Genders and Partners

Benefits of a Discretionary Trust

Benefits of a Discretionary Trust

Discretionary trusts are flexible estate planning tools that can offer you many advantages, some of which include:

1. Revocable. Because the needs of family members may change over time, a discretionary trust normally allows you to modify trust provisions or change the beneficiaries.

2. Private. A discretionary trust may avoid or reduce the costs and delays of Probate – which is the Court process that oversees the administration of your estate. Because a discretionary trust is not subject to public scrutiny, your beneficiaries and the specific amounts or percentages they receive remain confidential.

3. Continuous. Assets put in a discretionary trust stay under the control of the trustee, until you choose differently. When the trust is established, you can name a successor trustee who will carry on financial responsibilities in the event of your incapacity or death.

4. Flexible. You may add other assets to the trust during your life. The discretionary trust can be especially useful if you own real estate in another state by eliminating the need to have a separate probate proceeding in the other state.

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Accommodation after Death?

This isn’t the beginning of a joke about the person who died and went to Heaven… It’s a serious estate planning question about how a family-member might continue to live in a property after the owner has died.  This question frequently arises (where a spouse, child or sibling was living with the deceased), and it is often the cause of unnecessary concern & anxiety.

Following your death, family-members may have a challenge in finding new accommodation quickly; they may not have the finances available and if the house is sold quickly, could be rendered homeless.

Is there some way to delay the sale-after-death for a reasonable period to allow the family-member some time to adjust to his new circumstances; to cope with the grief of losing you, and to build-up finances towards a deposit for his own property or to find a suitable home to rent and move out?

Yes – there IS a way!  In your Will, you can create a testamentary trust leaving the house on trust, to be used by the intended person (let’s call that person the Tenant), with a clause in your Will saying that the Tenant can stay in the property for the agreed period.

The trustees of the house won’t be allowed to sell it without the Tenant’s consent.  It is not theirs to sell.

Your Will can contain all sorts of additional conditions, such as whether the Tenant will be obliged to insure the house correctly, pay rent and keep it in good repair.

There may be an agreement that the Tenant can move to a replacement property under the same terms, say if the original property becomes too much for the Tenant to mange and maintain. If a replacement house of less value is purchased the spare funds will go into the deceased’s residuary estate.

This, of course, only works if the property can be passed on this way in a Will and the house isn’t required to be sold immediately for cash for a particular reason, perhaps to clear a tax bill or to pay a specific monetary legacy.

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Wills and Estate Planning Adelaide: Estate Planning for Children with Special Needs

Estate Planning for Children with Special Needs

Most parents of disabled children worry about the day they won’t be around to help care for them, whatever their age.  They want to help them qualify for government (state or federal) assistance for medical and other services, and also to provide for their recreation, clothing and other small luxuries that improve the disabled person’s quality of life.

The difficulty for these parents, is in trying to grapple with the too-hard decision of who will look-after their children after the parents have gone. Many cannot overcome this emotional-paralysis, and simply hope against hope they will live just slightly longer than their child, so that neither parent nor child ever have to deal with the situation.

The reality is that most disabled children outlive their parents, so providing for their care after the caregiver’s death is a vital issue. If the parent simply leaves money for the child, it could disqualify the child for government assistance, but still not provide properly for the child’s special needs.

A special needs trust may present a solution. A lawyer specialising in the legal needs of the elderly and disabled, can help the parents or other family members to set up a trust.  With careful planning (both legal & financial), the assets may not be taken into account by the government when assessing the child’s entitlement to assistance, but distributions from the trust are used to provide greater comfort & independence for the child.

In this way, even after the parents have died, they can continue to care for their children. This can assist children with a variety of disabilities, including Down syndrome, autism, cerebral palsy, the aftermath of vehicle accidents, chronic diseases or anyone who may need a combination of government and private services to provide a good quality of life.

Genders and Partners

Wills and Estate Planning Adelaide: How Estate Planning Trusts Can Protect You and Yours

How Estate Planning Trusts Can Protect You and Yours

Estate planning and trusts are all about planning, not only for your own future, but also the financial well-being of your family and loved ones after you’re gone. However, the reality of life can often get in the way of a smooth transition – divorce, second marriages, step kids, long-term illness and other family changes can sometimes make life and plans unpredictable.

Protecting your wealth & assets and the financial well-being of your family is about a lot more than simply parcelling-out your assets – it’s about providing for yourself & your family members in a way that’s responsible and specifically addresses your personal situation.

Many people make the assumption that estate planning and trusts are only for incredibly rich people. That is wrong.

A family discretionary trust is a very versatile estate planning tool that allows you to address inheritance goals for your beneficiaries – who may still be children, are disabled, are from a mixed family  – and a trust might be the answer to difficult questions like who will manage your assets if you or they become incapacitated.

Typically, when a child inherits money, it is invested for him and held until he or she turns 18 or older. Of course, giving a young person access to a large amount of money at the age of 18 can be dangerous and detrimental to their long-term financial health if they lack maturity or sufficient financial wisdom.  Some parents think that the lure of fast cars and endless parties may be too great a temptation for their beneficiaries to handle at age 18, and so they specify an older age, frequently 21 or 25.

Wills and Estate Planning Adelaide: DIY Superannuation

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: Don’t Make These Common Mistakes with your Discretionary Family Trust

Discretionary trusts (often called family trusts) are very powerful planning tools you can use for all kinds of purposes. Trusts can simplify & minimise or even avoid probate, protect your beneficiaries from creditors or divorcing spouses and

Don’t Make These Common Mistakes with your Discretionary Family Trust

can provide for education for grandchildren or your favourite charities.

When a trust is part of your overall comprehensive estate plan, you should try to avoid these common trust mistakes:

Mistake 1: Failing to title assets in the name of your trust

If you have not put your assets into your trust, also called “funding” your trust, you have lost some of the benefits of your trust.

Any assets that are in your own name at the time of your death will probably need to be probated. However, any assets that are titled in the name of your trust at the time of your death will avoid probate and usually result in lower after-death administration costs.

In order to receive the protection and benefits capable of being provided by the trust, generally (except for superannuation funds and certain annuities) most of your assets would need to be transferred into your trust during your lifetime.

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Wills and Estate Planning Adelaide: Caring for Pets after we’re gone

Caring for Pets after we’re gone

When we die, we will leave behind us a lot of things that someone else will have to sort-out.  The administration of our deceased estate will include providing for our loved-ones, and dealing with our assets and debts.  A carefully drawn Will as part of an integrated estate plan will greatly simplify the process.

Most of us would also want to make some sort of arrangement for the care and accommodation of our family pets.  Yet for some reason most people never turn their attention to this issue.

Maybe it’s just too sad to think of parting from our beloved furry companion, or perhaps it’s just too hard to know what to do.

Some people try to do the right thing by their pets, but are ineffective in how they do it.  They might make a half-hearted effort to extract promises from family or friends that their animals will be given homes if they die. But those promises are not binding contractual agreements.  Circumstances and intentions may change.  The cost of properly caring for a pet needs to be taken into account.  It is a sad reality that animal shelters are overflowing with discarded pets.

Unfortunately, it’s not as easy as just leaving money in our Wills in our pet’s name, but there are ways to provide financially for our pet’s care. In many jurisdictions around the world, including Australia, pets are not allowed to be named as beneficiaries in Wills in Adelaide because only people and organisations can be named.

However we can leave money for a pet through a trust. We can specify who will look after the pet, who will make the decisions about the pet’s care and how much money is spent on the pet’s maintenance and healthcare.

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Asset Protection – Be Smart, Be Safe

Genders and Partners | Asset Protection – Be Smart, Be Safe | Wills and Estate Planning

Protecting your assets is one of the most important financial decisions you will ever make. Asset protection is a valuable and important part of a modern integrated estate plan. No matter how many assets you have, you should make an effort to protect them, but try to avoid these common mistakes:

1. Lack of Knowledge

Lots of people misunderstand how asset protection works. Some people believe asset protection makes them “judgment proof.” Even if your assets are protected, you may still cop an adverse court judgment. In some cases, efforts you have made to protect your assets can be overturned. This is why it is important to work with a professional when creating your protection plan.

Don’t make the mistake of assuming asset protection and estate planning are the same thing. Asset protection is part of any strong estate plan but they are not the same thing. Some trusts do nothing to protect you from creditors, and Family Court issues can interfere with the best-laid plans.

Don’t make the mistake of confusing bankruptcy law and asset protection law. In a state like South Australia, newer bankruptcy laws do not prevent the “clawing back” of assets you may have tried to unsuccessfully protect. You have less protection in bankruptcy court, so filing for bankruptcy should be used as a last resort.

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Wills and Estate Planning Adelaide: Expectation Management

As Baby Boomers, we are leaving the workforce in record numbers.

Expectation Management

This leads to some uncomfortable predictions about the lifestyle we can expect in retirement, and what the Government will do to help us.

In Australia, we have not felt the impact of the GFC (Global Financial Crisis) as quickly or as hard as many other countries (like Greece or Ireland).

But recently, the International Monetary Fund said “The global economy is in a dangerous new phase”, so it is natural to be concerned about our own futures – especially if our most productive years are behind us. It is not easy to recover from a financial reversal when our ability to earn is diminishing with age.

With market volatility in recent months reaching levels not seen since the GFC, it is worth looking at the key factors affecting our economy in this new financial climate.

Populations in most developed countries like Australia are ageing. As people retire, incomes fall and spending patterns must be adjusted downwards. In some countries, economic growth has been extremely low and price deflation has occurred. An ageing population lowers the number of citizens available to work and requires more government assistance in terms of pensions, health care services and other benefits.