Estate Planning

How many times have you heard the well-worn statement – “There are only two certainties in life – Death and Taxes!”

Well, as most of us will be living longer, quite a few of us also face the unpleasant prospect of losing capacity.

Naturally, none of us is eager to contemplate our own mortality or what will happen if we can no longer make our own decisions. However, unless we commit to doing the necessary planning while we still can, our families and those who we care about will often be left to deal with the unintended and disastrous consequences of our inaction.

Your estate plan requires more than just a Will

Assets you personally own (e.g. your family home, shares in private or publically listed companies etc.) are estate assets which you can gift to others under your Will.

Non-estate assets are assets you do not legally own. These assets cannot be gifted under your Will. Examples include assets you own with others as joint tenants, assets owned by a family trust and, in most instances, superannuation assets.

Other arrangements need to be made to pass ownership or control of non-estate assets to those you want to benefit from them. For example, having a valid superannuation death benefit nomination in place will ensure that your superannuation ends up in the right hands without any unnecessary tax being paid.

Why you should have an Enduring Power of Attorney

Most of us may have a current Will but how many of us have thought about who will manage our affairs if we lose capacity due to accident, illness or disease?

With a valid Enduring Power of Attorney you can ensure that only the person or persons you have utmost trust and confidence in will be able to manage your financial and personal affairs in those circumstances.

Unfortunately, should you lose capacity without having an Enduring Power of Attorney in place, someone will need to apply to be appointed to manage your financial and personal affairs. That person may not necessarily be the one you would have chosen and they could be someone who is not capable of responsibly managing your affairs.

Putting an appropriate Enduring Power of Attorney in place is not overly difficult, nor is it exorbitantly expensive. Should you wish to make an Enduring Power of Attorney, please contact us.

What should you do to protect an inheritance for a beneficiary?

No one is likely to say no to receiving an inheritance. However, for those who have put in place asset protection strategies or are at risk of any form of litigation, directly receiving an inheritance may cause unnecessary difficulties.

If an inheritance is received by someone personally, that inheritance will generally end up being intermingled with that person’s other assets, whether it is used to pay off the mortgage on the family home or put into a business to help fund a new venture.

Should that person be sued or should their marriage or relationship fail then the inheritance, or a substantial part of it, may end up in the hands of a creditor or the ex-spouse.

One way to minimise that risk is for the inheritance to instead be left to a testamentary discretionary trust for that person’s benefit.

A testamentary trust is a trust established by a Will. It starts to operate on the death of a Willmaker and its terms are set out in the Will. The terms of the testamentary trust can be tailored to suit the Willmaker’s circumstances, including those members of the Willmaker’s family that they wish to benefit from their estate.

Testamentary trusts can be used for a variety of purposes including providing a fund for the education of children or grandchildren, preserving an inheritance for the benefit of a beneficiary who is bankrupt, a spendthrift, has a substance addiction or has some special need (i.e. a physical or mental disability).

We are regularly asked by our clients to prepare Wills with testamentary trusts for them. If you are interested in discussing the preparation of a Will with testamentary trusts, please contact us.

How can a Will be challenged?

Wherever possible the law tries to uphold the terms of a Will. However, there are some ways that a Will can be challenged. These include where the Willmaker did not have the required capacity to make a valid Will, where someone close to the Willmaker has unduly influenced the Willmaker to favour them over other possible beneficiaries and where certain family members have either been left out of a Will or are seeking a greater amount of the Willmaker’s estate.

Depending on the specific circumstances, it is often possible to take steps to minimise the likelihood or risk of a claim being made, or if made, not succeeding. If you are concerned about the possibility of a challenge to your Will, we can advise you about the risk of the claim being made and discuss with you any action you should take to minimise that risk.