The sudden onset of illness and complicated family dynamics left a large estate in financial disarray.
Melissa Taylor* did everything to provide for her four children during her life. But it had an unexpected consequence: her children didn’t have the financial skills to successfully transition into adulthood.
“At least one of her daughters had never lodged her own tax return even though she was in her 50s,” says Equity Trustees Senior Estates and Trusts Solicitor Suzie Willis.
When Taylor unfortunately developed a terminal illness, she became quite sick.
“Although she had capacity, by the time she came to organise her affairs, she wasn’t in the position to engage in the kind of sophisticated planning that was needed.”
Taylor’s estate was also complicated – worth around $40 million – spread across trusts, private companies and assets, including a commercial enterprise. So when Taylor died, there was risk that chaos would ensue.
To make matters more complex, capital gains distributions had been neglected, leaving her estate facing a potential $2 million tax bill. Meanwhile, Taylor’s estranged partner and another child also made a claim against the estate.
“Given the large sums of money and complicated assets involved in her estate, there was also a fear that her children could be left vulnerable to exploitation by people who might not have their best interests at heart.”
Just before Taylor died, her solicitor at an external firm recommended she appoint Equity Trustees as a trustee and estate manager given the many risks she was facing.
After Taylor’s death, Equity Trustees worked to offset losses and negotiate her tax bill down from $2 million to $600,000 (including interest and penalties). The organisation also streamlined her estate and trusts by collapsing many complex assets, private entities and trusts into a more manageable structure.
“It was very clear that if the assets had passed directly to the family, there could have been a lot of infighting,” she says. “I also have no doubt that it would have ended up in some pretty protracted litigation at some point down the track.”
There would have also been more potential tax liabilities.
“We work to protect your assets and always make sure the tax office doesn’t get more than their fair share. This case is really a very strong reminder of why professional trustees are so important.”
* Name changed to ensure privacy.