Estate Planning- The Revolution Continues

Estate Planning: The Revolution Continues

Estate Planning, Wills

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.

Wills and Estate Planning Adelaide: DIY Superannuation

Death Benefits, Estate Planning, Pensions and Retirement Planning, Superannuation and Insurance, Trusts
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?

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

Estate Planning, Wills, Wills and Estate Planning
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.

Genders and Partners

Estate Planning for Every Business Owner

Asset Protection, Estate Planning, Wills and Estate Planning
Wills and Estate Planning Adelaide: Estate Planning for Every Business Owner

Every business owner needs some basic estate planning documents, even if you are not married, have no-one financially dependent upon you, or your business is not worth much yet.   You should consider the potential value of your business, and recognise that it is dependent upon you  If you have a spouse, life partner, or children, you definitely need to consider estate planning documents to provide for what would happen if you die or become incapacitated.

Here are the documents you may need to obtain:

Enduring Power of Attorney

This document gives another person power (your agent) to handle your finances in your absence.  This may include paying your bills, negotiating a lease, dealing with employees, contractors & government departments, or working with your bank.  You can give your agent power immediately or only upon your incapacity.

Medical Power of Attorney

Everyone age 18 and over should have this document.  It names & empowers the person you want to make medical decisions for you, if you cannot do it for yourself.  Do yourself & your loved ones a BIG favour, and create this now.

Will

Your Will says who you want to receive your assets after you die, who should handle your affairs upon your passing, and who you want to be a guardian for your children.  This must be formally executed to be valid, typically with 2 witnesses, depending upon state law.  Everyone should have a Will.

Other Documents

Some of you may need other documents, such as discretionary trusts, property agreements, co-habitation agreements, pre-nuptial agreements, irrevocable trusts, special needs trusts, superannuation trusts or life insurance trusts.

Estate Planning- The Revolution Continues

Wills and Estate Planning Adelaide: Estate Planning After Relationship Breakdown

Estate Planning, Wills, Wills and Estate Planning
Estate Planning After Relationship Breakdown

If you are about to separate from your spouse or partner, but your current Will, Trust or Advance Directives still give him or her control over your assets and your medical decisions, it’s urgent that you have all of your estate planning documents re-created now.

No matter how old you are or whether you have kids, it’s important to consult a lawyer who specialises in estate planning to make sure you have an updated estate plan for your new life once the dust has settled.

If you are married, remember that in all Australian states the law considers you to still be legally married until your divorce becomes final, and this cannot happen until at least 12 months after separation. If anything happens to you before that divorce Decree-Absolute is issued, your estranged spouse will retain the power to make decisions over those aspects of your life, if that is what your estate planning documents permit.  Remember also, that marriage will generally revoke and invalidate an earlier Will, however Divorce may not have the opposite effect. If you have separated, but haven’t gotten around to making a new Will and advance directives (such as powers of attorney), you definitely need to deal with these now.

Genders and Partners

Wills and Estate Planning Adelaide: Don’t Make These Common Mistakes with your Discretionary Family Trust

Estate Planning, Trusts, Wills and Estate Planning

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.

Wills and Estate Planning Adelaide: Create an Integrated Estate Plan That Works

Estate Planning, Wills, Wills and Estate Planning

There are lots of reasons why estate plans fail, including poor documents, failure to update them, careless titling of assets, and forgetting to nominate or update beneficiary designations.

Create an Integrated Estate Plan That Works

Then there are the situational problems, where there is a failure to properly address family issues and dynamics.

So how do you define an estate plan that will work for you and your family when it’s really needed?

Let’s take a quick look at some of the features I would ideally wish to see in an integrated estate plan:

It should give you access and control over your property while you are alive and well. This won’t be the case if your assets are jointly titled with someone other than your spouse or if you fail to follow through on the terms of a property settlement agreement after a divorce.

Genders and Partners

Intestacy: How Property is Distributed without a Will

Estate Planning, Wills, Wills and Estate Planning

When a person dies without a Will, this is known as dying “intestate”.  This might happen because their death occurs before they even considered writing a Will. Some people feel that they don’t need a Will because they don’t have a substantial estate. A person might write a Will, only to have a Court declare it invalid after they die, which has the same legal effect as dying without a Will at all.

When a person dies without a Will, the law has to find a way to distribute that person’s property. In some parts of the world, the government will take most or all of the deceased’s estate, but in most western countries there is a strong preference in the law to keep property in the family of the deceased, generally leaving it to the closest living relatives.

The exact order of priorities among relatives differs from state to state in Australia, but the goals of intestacy law (keeping property in the family) are broadly the same, so the schemes in each State are usually quite similar.

Often the surviving spouse will receive the first “piece” of the deceased’s estate. The value of this piece varies over time.  For example, in South Australia for many years the surviving spouse in an intestacy would receive the first $10,000 plus a percentage of the remaining estate. In February 2009, the law in South Australia was changed to increase this to $100,000 plus a percentage of the remaining estate.

live-well-at-retirement-199x300.jpg

How to Live Well in Retirement

Estate Planning, Pensions and Retirement Planning, Wills, Wills and Estate Planning
How to Live Well in Retirement

Are you nervous about the recent volatility in the markets, as you approach retirement age?

Everyone hopes for a comfortable retirement, but how many really plan for a long and fulfilling retirement? You know you should put money away for your retirement, but as that day approaches (particularly with world share markets and superannuation funds in crisis), which financial and investment strategies should you follow to help yourself enjoy the lifestyle you’ve envisioned?

You could literally spend decades in retirement. With advances in medicine and healthcare, it is actually becoming increasingly likely that Australians will live longer in retirement than they were in the workforce. Keep this type of longevity in mind when you create investment strategies for your retirement.

man-thinking-199x300.jpg

Death Benefits … Who Benefits? Do you know who will receive the benefits from your life insurance policy and superannuation fund?

Death Benefits, Estate Planning, Superannuation and Insurance, Wills
Death Benefits … Who Benefits? Do you know who will receive the benefits from your life insurance policy and superannuation fund?

You need to decide who should benefit from your assets or for whom you wish to provide financially.

You should be clear on how you want your beneficiaries to benefit – do you want them to inherit an asset, an income or cash?

Your Will cannot dictate who inherits the benefits from your life assurance policy.  You might think you can revoke the beneficiaries you have nominated on a life insurance policy by simply nominating other beneficiaries in your Will. But your loved ones might be in for a nasty surprise, when they find out (after your death) that you were wrong.

The life insurer has a contractual relationship with you as the policyholder, and they will only pay out the benefits to the beneficiaries nominated in your insurance contract, regardless of whether your Will states otherwise.

If you want to change your life insurance policy beneficiaries, you need to do this directly with your life insurance company.  You can’t do it in your Will.

Similarly, when it comes to your superannuation fund benefit, the discretion to distribute your death benefit lies with the trustees of the super fund, and they might not necessarily follow your wishes as stated on your beneficiary nomination form.  It is a complex area of the law, which may well have changed since you started with your super fund.

Death & taxes, illness & share-market corrections may be unavoidable … but they don’t have to ruin your family or your business.  Make the effort to protect the people you really care about.  Call Genders & Partners to create an integrated estate plan and avoid questions regarding death benefits in Adelaide and other areas in South Australia. And do it NOW … before it is too late.