Help available when preparing for worst
Grant Eddy, director of CooperAitken, often asks the questions of his clients ‘‘ What would happen if you were not here tomorrow?’’ He said this question encouraged clients to think about putting structures and polices in place; an estate plan, in case of death or serious illness/injury.
Your estate plan will cover aspects such as:
How would the family be provided for in the future? Wealth creation and protection. Who are my beneficiaries and their entitlements?
How are children cared for in their parents’ absence?
When can the beneficiaries access their entitlements?
What happens if a family member suffers a trauma preventing focus on the farm?
How will the farm and business continue short to medium term due to death or trauma?
Are there any relationship property issues?
What are the tax and other government risks with the consequences of the above?
Mr Eddy said: ‘‘ When death or trauma occurs there are precautious we can take to make life easier for the family. These steps avoid unnecessary delays, extra costs and additional stress when the family is recovering.’’
Having matters in order will also assist your professional advisors looking after your financial and business affairs.
Mr Eddy said that most people who had a will would have arranged it through their lawyer but they often forget to include their accountant in the discussions. This is a concern for a variety of reasons. Mr Eddy said: ‘‘ Many farming business structures are complex with companies and trusts involved. Estate planning does require a comprehensive solution and advice from both the farmer’s accountant and lawyer to ensure these complex aspects all align’.
For example Mr Eddy has come across situations where clients have thought they had left assets to children in their wills but, as the assets were in a trust this was not the case. The will did not have the power to distribute assets from the trust.
Most farmers meet with their accountant regularly to manage many issues including tax planning, financing requirements, ACC, stock valuation, asset protection, etc and as a result their farming structure can often change. Therefore your accountant is vital to assist with ensuring your estate plan aligns to both your wishes and your ever changing farming structure.
Your accountant will also be aware of the ever changing tax rules, for example the new gifting rules coming into effect next month and therefore will assist in implementing changes into your estate plan.
Mr Eddy also said with regards to risk insurance, this also needs to be regularly reviewed to reflect day to day changes in the farm such as level of family dependence, amount of debt, income levels and owner involvement.
To discuss anything raised in this article please feel free to contact Grant Eddy at CooperAitken Ltd.