

Following your death, your assets will pass on to your beneficiaries in accordance with the terms established in your Will. When assets are jointly owned with someone else, the legal ownership status is absolutely critical in determining exactly who will benefit from your interests in any particular asset.