Tax Planning for Individuals and Business Owners

Individuals –

When you take advice to review your legal documentation, it is a good time to also review your overall financial planning, including tax and estate planning. Hopefully you have chosen an experienced advisor that has a good overall knowledge and can assist you to implement financial strategies that will help you to securely manage your wealth, minimise tax, and ensure that your assets are distributed according to your wishes.

Here are some of the key benefits of tax and estate planning for individuals.

  1. Minimising Tax:
  • Reduce or eliminate estate taxes: Effective estate planning can help minimise or eliminate estate taxes (also known as inheritance or death taxes), ensuring that more of your assets pass on to your heirs rather than going to the government.
  • Capital gains tax optimisation: Proper planning can help you manage capital gains tax liability by strategically selling assets or using tax-efficient investment strategies such as hold-over-relief.
  • Income tax reduction: By using tax-advantaged accounts, deductions, and credits, you can reduce your annual income tax liability.

2. Asset Protection:

  • Protect assets from creditors:  Trusts can help shield your assets from creditors or lawsuits, ensuring that your wealth is preserved for your beneficiaries.
  • Consider also a clearly drafted Letter of Wishes, as this explains your planning intent, as well as providing a useful link between your will and associated trusts.
  • Preserve family wealth: Estate planning can help preserve family wealth by structuring your assets in a way that ensures they are passed on to future generations, rather than being eroded by taxes or mismanagement.

3. Control and Distribution of Assets:

  • Ensure your wishes are met: With estate planning it allows you to specify how your assets should be distributed after your passing, ensuring that your wishes are carried out.
  • Provide for loved ones: You can use estate planning to provide for your spouse, children, grandchildren, or other loved ones, including those with support needs.
  • Avoid family disputes: siblings can fall out over trivial matters, so clearly considered estate planning can help prevent family conflicts and legal disputes over asset distribution. Preventing a legacy of bitterness and despair.

Our Estate Planning Scorecard

Are you prepared? Complete our Estate Planning Scorecard to discover how well you are prepared. You may even gain valuable insights while completing it!

4. Healthcare and End-of-Life Decisions:

  • Advance healthcare directives: Estate planning can include documents like living wills and healthcare proxies, allowing you to make decisions about your medical treatment and appoint someone to make decisions on your behalf if you become incapacitated.
  • Ensure your healthcare wishes are respected: By outlining your preferences in advance, you can ensure that your medical care aligns with your values and beliefs.

5. Charitable Giving:

  • Philanthropy: Estate planning can facilitate charitable giving by allowing you to designate specific assets or amounts for donation to charitable organizations or causes that matter to you.

6. Probate Avoidance:

  • Lifetime Gifting: Proper estate planning can help your heirs avoid the time-consuming and potentially costly probate process, ensuring a more efficient transfer of assets.

7. Financial Peace of Mind:

  • Peace of mind: Knowing that you have a well-thought-out plan in place can provide you and your loved ones with peace of mind, knowing that your financial affairs are in order.
  • Given the importance of getting things right and recognising that incorrect or insecure documentation can cost your family dearly. It is surprising that most people prefer to spend as little as possible on drafting legal documents.
  • They have lost sight of their “why”, a concept commented on by Mark Twain, who famously stated that the two most important dates in your life are the day you were born, and the date you find your “why”.
  • Finding your “why” allows you to place value on your decision making when estate planning and places more emphasis on the benfit you are bringing to your loved ones, rather than the smaller cost of obtaining secure and comprehensive tax planning and legal documentation from an estate planning firm that has won numerous awards.
  • At Wills Tax & Trusts Ltd., our meeting process will bring out your “why”, in the years ahead your family will thank you for your thoughtfulness and care. 

It is essential that you consult with an experienced advisor who can look after your family and business with fresh eyes.

Contact us today and see how we can help you!

Business Owners –

Our business owner clients have three hats:

  • Individual Hat: They have responsibilities to their family to protect and ensure their financial stability.
  • Business Hat: They have responsibilities to their employees and shareholders.
  • Trustee Hat: They have a responsibility to their beneficiaries.

Yet almost all the tax planning advice that I have read focusses solely on business taxation. It is important to provide advice considering all the various roles the business owner has and to put forward planning that can assist in all three areas.

Financial planning is essential for business owners to ensure they have implemented strategies that save their company corporation tax, reduce their income tax, and increase their wealth without inhibiting the growth of their business.

Most business owners rely on their existing advisors for advice, and they provide advice on their specialist area but often cannot connect all the dots, which often leaves the business owner exposed to failure.

When you provide estate planning for business owners, we often establish a Flexible Director Trust for use in their lifetime, which will assist the business owner to save tax and increase their wealth.

We can also assist them in substantially reducing the potential tax on their death by establishing a Beneficiary Protection Trust that will allow them to protect their assets and manage their wealth for the benefit of their families and their businesses.

Here are some key points to understand about trusts for business owners:

1. Asset Protection: Trusts are designed to protect assets from various risks, including creditors, lawsuits, and potential estate taxes. Business owners may place their business assets, investments, or other valuable property in the trust to shield them from potential threats.

2. Control: The business or business owner can retain varying degrees of control over the trust assets, depending on the trust’s terms and structure. This can be crucial for business owners who want to continue managing their businesses while protecting their assets.

3. Estate Tax Planning: Trusts can also be utilised as part of a comprehensive estate tax planning strategy. By placing assets in an irrevocable trust, a business owner may be able to reduce the value of their taxable estate, potentially resulting in lower estate taxes upon their passing.

4. Succession Planning: For business owners looking to pass on their businesses to the next generation, trusts can be a valuable tool. They can be structured to ensure a smooth transition of ownership and management, helping to preserve the family business.

5. Privacy: Unlike wills, which are public documents that go through probate, trusts generally offer a higher level of privacy. This can be advantageous for business owners who want to keep their financial affairs confidential.