06 May Wills-should you be giving everything to your spouse in your Will?
In the normal course where a couple have been together for many years (and being their first marriage or long-term relationship), their Wills usually provide for their estate to pass to the survivor in the first instance and upon the death of the survivor then the estate is to pass through to the children.
However, as people get older and the question of aged care becomes a real possibility it may be better to consider alternative provisions. If, for example, the survivor ends up going into an aged care facility (or is in one already) an inheritance such as this can make a substantial difference to the cost of aged care. This is due to the means tested care fee, which provides for the fees associated with aged care to vary, depending on your assets. This can also result in the complete loss or reduction of any pension entitlements.
In those circumstances, it may be more appropriate as you approach a more advanced age, to look at the question of having your residence transferred into your joint names as tenants in common, as opposed to joint tenants (where the survivor automatically becomes the owner of the residence) and then through your will providing that your surviving spouse has a right to reside in the property for the rest of their life, and be able to require the sale of the property and for the proceeds to be used to purchase an alternative property or to pay the fees for entry into an aged care facility. Also, the Will could provide that the surviving spouse have a right to receive the income earned on the other estate assets but upon the death of the surviving spouse, the capital sums pass through to the children.
In this way you can help minimise the entry fee payable to an aged care facility and the ongoing fees and also maximise the likelihood of an aged pension being able to be maintained.
If, however one of the couple does not have sufficient capacity to undertake these steps then it could be too late. The additional costs that will then be incurred by you and possible loss of income could result in the ultimate inheritance being passed onto your children being substantially reduced.
With the complexities of the rules and regulations concerning aged care and with more and more people going into those facilities structuring your financial affairs to minimise ongoing costs and maximising income can require some careful thought rather than going down the simple path as has been the norm in the past.
If you require any advice or assistance in relation to this then our Wills and Estates team at Solari and Stock can help you; contact Solari and Stock Miranda on 8525 2700 or click here to request an appointment.