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While we know everyone’s circumstances are different when it comes to estate planning and commercial law, you’d be surprised to learn there’s a few frequently asked questions that are relevant to all. We care about our clients and are pleased to provide the answers to those questions here. For more information or to request an appointment to discuss your situation, please contact our office on (07) 4225 5420 or email info@leibingerlawyers.com.au
Every adult should have a Will. If you die without a Will government legislation decides how your estate will be distributed. If you have a Will you decide what happens to your estate.
Usually a family member will need to obtain a Grant of Letters of Administration from the Supreme Court before your estate can be dealt with.
Many people think they don’t own enough to justify having a Will. However, they often overlook the fact that they may have superannuation or life insurance (or perhaps both) that when added to their personal wealth will mean they have a valuable estate. In the case of a small estate, having a Will in place may mean that there is no need for the executor to obtain a Grant of Probate which will save the estate significant expense. The cost of obtaining a Grant of Letters of Administration will greatly exceed the cost of a straightforward Will.
Everyone’s circumstances are unique and a Will needs to be tailored to the outcomes you want to achieve with your estate. If your circumstances are fairly straightforward and you don’t want anything complex then a professionally drafted Will should cost you anywhere up to $500 to $600 plus GST. However, if your circumstances are more complicated, a complex Will which is likely to have testamentary trusts can cost anywhere up to a couple of thousand dollars.
If you don’t already have an Enduring Power of Attorney then you definitely need one. Have you ever thought who would make decisions about your assets and your medical care if you lost capacity to make your own decisions? Unless you have the people you trust making those decisions, either the Public Trustee or a government tribunal will make those decisions for you. If you have superannuation, you should also have a death benefit nomination in place.
This will depend on your circumstances. Most couples tend to appoint their spouse if they are in a long term stable relationship. However, it’s also advisable to appoint a reserve executor if, for example, you and your spouse were to both die in an accident. While most people tend to turn to other family members to act as an executor in those circumstances, sometimes a family friend, a trusted professional adviser or a professional trustee company are options that can be taken. An executor needs to be someone capable of logically working through any issues that might arise during the administration of your estate, with professional assistance as required.
There is no one correct answer to this question. If important life changes such as marriage or a new relationship, divorce, the birth of children, starting a business, receiving an inheritance or the sale or purchase of a property occur, you should review your Will and other estate planning arrangements to determine if changes are required. Ideally you should review your Will and other arrangements every 2 to 3 years.
Most people turn to family or close friends who they believe share the same values and would raise their children in a similar way. While a guardian has legal responsibility for a child until they turn 18, it is important to appreciate that there is no requirement for the child or children to reside with the guardian if more appropriate arrangements can be put in place.
There is a misapprehension that a person’s superannuation automatically forms part of their estate when they die. However, that is only one of a number of possibilities. Only people who are “dependants” under superannuation law are eligible to receive your super. A spouse (married, defacto or same sex), a child (of any age), a person in an interdependent relationship or someone financially dependant on you when you die can receive your super. Your super can also be paid to your estate.
If the rules of your superannuation fund allow, you can make a binding death benefit nomination (“BDBN”) directing your superannuation to those you wish to benefit (as long as they are a dependant under super law). Unless you have a BDBN, the trustees of your super fund will decide who receives your super. The trustees may, if they decide, follow any non-binding nomination you may have made.
If paid to a spouse, a child (under 25) who is financially dependent on you or someone else who is a “death benefits dependant”, no tax is payable on your super. Where super is paid directly to an adult child (who isn’t financially dependent on you), there will be tax payable on the taxable component of the superannuation death benefit. However, no tax is payable on the tax-free component of the death benefit. If paid to your estate, it is necessary to ascertain who will benefit from the super under your Will or under government legislation (where there isn’t a Will) to determine if tax will be payable. If any life insurance forms part of the death benefit, tax can also be payable depending on the identity of the recipient.
Any assets you own personally (e.g. real estate, shares, managed funds, bank account proceeds etc.) will be part of your estate and dealt with by your Will. In addition, any life insurance proceeds and superannuation death benefits paid to your estate are estate assets. However, property you own as a joint tenant with another person (including joint bank accounts) won’t form part of your estate, nor will assets owned in any trust or company you control.
If you own property as a joint tenant with other persons, your interest in the property automatically passes on your death to the surviving owners under the doctrine of survivorship. If you own property as a tenant in common, you can gift your interest in the property to anyone you wish under your Will.
That will depend on what arrangements you have made about who will replace you as trustee (or as director and/or shareholder of a corporate trustee of the trust) and as appointor of the trust. If you occupy any of those positions, you need to think about who you want to replace you when you die or if you lose capacity. Whoever occupies those positions will control the trust and the assets it owns.
A Grant of Probate is a document issued by the Supreme Court of the State where the deceased person ordinarily lived which legally recognises the validity of a Will and the executor’s authority to distribute the deceased’s assets in accordance with their Will.
Often a bank, life insurance company or another financial institution will require an executor to obtain a Grant of Probate before the executor can collect the bank account proceeds, life insurance or other financial asset. If there is a risk of a challenge to the Will or a claim against the estate an executor is usually advised to obtain a Grant of Probate to protect them from a claim that they have unlawfully distributed the estate.
Yes, there are some ways in which your Will can be challenged. If there is doubt about whether you had capacity to understand what you were doing when you made your Will (e.g. due to dementia, mental illness etc.), then your Will may be challenged. People you had a duty to provide for during your lifetime may also be eligible to make a claim against your estate (e.g. a spouse, a child (of any age) and anyone financially dependent on you at your death) if you don’t make adequate provision for them. There are also other circumstances where a person can have a claim against your estate.
Make sure you seek legal advice from an estate planning solicitor about how you can minimise that risk, including by possibly taking steps to re-structure ownership of your assets to remove them from your estate when you die.
Yes, rather than gifting the inheritance outright to the child under your Will, you can gift it to them in a testamentary discretionary trust established under the Will. If the child’s marriage breaks down, the inheritance is quarantined from having to be shared with the child’s former partner.
A testamentary trust is a trust established under a Will. It only begins on the death of the Willmaker or otherwise at a later time specified in the Will. There are a range of different types of testamentary trust. Which one you choose will depend on the purpose or object you wish to achieve. Asset protection and tax flexibility for your beneficiaries are common objectives. Providing for loved ones who are vulnerable in one way or another (e.g. intellectual or physical impairment, drug addition, spendthrift etc) are others.
It is your choice whether you have an Advance Health Directive (“AHD”). There is no requirement to have one. However, if you feel strongly about having control over what medical decisions might be made for you if you were to lose capacity, particularly certain “end of life” decisions, you should consult your solicitor and your doctor about an AHD.
Tax concessions apply to income and capital gains received by a super fund, including a self-managed super fund (“SMSF”). If you are a member of a SMSF you need an enduring power of attorney to ensure if you should lose capacity your attorney can replace you as a trustee or director of a corporate trustee of your SMSF. Unless that happens within six (6) months of you losing capacity, your SMSF will lose its eligibility to those tax concessions.
This will depend on what the governing rules of your super fund provide. Some public offer funds (e.g. industry and retail funds) do not allow a binding death benefit nomination (“BDBN”) to be made by a member, others require a BDBN to be renewed every three (3) years to remain valid. Still others will allow a BDBN to remain in force until it is revoked by the member. It is increasingly common for SMSFs to have governing rules that offer 3 year “lapsing” BDBNs and non-lapsing binding nominations. Generally, a member of any super fund is able to revoke their death benefit nomination at any time.
Yes. If you want certainty about who will receive your superannuation when you die, a BDBN will give you that outcome. Additionally, if you believe someone is likely to make a claim against your estate, you can keep your super away from your estate by making a BDBN if you have beneficiaries who are eligible “dependants” under superannuation law.
In Queensland, yes. A recent court decision has made it clear that an attorney can do that where no conflict of interest exists or you have authorised your attorney in your enduring power of attorney to make a BDBN where they have a conflict of interest.
For industry and retail funds the requirements can be found in the super fund’s governing rules which must comply with the superannuation legislation. A SMSF can set out different requirements in its governing rules for a BDBN. For example, the requirement for public offer fund BDBNs that two (2) people must witness the member’s signature on the BDBN does not need to be replicated in the governing rules of a SMSF (though many do anyway).
Usually, no. However, the governing rules of the super fund will need to be considered first to answer that question. It is best if those rules contain a specific provision addressing that matter.
