Tag Archives: Estate Planning

What is Estate Planning and Why Do I Need One?

What is estate planning?

Estate planning is more than simply making a Will. It is the process of anticipating and arranging for the management and disposal of your estate during your life and after your death.

It should provide you with peace of mind that your family will be secure if something happens to you. If well-crafted it can minimise any tax paid by your heirs and help avoid any family disputes. It should also include documents that govern how you will be cared for, medically and financially, if you become unable to make your own decisions in the future.

Every family is different and it needs consideration of all aspects to determine the best plan.

Estate planning is also vital to any financial plan. A good estate plan requires the involvement of skilled legal, accounting and financial specialists to ensure the right funds get into the right hands at the right time.

Laws change so your estate plan needs to be regularly reviewed and updated to ensure it is still achieving what you want it to achieve.

Some of the major estate planning tasks include:

✓ Understanding your assets and what can be done with them upon death
✓ Creating a Will
✓ Limiting disputes by setting up trusts for beneficiaries transferring assets now
✓ Establishing a guardian for living dependents
✓ Naming an executor of the estate to oversee the terms of the will
✓ Creating/updating beneficiaries on plans such as life insurance & superannuation
✓ Setting up funeral arrangements
✓ Setting up durable power of attorney (POA) to direct other assets and investments
✓ Placing assets outside of your estate to avoid litigation

Transferring the family farm or other businesses has never been more affordable

Recent changes to tax legislation and stamp duty rules has made now an excellent time to consider how you want to manage the family farm or business for the future. Up until now tax consequences and stamp duty have made this unviable for many families but the new rules are making a big difference. Previous rules were very strict but now there is a lot more flexibility if your farming or other business meets certain criteria.

So if you have ever discussed selling or gifting the farm or your business to family members now is the time to talk to us about the new rules.

How do I avoid my family fighting over my will?

In our modern world families no longer accept their loved ones’ decisions as set out in their will and more and more people are commencing court action against estates. The costs both financially and emotionally to families is enormous. Proper estate planning involves more than drafting a will. Considering transferring your assets to entities that are not impacted by your will, managing superannuation and debt and generally letting you know where the risks to your estate plan lie and how they can be minimised is an essential part of the estate planning process.

Managing family expectations and then setting up your assets in entities that are difficult to contest when you die is one of the many ways we can help ensure that your wishes are put in place. Traditionally some of these options were very expensive but new taxation and stamp duty provisions have made estate planning far more affordable.

I have a great estate plan in place so what else can go wrong?

It is also important to consider how your assets are dealt with if you lose the capacity to make decisions for yourself. It is amazing how often a great estate management plan can be affected by an attorney dealing with assets without considering the impact on your will. Many fail to consider these implications and a ‘standard’ or ‘kit form’ power of attorney can be as disastrous as a will kit. Worse still if you have no power of attorney the courts determine who will manage your affairs and often will appoint the Public Trustee. Can a stranger manage your assets for you???

Call Wright Clarke Solicitors on (07) 4992 2722 to arrange an appointment to discuss your Estate Plan today.

The return to school battle!

January and early February have been a flurry of school based activity. Both my children now are boarding at The Rockhampton Grammar School. So January was busy with cricket and golf training, fencing and cattle work as well as arguments with contact and the sewing machine!!! 

My goodness the busyness of getting school books uniforms and casual clothes kept my mind off the fact that I would be home alone (except for a husband that crashes each night exhausted on the couch!!). It was hard sending my eldest last year, but to send them both this year resulted in a two hour drive home in tears!!  

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I have been looking for some me time for 13 years and now that I have it – I would give it up in a heartbeat to have my lads back home!!

 I find it amazing how the jobs seem to take no time at all when you are not hollering at them to stop fighting or clowning about and feed the dogs, check the eggs, feed the poddy calf.  I now wonder why I didn’t just do it myself – oh that’s right I was washing folding ironing cleaning and shopping for food (my poor husband had the fun of cooking most nights!!!) not to mention adjudicating the incessant pre-teens squabbles and hiding iPad’s.

My eldest  son took an entire year to settle into boarding last year. Thanks to the tireless efforts of a well-equipped and generous minded staff he finished the year well and waded back into the fray with hardly a backwards glance.  A cricket tragic, he was off in a cloud of dust to the cricket nets!!!

My younger son had a few ups and downs but has found some mates and will no doubt find his rhythm soon. The teary phone calls are less often and he seems to be having lots of fun! 

Choosing the right path for your children is always a challenge – every option has its pros and cons. The discipline and focused education was vital to my boys who are not naturally academic. The exposure to so many children from other areas helps them understand others and truly realise the world is a lot bigger than Biloela! 

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So term one has begun and now I am taking the time to follow my own advice. This week I am completing our legal health check for our personal affairs. Whilst we never want to think about early death or sudden serious injury – riding the quad bike through mud paddocks to get to town for work  made me stop and think – did we consider the risks and what if a nasty accident had occurred? Well after I complete this check I will know what I need to do to ensure my boys are safe and cared for if something happens to me!  

Have you considered the potential outcome of sudden death or illness on your family? Our free personal health check questionnaire can help narrow down issues that need to be considered and we can formulate a plan to ensure that all bases are covered and your family provided for legally in the event of an accident or illness.

Email or call our office on 07 4992 2722 and arrange a time for me to contact you by telephone to discuss your situation and see how we can help you. Sign up for our emails and let us know what legal issues interest you.

 

Binding and Non-binding Superannuation – what’s it all mean?

Who is going to get your hard earned Superannuation
You’ve put away money for that rainy day – but who will get this money if you die?

When you die the Trustee of your super fund decides on who receives your super. Many people are blissfully unaware that their entire super, and often their insurance benefits, are up for grabs amongst the dependants they leave behind. Many more do not know who is a ‘dependant’.

Hang on I told them who was to get my super if I die
Under superannuation law, the Trustee of your super fund has the discretion to pay out your super benefits if you die amongst the defined ‘dependants’. At this stage you might say to yourself, this does not apply to me, I have nominated my beneficiaries. Are your bases covered?

Was it a binding nomination? Or did you just write in your partner’s or your children’s name. Have you checked recently? It is surprising how many people nominated mum or dad 20 years ago and now have a family.

Okay I didn’t do that binding thing
On the positive side, this power allows the Trustee to take into account a new spouse or family if the Superannuation Member never got around to updating those nomination forms. The downside is that this may mean that your “ex”, who you never got around to removing as a nominated beneficiary, may get their hands on your super after you have gone and it is too late to argue. Will your ‘ex’ take care of all your children properly? This is not something we should leave to chance. You need good financial and legal advice and this advice must be within the context of all your financial affairs and your specific and unique family circumstance. A simple ‘kit’ just won’t cut it.

Binding Nominations
Well now you can have the final say about who receives your super. This feature is called a Binding Death Benefit Nominations (Binding Nominations).

What are the benefits of making a binding nomination?
You remove any uncertainty about who receives your super (including insurance amounts) when you die. This means you can nominate exactly who gets what. Provided you get good professional advice you can prevent unwanted claims against your super. This makes your Estate Planning more precise and effective.

Who can I nominate?
You can nominate any of your dependants as defined under the superannuation law – i.e. your current spouse (including your defacto) or your child of any age (including adopted children and your spouses children), or a person financially dependent on you at the time of your death (your grandson you are raising). You can also nominate your estate (your assets in your Will). It is important to understand the financial consequences of who you nominate.

It is also vital that you understand who is considered your child under the super laws. This can be quite shocking – particularly if you are separated but not divorced and have a defacto partner. The definition of child is very broad.

You can split the benefit between people as long as you give details of those dependants and the proportional share you want to go to them. You can also determine how they take their super in certain circumstances – such as pensions for spouses rather than a lump sum payout. Only the nominees who are dependents at the time of your death can receive your super so it is important to review this with your advisors regularly.

Must I make a binding nomination?
No. The decision is yours to make. You can make or revoke a binding nomination at any time prior to your death provided you have capacity.

What happens if I don’t make a binding nomination?
The Trustee distributes your benefits amongst your dependants and your estate in whatever way it believes is fair and reasonable. This is done taking into account the nomination you completed on your application form (remember, though, they are not bound by your nomination unless you made a ‘Binding Nomination’).

Special care needs to be given to self managed super funds. Who will be the Trustee at the time that you die? If that is your spouse or a child can you be certain that they will put your other family member’s needs and your wishes ahead of their own interests. It is not against the law for your Trustees to use their power to give your super to themselves if they are your ‘dependent’

What if I have already named my beneficiary?
Any nominations made before December 1999 are not binding on the Trustee. The Trustee continues to take them into account when exercising its discretion, provided you do not make a ‘Binding Nomination’. However, if you make a ‘Binding Nomination’ now, you override any prior death benefit nomination you have made.

Are binding nominations effective forever?
No. You can revoke or change your nomination at any time. Some nominations lapse other remain until you change or revoke them. Each super fund has its own rules and you must be certain that you comply with the rules to ensure your nomination is valid.

How do I make a binding nomination?
Contact your super fund and ask them whether they allow you to make binding nominations. You will need to complete a special form and have your signature witnessed in a special way. It is very important that you discuss this with your lawyer and financial advisor before you make a binding nomination. All your assets and interests must be considered to ensure that your wishes can be upheld after you die.

What happens if my nomination is invalid?
If your nomination is invalid for any reason, e.g. not signed properly, your super is paid at the discretion of the Trustee, to either your dependants or your estate.

Is there anything else I should consider?
You may want to consult an adviser and a lawyer to determine any tax and legal implications and to ensure that you achieve the optimal financial result for your dependants.  Bear in mind that superannuation money left to someone other than a spouse or minor (under the age of 18) dependant is in most circumstances taxed.

How does the Trustee make their decision
Generally a fund’s trust deed determines a benefit is paid to a dependant or anyone who is financially dependent in any way on the member.  The Trustees must also go through a pain staking process, which involves notifying anyone who may be considered a dependent and entitled to claim on your super.  This may encourage people to make a claim, purely because it has come to their intention that they may be entitled to a benefit.

As a result the distribution of a member’s super death benefit can become a time consuming and sometimes costly process.   Beneficiaries can appeal the trustee’s decision through the Superannuation Claims Tribunal and due to the processes involved, the distribution of the superannuation proceeds can take many months and even years.

In the meantime, your loved ones are left to deal with the financial, emotional and physical devastation of no longer having you in their life.  To add to their difficulties, they are left to deal with the stress of the superannuation claim appeals process, not to mention the disintegrating family relationships that may result from such a process.

You will need to keep your nominations up to date, especially if you marry, re-marry or have children.

There is no substitute for regularly reviewing your affairs with your trusted advisors and ensuring that all your assets and entities are taken into account and taxation, debt management and other issues properly considered in the full estate planning context.

Anna Radel at Wright Clarke Solicitors takes the time to thoroughly review your financial and personal affairs and to explain the various legal matters that must be considered when planning for the future of your family when you can no longer take care of them. If you need help with your Wills and Estate Planning contact us on 07 4992 2722 or email admin@wrightclarke.com.au.

How to challenge a Will

Losing someone close to you can be an emotionally difficult time, and having to challenge a Will can make this all the more difficult.  Challenging a Will can be complicated and strict time limits apply- so seeking legal advice early is imperative.

Under the Succession Act 1981 (QLD) the following categories of people are eligible to make a claim for further provision from an estate if they feel unfairly provided for under the Will:

  • Husband or Wife of the deceased
  • A de facto partner of the deceased
  • A child of the deceased (this includes adopted and step children)
  • A dependent former husband or wife of the deceased
  • A person who was wholly or substantially maintained by the deceased at the time of death

To challenge a will and to make a claim under the Succession Act you must establish that inadequate provision has been made for you by the deceased.

The court will consider 4 things when deciding if adequate provision has been made from the Estate for your proper maintenance and support, namely:-

  1. Your financial position;
  2. The size and nature of the deceased’s estate;
  3. The totality of the relationship between yourself and the deceased;
  4. The relationship between the deceased and other persons who have a legitimate claim on the estate.

You may also challenge a will due to:

  • Undue Influence – if someone attempts to influence the terms of the Will or if physical, psychological or threatening duress was placed upon the deceased the Will can be contested.
  • Incapacity – if the deceased lacked capacity to make the Will meaning they did not understand the nature and effect of their Will they were signing or were unable to make rational decisions about how their estate is distributed the Will can be contested.
  • Contract to Make a Will – sometimes people may choose to enter into a binding contract to make their Wills in a certain way. Problems occur when one of the parties makes a later Will which is different to the contract. On most occasions the other party is not told of the change or in some circumstances has passed away. Providing the contracts have been drafted correctly and can be enforced legally, a person affected by the breach of the contract may be entitled to make a claim.

Wright Clarke Solicitors gives consideration to all of your personal and financial affairs when drafting your Will. We examine your own financial position and the size of the estate to determine your needs relative to the value of the estate. During the estate planning process we look at both current and previous relationships that may entitle others to a claim on the estate.  Contact our team today to discuss your Estate Planning needs.


Have you seen the other posts in our Estate Planning series?
Estate Planning Introduction: When to review your Will
Estate Planning Part One: How do I make changes to my Will
Estate Planning Part Two: The role of executors
Estate Planning Part Three: Challenging a Will

The role of executors

Being an executor can be time-consuming and emotionally demanding. You may be personally liable for the decisions you make. So agreeing to be executor is a decision which should not be taken lightly.

The paperwork involved in estate administration is increasing every day. Prior estate planning involving the relevant family members can minimise the negative impacts on a family. Many families are shocked to discover that the death of a loved one can trigger so much bitterness. Estate planning can identify areas of dispute and often help resolve them during the lifetime of the willmaker.

Estate planning involves more than just a well drafted will, although this is an essential component. Analysing the assets and liabilities and discussing gifting of personal effect (high sentimental value but generally of no commercial value) and implementing these plans can minimise the financial and emotional costs of managing an estate.

Executors are charged with identifying estate assets and liabilities, discharging the liabilities and then distributing the assets in accordance with the will. Some estate assets can decrease in value if not dealt with swiftly or if the estate has insufficient funds to maintain them. Sometimes this means making hard decisions and offending other family members. Whilst fair and open communication between the family members will minimise costs, it is imperative to obtain both financial and legal advice early on to ensure that executors are aware of the risks and obligations involved and some of the options available to them.

Have you been appointed executor?
It is your role as executor to locate the original Will, advise family and friends, then assist and pay for the funeral, and follow up the special wishes/ instructions from the deceased.

You must establish a complete picture of the deceased’s finances, including identifying any debtors and creditors. Funeral expenses, income tax, fees for administering the estate and out-of-pocket expenses must also be paid.

It is also your duty to carry out everyday tasks such as arranging for pets to be cared for, redirect mail, cancel services and pay any outstanding bills.

The executor must identify the estate assets including any interstate or overseas and have them valued, secured and insured. This would include such things as a home, car, superannuation, jewellery, investments and home contents

As an executor you are potentially responsible should something happen to the assets of the estate. It is important for the executor to ensure that all assets including property, collectibles and investments are safe and to arrange insurance protection if needed.

Before an estate can be distributed, it is necessary to obtain a clearance from the Australian Taxation Office. It is your duty as executor to obtain this clearance. It requires both a date of death and an estate tax return. The executor will have to give details of all income earned during the current financial year and past years.

There are many legal issues that arise when administering an estate. The executor is responsible for resolving estate issues, liabilities and disputes. This may consist of challenges to the Will including, entitlement issues and beneficiary disputes.

Wright Clarke Solicitors handle many estate matters and liaise closely with financial advisors to ensure practical efficient and costs effective advice is given to families involved in estate administration and planning.


Have you seen the other posts in our Estate Planning series?
When to review your Will
How do I make changes to my Will

How to change your Will

If your circumstances have changed – your Will must be updated to reflect your current circumstances. But what’s the best way to do this? Let’s go over some of the main questions we get asked when people are looking at changing their Will.

Can’t I just write in my changes?
Your Will is a legal document, and you cannot simply add or delete anything from your Will after it has been signed. Doing so may cause your Will to be invalid. Even the simplest change needs to be done correctly or the results can be costly.

What if I make a codicil?
A codicil is an addition or supplement that explains, modifies, or revokes a Will or part of one. If wrongly prepared a codicil can revoke all of your Will. Will drafting is a very precise legislation driven exercise and should only be handled by experienced solicitors.

Codicils were originally designed to save time and money when Wills were handwritten or typed on a typewriter.

A codicil must be signed and witnessed with the same formalities as those used in the Will’s preparation. We do not recommend attaching a codicil to your Will as there are many legal issues that arise and they have a potential to add to the cost of administering your estate while not guaranteeing the result you intend.

How to change your Will
With today’s technology is it more effective to prepare a new Will. Here at Wright Clarke Solicitors we offer a complimentary 30 minute consultation to review your current Will and to consider your full estate planning needs. If you decide not to make any changes no fees apply. Of course if you do decide to make a new will our team can discuss your needs and advise you of the approximate costs. In most situations you will need to consider more than just your will alone. Contact our team today to book in your consultation.


Have you seen our Introduction to our Estate Planning Series?
When to review your Will

When to review your Will

Some people think that making a Will is something you do once and that you can then forget about it. Nothing could be further from the truth. The only thing that can be worse than not having a Will is having a Will which is no longer relevant to your circumstances.

If a child, spouse, executor, guardian or beneficiary passes away you will need to amend your Will to reflect this.

If you have gotten married since your Will was created it will generally be revoked by the marriage unless your Will is made in contemplation of marriage. A de facto living arrangement will also affect your Will as the de facto partner is entitled to distribution from your estate and may contest your Will if not provided for.

If you have divorced from your spouse certain clauses in your Will may be revoked. If you are separated, contemplating divorce or have been divorced since making your Will make sure you consult our team.

If you buy a significant asset or investment, get involved in a new business, company or trust you need to give consideration to what happens to this asset after your death. It is important for you to review your Will every two or three years or when a major event occurs in your life. Regular reviews of your Will ensure that your intentions are still accurately reflected.

Peace of mind comes from making sure all your affairs are considered. If your circumstances have changed – now is a great time to review your Will.  Wright Clarke Solicitors offer a complimentary 30 minute consultation to review your current Will and to consider you full estate planning needs.  Contact our team today to book in your consultation.