10 Tips

New Financial Year, New Will: 10 Tips to Make Sure it’s Valid

12 July 2016

As a new financial year ticks over, financial and strategic planning is common practice for businesses, but one overlooked and yet highly important action to take is the review of your personal Will and estate planning.

We speak with Rigby Cooke Lawyers’ Special Counsel, Rachael Grabovic, about the best approach.

Rachael: Having an effective and valid Will is important but we all too often put it into the too hard basket, and ‘update my Will’ continues to slide down the to-do-list.

Understandably many people also find the mere thought of death and incapacity both a stressful and a daunting notion, but let’s make FY17 the year where you make your estate planning a priority.

What is estate planning?

Rachael: I am often asked this question, and yes, it is different from a legal Will.

Estate planning is the development and preparation of a plan which details your current personal and financial needs, wants and objectives followed by a strategy for lifetime planning and the passing of your wealth to your family and friends on death. It considers a succession plan for both death and incapacity across your personal and business needs. This objective remains the same whether you have a lot of money or a little.

How often do I need to redo my estate plan

Rachael: I recommend that you turn your mind to your estate planning at least every two years. This means reviewing your personal and financial circumstances and objectives, as well as the personal circumstances of your intended beneficiaries, and comparing them with your current estate plan. You should also update your legal documents if you have had a significant event occur, say, you come into money or property, or you get married, divorced or have children.

Top 10 key issues you should consider in reviewing your estate plan:

1. Lifetime Planning – dealing with incapacity

Many people associate mental incapacity with dementia and old age, but there are many circumstances where age is irrelevant. For example, you may find yourself in a coma or with an acquired brain injury following a motor vehicle accident, or a serious illness may affect your ability to make decisions for yourself. Regardless of your age, it is important to plan and appoint someone you trust to manage your finances or more importantly to make legal, medical and life style decisions for you!

2. Marriage and Divorce

There are so many things a soon to be married couple must organise before the big day, but unfortunately something many people do not realise is that most Wills prepared prior to marriage will be revoked (no longer legally valid) once you are declared husband and wife, unless they are made in contemplation of marriage.

Divorce on the other hand, does not revoke your Will but it does remove your ex-husband/wife as a beneficiary of the estate. The question remains with this major change ‘Are your Wills still legally effective?’  It is important to know how particular events or changes in your life affect the validity of your Will.

3. Guardianship of children under 18 

If you have children under the age of 18, then you should turn your mind to who will care for them in your absence. Although an appointment of guardian in your Will is not binding, it does provide the authorities with guidance as to who you believe will do the best job in providing the long term care and support for your children.

Directions to your executors however are binding and therefore you can include directions in your Will, regarding the use of your home, the hiring of a nanny, the purchase of a car or the payment of travel expenses etc.

4. Superannuation and Death 

Without a valid Binding Death Benefit Nomination in place, the Trustee of your Super Fund has the power to determine who will receive your super on your death. Reviewing your superannuation is an important aspect of Estate Planning and should not be done in isolation. The law governing superannuation is strict and can impact upon who you can leave your super death benefits to. For example, parents, siblings and grandchildren do not automatically qualify.

5. SMSF Planning for incapacity and death

Managing your own self-managed superannuation fund (SMSF) brings with it further estate planning issues. In addition to contemplating who will be entitled to receive your superannuation death benefit on your death you must also consider who will take control of your fund if you were to lose capacity or die. The issue of control has become a very important aspect of estate planning with recent cases being disputed in the Courts; lawyers being the only winners.

Without a valid binding nomination in place at time of death, the person or persons in control of your fund will decide who receives the proceeds of your death benefit. Do you trust this person or persons to make a fair and just decision once you are gone or could they decide to keep it for themselves?

6. Life Insurance – who should you nominate as the beneficiary?

Life Insurance can be an important element of an estate plan especially if you have a mortgage and a young family. When nominating the beneficiary of a life policy you should consider the purpose of the policy and how the proceeds could be best used. For example, it may be prudent to pay the policy to your estate where it is held on a testamentary discretionary trust for the benefit of the surviving spouse and children. This can provide substantial taxation savings, especially where the children are of school age.

7. The Family Business 

Not only should you plan for the transfer of your personal wealth, but also your business interests. The options available to you will depend upon the type of business you own and how you own it. Most business succession plans will operate outside of the Will, but there are circumstances when you will need to provide directions and additional powers to your executors to ensure that they can carry out your wishes or continue to operate the business until it is sold or transferred. Planning and tailored advice is imperative.

8. Family Trusts and Estate Planning 

The assets in your family trust are governed by terms of the trust deed, and therefore you are unable to deal with them via your Will. This statement is true in most cases, but there are a number of aspects which need to be considered when reviewing your estate planning: the position of the Trustee, the power of Appointment, the succession of Appointor and any loans between your beneficiaries and the trust.

9. How will inheriting your assets affect your beneficiaries? 

Often we think about who we want to leave our estate to and neglect to consider how this gift of money or property may affect the beneficiary.

When reviewing your estate plan, you should consider the personal and financial circumstances of your beneficiaries. For example, are they an undischarged bankrupt, does the beneficiary have a disability, a gambling problem or perhaps some form of addiction which may affect their ability to effectively manage a sizeable sum of money? If you answered yes to any of these, then your Will should deal with the gift prudently and often a testamentary trust should be included.

10. The changing face of the law 

The law is constantly evolving and although your Will and Enduring Powers of Attorney may still be valid twenty years after they are signed, the question remains, ‘Is it the best Will or Powers of Attorney for your current situation?’

We have over the past 12 months seen major changes affecting the law of estate planning.  We saw the introduction of the Powers of Attorney Bill and changes to who can challenge a Will.  With the state government introducing further changes to enduring powers of attorney and the implementation of binding advanced care directives, this is an opportune time for you to review your existing estate planning documents.

If you would like to discuss your estate planning needs with an experienced estate planning lawyer please contact Rigby Cooke Lawyers – our goal is to deliver personalised tailored estate planning advice

Disclaimer: This publication contains comments of a general nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional advice. No responsibility can be accepted by Rigby Cooke Lawyers or the authors for loss occasioned to any person doing anything as a result of any material in this publication.

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©2016 Rigby Cooke Lawyers