by Jack Stuk, Partner Taxation, Property Joint Ventures & Complex Estates, Mills Oakley and recently published in Thomson Reuters Weekly Tax Bulletin Issue 13.
Despite being in the top 30 richest families in the World, never has so much (from the litany of newspaper reports) produced so much less in family cohesion and happiness for the Rinehart Dynasty.
It is understood the case concerns the vesting of a family trust for the benefit of several children of the family, and the power of the trustee to extend the life of the trust.
While the matters in the case are before the courts, they give rise to some consideration of what constitutes good and effective succession/estate planning. This brief article explores some of those issues.
Leaving aside the many technical, legal and tax issues recently canvassed in the press, the absence of a robust, carefully considered Succession/Estate Blue Print from the outset can cause major problems.
Family Trust Deeds, being the receptacles of the wealth, need to be properly set up and drafted to accommodate an appropriate “Succession Blue Print”. Where this is done, expensive and emotionally disruptive and divisive litigation can be avoided.
“….. leave them enough for them to do something but not too much so they do nothing” (quote from George Clooney’s recent film “The Descendants”)
A well thought out and structured Estate/Succession Blue Print should include the following components:
Leaving a responsible, independent and dispassionate trustee with some guidelines and a discretion of when and how much of a beneficiary’s notional share they should get is a better option. Of course, choosing the right trustee(s), appointor and guardian, is a difficult but usually rewarding task.
Many financially successful (albeit not Mega Rich) families have considerable wealth within and outside family trust structures including “bucket companies” and private superannuation funds.
Without the careful planning required to implement a cohesive and uniting Succession Estate Plan (covering control over the Wills, trusts and associated entities), a large number of families will unfortunately also inevitably end up in divisive, expensive and debilitating litigation.
Further, future generations will have the desire to excel eroded by no or an injudicious Blue Print for the passing of family wealth. Overall, society suffers.
Those who care about family harmony need to work on and implement a well considered Succession Blue Print tailored to the specific requirements of their loved ones.
Otherwise, many lawyers will “inherit” through avoidable litigation, a material part of that wealth.
To discuss any of these issues and their application with yourself or your family, please contact: