Another year has passed and 2018 is already here. The New Year is a time of optimism and noble resolutions to quit bad habits, get organised, pay off debt and save money. It’s a good time to take a look at your estate plan to make sure it is in place and up to date.
Your estate planning documents determine who will receive your property when you die, and also determine who has the right to make financial and major medical decisions during your lifetime. Getting your estate plan right will save money and heartbreak for you and your family.
Less than half of adult Australians have any estate planning documents in place and many of those people may have outdated documents. Documents that were created when you first got married or when your children were born may need updating years later, after your family and financial situation have changed entirely.
Here is a basic checklist of issues we suggest you review annually (make it a New Year’s tradition!).
1. Assess the changes in your life since you last updated your estate planning documents
Have you gotten married or divorced? Had or adopted a child? Moved to a different state? Had a death in the family? Had a major financial event? Have minor children grown into adults? Have any children married or had children of their own. Have you retired?
Any of these major life events, can have a significant impact on how your estate is managed when you are no longer able to make your own decisions, and distributed when you are gone. Your documents may need to be revised.
2. Have the difficult conversations
Everyone needs to confront the reality that each of us eventually will die and some of us may become incapacitated prior to death. You and your family need to resist the temptation to avoid uncomfortable legal, financial and emotionally-charged issues. If you don’t devote enough attention to communicating your wishes, there is a good chance those wishes will not be honoured.
Having the challenging conversations now is a major step towards honouring those wishes later. Such issues typically include who should make legal and financial decisions under an Enduring Power of Attorney, who should serve as Executor of the estate, who should make medical decisions for you, what type of care do you want if you are in an end-stage medical condition, and who should receive your property when you die, when and how.
Many family disputes and lawsuits would be averted if more people had Wills, and discussed them openly with their family. While surviving family members are mourning the loss of a loved one, tempers can flare as questions about money, family heirlooms and valuable assets arise. While certain issues and items might be better handled outside of your Will — such as funeral arrangements, jointly held real estate, life insurance proceeds or superannuation benefit payments — a Will allows you to distribute the balance of your assets as you determine.
Your planning now will pay dividends later – it will help your family better understand your intentions – and such knowledge should reduce stress, because your goals and wishes are thoroughly and transparently communicated and recorded in advance.
It is important to review who is nominated to receive your property after your death, including any monetary gifts you may make, to ensure these bequests remain up to date. Is the amount of the cash gift still appropriate, or has inflation eroded its value too much? Do you still talk to that friend to whom you were going to leave a gift? Does your child still owe money on that loan you refer to in your documents?
If you recently divorced, you will want to replace your former spouse with another beneficiary of your choice. If you’ve had a child during the past year, or if a child has become an adult, you will probably need to make changes to some of your documents.
4. Your Will
Your Will says who will get all your assets and belongings when you die and who will be in charge of paying your bills, filing your tax returns, gathering your stuff and distributing it according to your instructions. However be aware that these days many assets pass outside of probate. What the Will says may not apply in many situations, including: joint accounts that pass to the other joint owners, superannuation funds and life insurance policies that go to nominated beneficiaries, and property in trust that passes to the beneficiaries named in the trust document. Only what you own in your own name alone passes under the Will.
Your Will appoints your executor or personal representative who is in charge of carrying out your wishes. This can be very important in avoiding squabbling among children. And your Will can be used to appoint guardians for minor children. A Will permits you to make charitable or other specific bequests.
An experienced estate planning lawyer can help you to understand the process of creating a Will and how your wishes are followed after you are gone. Estate planning is an important process and it is valuable to you and your loved ones.
In your Will, you choose your executor — the person who will carry out your wishes expressed in your estate plan. Without a Will, an administrator may be chosen by the Court and may not be a person you like or trust, and the State Government will dictate who is to receive your assets.
6. Gifts and Donations
A Will can allow you to give donations to your favourite charities and may also let you account for lifetime gifts given to specific family members. For example, if you provided substantial financial assistance to one of your children during your lifetime, you may choose to leave less to that child after your death in order to provide equally for all of your children. If there is any specific item of property, such as a family heirloom or jewellery, that you want a particular person to receive, you should update your documents to incorporate that gift.
Increasingly, people are specifying who should receive their pets upon their death and sometimes even provide a fund to pay for the pet’s care. If you wish to provide for your beloved pets, your Will or trust should be updated with specific provisions that reflect your wishes.
Do you still want to support that charity you nominated in your previous Will?
7. Enduring Power of Attorney
This important document allows you to appoint one or more trusted agents, to take control of your financial and legal matters. They can make decisions and sign documents on your behalf.
This document is for taking care of you, your assets and your family during your life, as opposed to after death. It can operate in the event of your incapacity, whether through illness, dementia, or an accident, and whether the incapacity is temporary or permanent. In the absence of an enduring power of attorney, family members often must resort to going to a Court or Tribunal such as a Guardianship Board or SACAT. This causes delay and legal fees, and can lead to family infighting.
8. Advance Care Directive
You can appoint one or more trusted persons as medical agent or guardian to make your health care and personal decisions when and if you become incapacitated. You should have an advance care directive in effect to avoid disputes among family regarding who should make your medical decisions if you cannot, and provide a clear point of contact for your medical professionals. Without this type of document in place, your family may need to resort to going to court to be appointed guardian.
Like the enduring power of attorney, your ‘substitute decision maker’ or agent steps in for you to make health & care decisions when and if you become incapacitated. This directive sets forth your wishes concerning medical treatment you would or would not want, specifically end of life medical treatment. This can be thought of as a “Do Not Resuscitate” command. Most people do not want heroic measures to sustain life if there is no hope of recovery. An advance care directive can include specific instructions on what kind of medical care and treatment you want, or do not want, if the medical determination has been made that there is no realistic hope of your significant recovery from your end-stage condition.
9.Guardians of Minor Children
If you have minor children, you will want to designate a guardian to care for them in the event of the death of both their natural parents rather than leaving that decision to a Court. You will need to decide if the appointed guardian can also make financial decisions on behalf of your children until they reach the age of majority.
Are your nominated guardians still active in your children’s lives? Are they still fit enough and able to cope with the demands of raising kids?
10. Trusts for Minors
If your children are minors (under the age of 18 years) at the time of your death, the law of every Australian State & Territory prohibit the distribution of substantial assets directly to them. If you die without a Will, their inheritance will be subject to Court direction until each child reaches age 18. If you have a Will, a bequest to a child can be held in trust until whatever age you determine. You also designate the trustee and the terms of the trust.
11. Trustee Appointments
The role of Executor in your Will is different from the role of Trustee, although the same person(s) can – and often are – nominated for both roles. The individuals and/or institution you name should be those you consider responsible and trustworthy. If you designate more than one individual Trustee, consider whether they get along and will be able to work together. A corporate Trustee brings expertise and resources to the table that an individual Trustee usually cannot provide, but will typically charge significantly higher fees than individual Trustees.
12. Family Trust
A family discretionary trust is an arrangement where one or more people (called ‘trustees’), manage property or investments for the benefit of one or more people (called ‘beneficiaries’). A family trust is a trust set up to benefit members of your family, so that you progressively transfer your assets to the trust, so that legally you do not own those assets yourself, but you can still, through the trust, have some control over, and get the benefit of, these assets. This advanced estate planning technique may be worth considering, especially as you continue to acquire assets throughout life, and if you like the idea of asset protection from creditors and predators.
13. Superannuation Beneficiary Nominations
You should review and assess the beneficiary nominations on your life insurance and superannuation plans. Yet these nominations are often overlooked by people when updating their estate planning. Be aware that Australian laws heavily restrict the categories of persons that can be validly nominated as beneficiaries for your super. This is an area where the advice of a specialist estate planning lawyer is vital.
A well-made and up to date Will can greatly reduce the amount of time and money it takes to probate your estate. A shortened probate process means less grief and more of your assets to your family.
If you don’t have a modern integrated estate plan or have one that needs updating we offer a cost effective and convenient estate planning service. Our specialist expert consultants can come to you and our rates are very competitive. To learn more about our services please call 08 8212 7233 or email firstname.lastname@example.org
SPECIAL REPORT “7 Things You Must Know Before You Make Your Will”
In this report you will Learn:
Why home-made Wills can be a LOT more expensive than you might think.
The secret weapons used by the rich & powerful to protect their assets, and transfer their wealth two or three generations ahead.
How Estate and Trustee Companies make BIG money from “free” Wills.
The Most Common Estate Planning Mistakes, how they can cost your family a fortune, and How to Avoid Them.
The Elements of a Sound Estate Plan – why a Will alone is not enough.
How to Make Sure Your Assets Stay in Your Family and are not lost to creditors, lawsuits or ex-spouses.
How to guard against challenges to your Estate after you’re gone.