- Death is not necessarily tax-free.
- Accrued capital gains can affect property values.
- Always consult with clients’ accountants and financial planners when making their will.
Peter and Patricia have instructed you to prepare their wills. They rent the family home but own two commercial properties, each worth about $3 million and subject to a mortgage of $2.5 million. They have a share portfolio, which they started to acquire during the 1990s. Finally, they also have a self-managed superannuation fund with a policy on Peter’s life for $2.5 million – to pay off the debt.
Peter and Patricia have three children – Michael, Bruce and Rachel. The boys live in Australia but Rachel has lived in the UK for many years. Family harmony is pretty good.
Peter tells you that on the advice of his financial planner he has made a binding death nomination for the life insurance (in the super fund) to go to his estate. Peter recalls the planner saying it would be best for Patricia to receive the death benefit but Peter worries about the debt so wants you to fix that in his will.