Estate Planning – Misconceptions & Actions to be Taken

Estate planning is important to everyone, irrespective of their age or financial position.

Everyone should think about or implement an estate plan which takes into account the individual’s personal circumstances including family arrangements, businesses, assets and liabilities, superannuation and how the estate is to be administered upon death.

In addition to leaving assets to chosen beneficiaries, other goals can be achieved by implementing an estate plan, including:

1. expressing wishes in respect of guardianship arrangements for any children under 18 years of age. We note that it is only a wish and the Family Court does have an overriding power to appoint someone as a guardian.
2. establishing a testamentary trust in the Will to cover issues such as:

• minimising the taxation payable by beneficiaries on any income generated through the inheritance.
• protecting assets for beneficiaries who might be at risk of losing their inheritance. For example, they may be bad money managers, have gambling or other issues, or may be involved in a business where they have an exposure to risk.

A Will does not necessarily cover everything as some things fall outside the scope of the Will, such as:

1. any assets held by the deceased person jointly with any other persons as joint tenants;
2. superannuation – depending on the options given to the Trustee of the super fund; and
3. life insurance policies with nominated beneficiaries.

Unfortunately, regardless of how well an estate plan is prepared, there is a prospect that certain persons (such as dependants or spouses) can make an application to the Court for further provisions to be made for them from an estate. However, steps can be taken to minimise the likelihood of any such claim being successful by, for example, leaving details as to why certain individuals have been excluded from a Will or have had their inheritance reduced.

We recommend that clients review their Will or estate plan on a regular basis to ensure that it still suits their circumstances and goals. Various events, however, make it imperative for an individual revise their Will or estate plan including:

1. marriage – marriage revokes a Will unless it is made specifically in contemplation of that particular marriage;
2. divorce – divorce does not automatically revoke a Will;
3. the sale of any significant asset;
4. changes in financial position – Good or bad;
5. the addition of beneficiaries, such as a new child or grandchild.

For further information, please contact our Wills & Estates Team