- Remember that transfers to beneficiaries of a will under a power of sale or testamentary option are not CGT free.
- Always be careful preparing wills where there are non-resident beneficiaries.
- Never make a will of any complexity without consulting other family advisers – especially the family accountant.
Andrew made me promise, Sheila tells you, that we would always treat the children equally. Yes, you reply, poor old Andrew, how long since he died? Ten long years, Sheila replies, and oh my goodness! How things have changed since then!
Do you know, she goes on, that Michael married that woman we never got on with and has moved to the UK just to get away from us? And James, our youngest, has worked so hard in the business Andrew bought into in the late 1980s and is not even a shareholder!
Then there’s Jane and her marriage is very shaky.
Goodness, you say, what a mix. And of course you have a big share portfolio don’t you? And your house is worth a fair bit I guess. And then there’s that investment property you have that Michael once said he’d like to have if he ever moved back to Sydney.
Yes, says Sheila, it’s all so difficult, I don’t know what to do. Don’t worry you say. We can fix it.
Firstly, so far as Jane is concerned, you suggest a capital protected testamentary trust controlled by Jane to help if her marriage does in fact fail. Sheila is happy with this and doesn’t think Jane would have a problem with it.
Secondly, you suggest Sheila in her will give Michael an option to buy the investment property. He could then choose between buying it for effectively two thirds of the value or letting it go equally between the three under the will.
Thirdly, in the family company there are two issued shares as initially Andrew and Sheila had one each and Andrew left his share to Sheila in his will. You suggest a condition in the will requiring the executors to issue a third share to Jane’s testamentary trust with the other two going to the other offspring, James and Michael.
Sheila gives you the go-ahead and tells you how grateful she is for your help. A few months later you hear that Sheila has passed on, and soon afterwards the three kids make an appointment to go through the will. They also appreciate the equal and considered treatment.