CUTTING EDGE ESTATE PLANNING TECHNIQUES NSW 8TH ANNUAL TAX FORUM CUTTING EDGE ESTATE PLANNING TECHNIQUES

Introduction You can rule from the grave Estate Planning Revenue Issue Family Law Ownership of assets Asset protection

The Family Constitution What is it? Objective purpose Parties Process Issues to be covered How to make them work Relevance Binding agreement - deed

Strategies for Preparing a Family Constitution Approach Central structure Double trusts Family law/ Lineal Issue trusts Shareholder/director control Provision when child dies Communication Income entitlements

Case Studies Bill and Colleen Operating business family managed Parents wish to retire Pass the baton to the next generation Structure Pre and post DOFA

Bill & Colleen Pre DOFA Bill Colleen 50 % 50 % Widget Pty Ltd

Post DOFA & Deaths of Bill & Colleen 6 Next Generation – Shareholders / Directors Widget Nominees Pty Ltd Bill & Colleen Will Trust Widget Family Trust 100% Ord Shares Div. Access Shares Widget Pty Ltd

Case Studies Geoff and Mary Large family investment Parents wish to protect the next generation Maintain and grow investment Structure Pre and pose DOFA

Shopping Centre Co Pty Ltd Geoff & Mary Pre DOFA Geoff Mary 1 Share 1 Share Geoff & Mary Nominees Pty Ltd Steve Nominees Pty Ltd Geoff & Mary Family Trust Steve Family Trust 50% 50% Shopping Centre Co Pty Ltd

Geoff & Mary – Post DOFA Shopping Centre Pty Ltd Geoff Next Gen L Next Gen T Mary (Shares) (Shares) (Shares) Next Gen Nominees Pty Ltd Independent Director G & M Nominees Pty Ltd (Trustee) Next Gen T Family Trust (Trustee) G & M Family Trust (Beneficiaries) Steve Next Gen L Family Trust 50% 50% Shopping Centre Pty Ltd

Case Studies Alex and Pat Major operating business Independent management Property investments Control the issue Structure Pre and post DOFA

Operating Business Pty Ltd Alex & Pat Pre DOFA A & P Family Trust Alex Pat (Dividend Access) (Ord) (Ord) Holding Co Pty Ltd 100 % Operating Business Pty Ltd

Alex & Pat – Post DOFA A & P Nominees Pty Limited (Trustee) Next Gen 1 Next Gen 2 Next Gen 3 Next Gen 4 (Shares) A & P Nominees Pty Limited (Trustee) (General Partner) Alex Pat Next Gen 1 FT Next Gen 2 FT Next Gen 3 FT Next Gen 4 FT Alex Pat A & P Limited Partnership (Ord) (Ord) (Dividend Access) Holding Co Pty Ltd 100 % Operating Business Pty Ltd

Benefits Achieved in the Case Studies Family agreement for managing the business The ownership and control protected under Linear Issue structure Agreed flow of income Adoption of capital distribution policies Use of independent directors/arbitrators to avoid conflicts, non-commercial and differing social objectives Segregating ownership and control of core assets from the investments of Next Gen members

Benefits Achieved in the Case Studies Decision making and control was with the family group as a whole Minimal adverse tax and stamp duty consequences Family law issues Family members to discuss critical issues in fair and reasonable manner The professional advisers to add value

Benefits Achieved in the Case Studies The addressing of relationships after the death of the parents Accepted by family members as a formal agreement and legally binding A mechanism in place to ensure that the estate plan was effective