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Wills and Estate Planning Adelaide: More common pitfalls of estate planning and how to avoid them

In my law practice I see lots of mistakes that people have made when it comes to estate planning, as well as some estate-planning strategies that could be used a lot more.

One of the most common mistakes is a misunderstanding of beneficiary nominations. Nowadays, many assets are transferred at death through superannuation funds, life insurance policies and annuities.

The owner of those investments or insurances (the person who set them up) will often have nominated a particular person(s) to receive the benefits of them, once the owner has died. This is a separate & binding contract which can bypass the owner’s legal Will.

Many people don’t appreciate how important it is to get the designations of those nominated beneficiaries right. I typically see beneficiary nominations where at the start of the marriage each spouse nominates the other as the sole nominated beneficiary for the super & the life insurance. Unfortunately most people forget to keep their binding nominations up to date. They forget to add the children, or only add some of them, leading to unintended consequences & heartache.

Similarly, if a child dies, most people would want that share to go to that child’s children, ie to the descendants, down the bloodline to the deceased child’s children. Sadly many people get this wrong, and end up accidentally disinheriting their grandchildren.

And you can’t necessarily rely on “common sense” to sort it out after your death. Unfortunately, there’s little consistency within the financial-services industry. If the insurance plan administrator or superannuation trustee doesn’t know how to handle it, your family will be the ones paying to sort it out.

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Elder Law and Retirement Planning: The BIG Estate Planning Issues

Elder Law and Retirement Planning are areas of estate planning relating to government benefits such as veterans’ pensions, Medicare & Centrelink, as well as to accommodation issues specific to seniors, such as retirement village contracts. Other issues might include the need for long term care planning, solving disputes with family members, providing for powers of attorney, medical care planning or guardianship.

Elder Law is a growing specialty of estate planning that helps the elderly deal with many of the problems unique to their circumstances as retirees:

Preservation or transfer of assets seeking to avoid spousal impoverishment when one spouse enters a nursing home;
Medicare claims and appeals; qualification and application; planning strategies;
Centrelink (formerly department of social security) pensions and disability claims and appeals;
Private health insurance issues;
Superannuation and life insurance issues;
Disability planning, including use of durable powers of attorney, discretionary trusts, advanced directives & “living wills,” for financial management and health care decisions, and other means of delegating management and decision-making to another in case of incompetency or incapacity;
Guardianships;
Estate planning, including planning for the management of one’s estate during life and its disposition on death through the use of trusts, Wills and other planning documents;
Probate;
Administration and management of trusts and estates;
Long term care placements in nursing home and life care communities;
Nursing home issues including questions of capacity, patients’ rights and nursing home quality;
Elder abuse and fraud recovery cases;
Housing issues, including discrimination and home equity conversions (reverse mortgage);
Age discrimination in employment;
Retirement, including public and private retirement benefits, survivor benefits and pension benefits;
Mental health issues, especially regarding capacity and ability to live independently;
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Wills and Estate Planning Adelaide: Estate Planning for Illness and Incapacity

Millions of Australians live with chronic illness or disabling injury. Many more will develop progressive and degenerating diseases of the mind and body. With so many facing life with such severe challenges, smart estate planning can make the difference between maximising control over your life or falling victim to it.

How should they plan their estate to maximise their freedom, independence & quality of life?

What impact will your chronic illness have upon your health & mobility, your capacity & cognitive functioning? How might this change over time? How do you protect yourself from its effects?

Each chronic illness, whether dementia or senility, Multiple Sclerosis or Parkinson’s disease, Alzheimer’s disease or ALS, diabetes or cancer – has its own unique implications for planning. One-size-fits-all generic assumptions can be detrimental to you and your loved ones.

You should consult a lawyer who specialises in estate planning in Adelaide, preferably one with experience in dealing with the special needs of disabled & incapacitated people.

Your lawyer will discuss with you a variety of legal documents. These may include Enduring Powers of Attorney, and how they may be tailored to address your concerns.

Other documents may include Medical Powers of Attorney (sometimes called living wills or health proxies), Advanced Directives, and Discretionary Trusts.

Your lawyer can draft legal documents to protect you in the context of your chronic illness, and to address the anticipated course of your illness.

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Wills and Estate Planning Adelaide : The Disinheritance Debate

60 years ago, a baby girl was given up for foster care by her birth mother due to shame about her illegitimate birth. They did not live together after the first year of the baby’s life, and after the first 7 years shared no relationship at all other than biological.

Now the birth mother has died and left only $100 in her Will to that baby girl (now aged 60). The bulk of the estate was left to two other daughters. The disinherited daughter successfully sued for a third of the estate.

People always say it’s not about the money. But when someone is left out of an estate, they feel hurt, and their emotions take them on a roller-coaster ride. Money and love get mixed-up. Heart and head collide. Grief can very quickly turn to anger, and people can easily relive childhood slights.

Highly charged issues of hurt, shame, pride, greed, love, unfairness, resentment, anger, prejudice and entitlement take over from logical thought.

In my legal practice I have heard hundreds of reasons for excluding family from inheritance. Older generations were brought up to have different degrees of tolerance for unwed mothers, couples living-together and same-sex relationships. The rising numbers of step-children provide real challenges to family harmony, and in many cultures it is considered acceptable to leave the bulk of the estate to male children.

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Wills and Estate Planning Adelaide: Peanuts and Monkeys in Estate Planning

It’s not hard to find do-it-yourself Wills or Will-kits and other estate-planning materials on the Internet. But the topic is complicated, and the right solution is specific to each individual.

The laws vary from country to country, and even within Australia they vary from state to state. They also change over time, and the laws related to estate planning have also undergone rapid changes internationally over the past several years and are starting to change in Australia too. Further changes to the law are expected in the next few years, as Australian governments try to cope with the retirement of so many Baby Boomers.

If you’re creating or updating an estate plan, it’s essential that you seek the advice of a lawyer who’s well versed in the key issues. Not only can a specialist lawyer advise you how to ensure that your assets are properly distributed and that your health care proceeds in accordance with your wishes, but he can also do so with an eye toward protecting those assets (from creditors, bankruptcy, litigation etc).

Of course, any time you hear the word “lawyer,” it’s natural to worry about the legal costs you might incur. But the process is more affordable than people fear. You might be tempted to postpone creating an estate plan, assuming that you need to have a lot of assets to make the process worthwhile. Alternatively, there are plenty of excuses to delay this important process: waiting until after they are married, until the kids are born, until the kids are grown, until they’ve retired, until the grandkids are born etc. But everyone – regardless of life stage or the size of their estate – should think about hiring a lawyer to draft the basic estate-planning documents: a Will, an Advanced Directive, and powers of attorney.

Before you hire an estate-planning lawyer to draft or update your estate plan, it’s important to understand your role in the estate-planning process. Your estate plan will be most effective if you spend some time at the outset finding the right lawyer for your needs and thinking through what you’re trying to achieve as well as whom you trust to see your wishes through.

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Death Duties May Be On The Way Back

On 15 October 2009 the most senior tax-policy advisor to the Australian Federal Government, Dr Ken Henry (Chair – Australia’s Future Tax System Review Panel and Secretary to the Treasury) gave an Address to the Committee for Economic Development of Australia.

In that address he identified 6 areas of future opportunities and challenges governments will need to address in respect to taxation. At the very top of his list was:

“the ageing of the population, posing challenges for the financing of retirement incomes and of increasing health and aged care needs”.

Dr Henry said that taxes levied on broader bases would be more efficient policy tools, probably more equitable and certainly more transparent ways of raising revenue. Without such tools, governments would otherwise be compelled to continue to rely on bad taxes to achieve their spending objectives.

What does this mean, and why should you care?

A number of senior political commentators have recently speculated in mainstream Australian newspapers, that Death Duties, Estate Taxes or Inheritance Levies might well be one of the options likely to be seriously explored, as part of the current tax-reform inquiry.

The re-introduction of death duties could have a severe impact on most deceased estates, unless great care has been exercised to create an effective estate-plan. This is just one example of how a change in the law could drastically affect you & your family. Make sure that you have a valid, effective & integrated estate plan. And keep it up to date.

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Estate Planning: The Revolution Continues

When I was at school, they taught both slide-rules and calculators, because we were the “transitional” generation. I grew up with pints & litres, pounds & kilos, inches & metres, and only some of the new measurements stuck in my brain. So now, when they describe some villain on TV as 180 centimetres tall, I never know if he’s a giant or a midget.

I can empathise with Grandpa Simpson, when he said: “I used to be with ‘it’. But then they changed what ‘it’ was. Now what I’m with isn’t ‘it’, and what’s ‘it’ seems weird & scary to me.”

The Baby Boomers generation (born 1944 – 1964) has seen amazing social changes: sexual & racial equality; the metric system; GST & superannuation; outsourcing; computers & the digital age; political correctness.

We’ve been led down the path of expecting old traditions to continue in so many ways, but then suddenly we’re expected to adapt to “new realities” partway along the journey.

So it is with estate planning.

We cannot afford to assume that the old ways of doing things will still work in this brave new world.

Take codicils for example. Decades ago, when wealthy people made their Wills, these were enormously long & complicated documents, handwritten in neat copperplate calligraphy by a law clerk under the supervision of a solicitor. The entire document (sometimes hundreds of pages in length) would list and describe every individual asset with great precision, and the whole document would be one long sentence, as punctuation like commas was to be avoided at all costs.

With such an awkward and expensive process, it is not surprising that no-one wanted to make more than one Will in their life. Instead, if they needed to make a change, an additional document called a codicil would be created, which would vary the terms of the original Will, and both documents had to be read together, as one would not make sense without the other.

Now, with modern Will-drafting techniques and computer word-processing, it is cheaper and safer to make a new Will rather than a codicil, so codicils have gone the way of the Dodo.

This is just one of the many ways that old ideas & practices in estate planning have changed.

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Wills and Estate Planning Adelaide: DIY Superannuation

Have you been watching the news recently? It has been a challenge trying to make sense of all the current news reports on this financial crisis.

A lot of Australians choose to remain blinkered about the impact that the current crisis will continue to have in our local markets as well as globally. If you are sitting in your home in suburban Australia thinking that all these financial crisis events don’t relate to you, you might be in for a nasty surprise.

For most people, their primary concern is the cost of petrol, rising food prices, health care and housing affordability. Those concerns don’t magically disappear when you retire…in fact they tend to get magnified through the lense of “fixed income”.

Chances are that you have some form of superannuation and in most cases it is probably a managed super fund.

At the moment, almost all of the big managed super funds in Australia are announcing huge (20% to 30%) reductions (losses) of capital of value. Some funds have lost more than 30%. They might try to “spin” this as no big deal, and encourage you to take a “long-term” view of the market performance. They’ll show a graph of managed-funds values over 20 years or so, and say that you have to expect some “swings and roundabouts”. Of course the fund managers get paid whether the fund values go up or down …

Maybe this isn’t too alarming for some people. However, if you’re in your 60’s and looking to retire the next couple of years, how do you recover from a pretty big dent in your retirement fund?

You might be forgiven for wondering just what you’ve been paying-for with those managers’ fees all these years, and whether there might be a better solution?

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Wills and Estate Planning Adelaide: Silence & Procrastination: Your Family’s Enemies

When people consider end-of-life issues, they often don’t want to talk about it with their family, out of a desire to spare everybody’s feelings. After all, death & dying is nobody’s favourite topic of conversation. It makes a lot of people feel awkward & uncomfortable, inadequate & out of control. As a result they keep hidden their wishes regarding a variety of important issues. They also tend to put-off making the essential decisions and plans which would really spare everybody’s emotions.

Stress and grief cause a lot of very strong emotions, so leaving important decisions until you are sick, or hoping that family-members will somehow know what to do at that time, can sometimes lead to poor decisions. Mistakes get made; shortcuts are taken; errors of judgment compound an already-difficult situation.

And (like insurance), you generally cannot put suitable arrangements and protections in place after the disaster has struck.

That is why it is essential for everyone to make appropriate advance-medical and end-of-life decisions in advance. It is far better and easier to make these decisions when you (and your family) are still healthy and calm – it will be less tense and emotionally charged.

Make your advance-medical-directive wishes clearly understood to your family, so there is no need for doubt or interpretation on their part at a crisis-moment. It can help prevent a lot of problems later and is likely the kindest thing a person can do for the sake of family unity.

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Wills and Estate Planning Adelaide: Even More Reasons to Create an Estate Plan Now

Some people think that estate plans are for someone else, not them. A common misconception is that estate planning is only important for the wealthy or elderly. They may rationalise that they are too young or don’t have enough money to reap the benefits of a plan. But here are some more reasons why estate planning is for everyone, regardless of age or net worth.

Loss of capacity. What if you become incompetent and unable to manage your own affairs? Legal, medical and lifestyle decisions will need to be made for you, but without a plan the courts will have to select the person to manage your affairs. With an integrated estate plan in place, you choose that person, through a careful combination of powers of attorney and advanced directives.

Minor children. Who will raise your children if you die? Although a court will make the final determination, you are able to nominate the guardian of your choice in your Will, and the court will give very serious consideration to your wishes.

Dying without a Will (intestate). Who will inherit your assets? Without a plan, your assets pass to your heirs according to your state’s laws of intestacy (dying without a will). Your family members (and perhaps not the ones you would choose) will receive your assets without benefit of your direction or of trust protection. With an integrated estate plan, you decide who gets your assets, and when and how they receive them.
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