Why lawyers and accountants need to work together for optimal estate planning outcomes

Estate planning is a delicate balance of careful planning and considered strategy. Having your estate planning accountant and lawyer on the same page will deliver the best results for everyone.

By Kelly+Partners Team  |  15 Dec 2021

It seems no matter where you look these days, talk of estate planning is everywhere. This may have a lot to do with the beginning of the Great Intergenerational Wealth Transfer. Or it could be that people are a lot more savvy than, say, their parents or grandparents, and want their estates to be divided (or not) exactly as they choose.

With Domain reporting in June 2021 that the national median house, at $955,927, is now nudging seven figures (an increase of 18.8 percent over the last twelve months), it’s reasonable to suggest most Australian home owners are now in possession of estates worth more than $1M.

That alone is a great reason to have your estate planning accountant working with your lawyer.

But I don’t have ‘an estate’

Oh but you do.

Your estate is everything you own, including anything owned in joint names with others. And as noted above, with the median Australian home worth close to or more than $1M, throw in personal belongings, a car (or two), maybe a boat or caravan, other assets such as cash, jewellery or shares, and your estate is now sailing past the million dollar mark, with $2M on the near horizon.

In fact, the 2021 Credit Suisse global wealth report suggests as many as 1.8 million Australians are now millionaires. This is up from 176,000 in 2020, due largely to the soaring Australian property market.

Okay, so now we have your attention…

What’s estate planning?

We recently wrote about estate planning and making a will. But in a few words, the MoneySmart site tells us estate planning is:

‘An estate plan records what you want done with your assets after your death. It can include documents such as:

  • your will;
  • a testamentary trust (as part of your will);
  • superannuation binding nominations.

Part of your estate plan may be in documents such as:

  • any powers of attorney;
  • An Enduring Guardian (giving someone the right to choose where you live and to make decisions about your medical care);
  • an advance healthcare directive (your needs, values and preferences for your future care)’.

Estate planning is the strategic and legal preparation for your own financial and retirement future. (With a side dish of preserving your wealth for future generations). The choices ‘today you’ makes will impact the comfort and financial wellbeing of ‘tomorrow you’ as well as that of your loved ones.

It’s why from a young person’s very first paycheck, they’re contributing 10 percent of their income (for now) to their superannuation, thinking and planning for 50 years into their future. I guess you could say we’re all estate planning in one way or another, we just don’t realise or put any real thought into it.

When you need to put more thought into your estate planning

Estate planning is for both individuals and businesses, and it’s often a combination of both.

It’s fair to say, lots of people have an accountant who does their annual taxes and might even offer a spot of advice, but that’s it. However, a great financial planner or accountant is proactive in recognising a client’s future financial needs and flagging potential financial risks as they increase their personal and business wealth, not to mention when things start becoming a little more complex.

This complexity is usually centred around tax structures and wealth management. Because who wants to pay more taxes than they absolutely have to?

As the wealth of the average Aussie continues to grow, so does their exposure to risk. That’s why you need an accountant who’s always on top of things and is always looking one step ahead on your behalf. 

When would my lawyer be involved in my finances?

There’s many reasons your lawyer would need to be involved with your finances. These include the drawing up of Wills, changes to your personal situation (marriage, divorce or the birth of children) and the effective structuring of your business.

Sole trader to company - a sole trader experiencing significant growth and needing to think about their business structure is a common reason they need to connect their accountant and lawyer. Scaling up from being a sole trader to becoming a company isn’t something to be taken lightly. Along with the financial and tax benefits, there’s the legal implications to consider.

Planning for retirement – if only it were as easy as waving goodbye one Friday afternoon and walking off into the sunset. Depending on your circumstances, planning for your retirement may also involve setting up a succession plan or business exit strategy, many years ahead of your actual retirement.

Intergenerational estate planningthe smooth transition of wealth from one generation to the next may be simple and straightforward or it may be complicated. Wealth doesn’t necessarily transfer from spouse to spouse or from parent to child. Family dynamics and complex business structures help keep accountants and lawyers on their toes.

Because estate planning is much more than just numbers, lawyers and accountants need to work together for optimal estate planning outcomes long before the time to implement their carefully crafted plans even happen.

It’s important to speak to both your lawyers and your estate planning professionals sooner rather than later so everyone is on the same page. Then your wealth will be protected and preserved exactly the way you want it to be.  Chat with a Kelly+Partners professional today.

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