… an interview* with refreshingly honest observations from a specialist lawyer …
After 35 years in legal practice, there isn’t much that still surprises Rod Genders. He’s pretty much seen it all.
I have made my Will with him, and I am glad to have his strength and knowledge on my side. Standing at 6’4” Genders is a big man, and he has an imposing presence. I wouldn’t like to confront him in Court – or in a dark alley, for that matter!
His law firm is the oldest in South Australia – established in 1848 – and like his father and his grandfather before him, Genders has spent his entire working life in the law, helping generations of Australian families to sort out a multitude of legal issues.
His areas of expertise are Wills and estates, and he describes one of the main issues that concerns many families when they come to him to help put their affairs in order – the black sheep or problem child in the family.
I ask him about this, and he switches his phone to Do Not Disturb and leans back in his chair.
“Parents naturally want to look after their children – even from beyond the grave. They want their kids to receive the benefit from their hard work after they’re gone. But an increasing number of parents are concerned about leaving unconditional bequests in their Wills to their grown-up children, for fear that they will squander their inheritance.
Some kids just seem to attract hard luck and trouble, don’t they? They can be immature, have difficulty holding a job, or are just poor money managers. Some develop a bad and expensive habit, like gambling, drugs or alcohol, while others suffer mental illness.
Then there are the risky-business kids, who constantly fear the door-knock from the bailiffs because they run their businesses on the knife-edge of bankruptcy and litigation.
A few are constantly in trouble with the law. Some are always in a fight with someone.
Many parents feel the need to try to protect these problem kids from themselves.
Sometimes it is not the biological kids who are the source of concern, but the kids’ unsuitable choice of partner. Many parents are concerned about their children’s spouses. About fifty percent of all marriages end in divorce. Many of my clients worry about what happens if they leave assets to their child, who subsequently gets divorced. Under current Australian laws, the child’s ex-spouse may wind up with half of their inheritance. This ‘out-law’ benefits from the parent-in-law’s estate. This worries and angers many people.”
I ask Genders what he recommends in these circumstances. He says that one option is to encourage children to sign Binding Financial (‘prenuptial’) Agreements, but many children are very reluctant to confront their prospective spouse with such a document.
An alternative way to protect a child’s inheritance from an irresponsible spouse or ex-spouse is through establishment of a Testamentary Trust so that the assets are not mixed in the matrimonial pool and made subject to a Family Law distribution.
A Testamentary Trust should always be considered when either the child or their spouse (the ‘out-law’):
- is a spendthrift and/or poor money manager.
- has difficulty holding a job.
- is a gambler.
- has an addictive illness such as alcoholism or drug addition.
- is emotionally and/or physically abusive to child and/or grandchildren.
- has children from a previous marriage.
- is unfaithful.
- is not close to and/or not on good terms with children from the child’s previous marriage.
Grandchildren from a child’s first marriage could be disinherited by the out-law following a second marriage (this is surprisingly common in blended families).
A Testamentary Trust is designed to keep money in the family, protecting the inheritance of the client’s children and their descendants. It is how wealthy families have amassed and retained their fortunes over many generations.
Testamentary Trusts offer a number of important benefits:
- Trust assets can be defined to be used only for blood descendants – the client’s biological children and grandchildren. Specifically, assets in the trust can be set to be used only for the client’s children’s or grandchildren’s health, education, maintenance or support.
- Trust assets are never available to an out-law, either during the marriage or in a divorce, through Family Court distribution or alimony.
- Trust assets are protected from children’s creditors and those of the out-laws.
- The client’s child can be given control over the trust, however this is seldom recommended due to Family Court concerns.
- The trustee can distribute principal and/or income to or for the benefit of the child or to their descendants.
- The trust can be set to terminate at the child’s death and the remaining principal can be set to be paid only to the child’s descendants.
Genders says that many of his clients just want to make sure that the money will still be there for their kids, despite the kids’ flaws and shortcomings.
“Golddiggers of both sexes abound, particularly in these difficult economic times, and a high percentage of all marriages end in divorce. None of us wants our hard-earned assets to end up leaving the blood-line, and going to the ex-spouse of our child in a divorce and property settlement.
And it isn’t just marriage that can lead to “sexually-transmitted debt”. In South Australia, any two people (of any combination of gender) can begin to acquire property rights in each other’s assets after as little as 3 years’ cohabitation.”
From my personal experience, it’s a very good idea to explore your estate planning options, by contacting a specialist lawyer who is experienced in estate planning in South Australia.
Founded in 1848, Genders & Partners is the oldest law firm in South Australia. They choose to specialise in just a few areas of law closest to most families, so that they can provide the legal services that matter most to you and your family.
Their experienced estate planning team can discuss many estate planning tools and techniques including:
- helping you to encourage (and even pay for) children to sign prenuptial agreements;
- creation of protective trusts;
- titling of assets for joint ownership;
- consideration of insurance options.
Choosing the right estate planning lawyers can make a huge difference in ensuring proper distribution of your assets after death, minimising or avoiding any legal issues that may arise, and protecting your hard-earned assets.
Most importantly, it helps save your family all the trouble, as well as thousands of dollars in legal fees and taxes, after your death.
Genders and Partners is the oldest law firm in South Australia, established 1848. Contact them to learn how to protect yourself, your family and your assets through modern integrated estate planning solutions, by visiting our website today and schedule a free no obligation telephone consultation to find out how they can help you and yours.
To learn how to protect yourself, your family and your assets, by creating a professionally-made estate plan, claim your FREE 15 minute Telephone Consultation .
*27 January 2023 – Part of a series of interviews between Rod Genders and Charles Makarewicz.
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