Warnocks January Newsletter - Estate Planning
We wish our clients and the friends of our firm a Happy New Year. After a good break, blessed by some warm weather, the festivities are over and people are starting to resume their normal routines.
This newsletter contains some observations regarding the need for Estate Planning, beginning with a current will. Everyone deserves to have a properly-formulated estate plan, the main component of which is an up-to-date will. To be most effective, the will should be congruent with one’s other important documents such as enduring powers of attorney, superannuation nominations, business succession agreements and insurance policies.
Not Having a Will
To pass away intestate, that is, without having made a will, creates many administrative problems for the people who have to administer the estate of the deceased person. Fortunately, we have only had this experience once in the last ten years. In that case, despite the estate being fairly small, it took us over 18 months to find a relative who was willing to take on the role, and to help them to administer the client’s estate.
Having a will that reflects your current wishes There are many reasons why people put off making or updating a will. They are understandable as it can be difficult to consider one’s own mortality, and to make decisions about the disposition of one’s estate. However, one ought to consider the situation of those people left behind. It can be helpful and comforting for the family friends and associates of a will-maker to know that a will reflects the up-to-date wishes of the will-maker. Even though there may be difficult issues to be faced, it is better to make tough decisions now, so as to avoid controversy later on. Not all assets can be dealt with by your will At a minimum, one ought to know which assets can be dealt with by one’s will, and which assets are excluded. For instance, the control of one’s superannuation benefits may be vested in the trustee of a Self-Managed Super Fund, and control of a family trust may depend upon ownership or control of shares of a trustee company.
Survivorship Certain jointly-held assets do not even have to be dealt with by a will, for instance, where the laws of survivorship apply. Where couples own a home or other asset in joint names, on the death of one partner, the will-maker’s share of ownership will transfer to the survivor.
Tax benefits There can be tax benefits from estate planning. For instance, giving beneficiaries the option of setting up testamentary trusts could benefit minors. Income derived from testamentary trusts is presently taxed to minors as though they are adult beneficiaries, resulting in a tax-free threshold of $18,200 for each minor beneficiary.
But, it’s simple isn’t it? Indeed, in many cases, estate planning may be straightforward. For instance, an established couple may wish to have wills that mirror each other, merely leaving their assets to one another and appointing the other partner as executor. Often, the intention is that assets are to be divided between any children on the death of the surviving partner.
Potential complications
Where a person’s family situation is not quite so plain, complications could arise. For instance, where there is a blended family and the will-maker has specific distributions in mind. Other cases that need careful consideration could include those where a child has already received significantly greater benefits than their siblings, a child that has special needs, and a child or other beneficiary is drug dependent or has a gambling issue.
Other considerations Some other issues that could be considered when engaging in estate planning and making a will could include: - Executing Powers of Attorney and Health directives - Choosing suitable executors, and making sure they are willing to act - Who should administer the will, including making the application for probate? - The effects of a de facto relationship - Deciding how old a beneficiary should be before they have access to significant assets? - How to leave one’s personal assets and household contents - The possibility of a divorce in the family group, and the effect of a marriage, entered into after making a will - Giving a life interest in an asset - Guardianships - Bequests - Possible challenges to the will; how can they be foreseen and hopefully avoided? - Funerals: what does the will-maker want? Who knows their life story? And, finally, it is better not to have everyone guessing, so please leave clear Instructions for a burial, or cremation. Consider organ donorship and/or making your body available for medical research.
Disclaimer: The information in this newsletter is provided for informational purposes only and should not be relied upon as specific advice. Warnocks Pty Ltd does not accept any liability in respect of this information.