For many Australians, superannuation is the largest single asset they will accumulate over a working lifetime. Yet despite its size, superannuation is also one of the most misunderstood assets from an estate planning perspective. The critical point — one that surprises many clients — is that your superannuation does not automatically pass according to your Will.
Among the more distressing phenomena encountered in succession law practice is the marriage of convenience — sometimes called a predatory marriage — in which a person cultivates a relationship with an older or cognitively vulnerable individual for the purpose of securing an inheritance. The legal consequences for the victim’s family can be severe, and South Australian law has only recently moved to address them.
Australia’s rates of relationship breakdown and re-partnering mean that blended family structures — where one or both partners bring children from a prior relationship into a new household — are now a common feature of Australian life. Estate planning in a blended family is one of the most complex and emotionally charged challenges in succession…
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
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:
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.
Choosing who will take on the role of Executor of your Will can sometimes be challenging.
Most Will-makers (aka ‘Testators’) appoint a trusted friend or family member as their executor. This person will end up playing a very important role, with a lot of responsibility.
If they instruct an experienced lawyer who specialises in Wills and Estates, then most of the ‘heavy-lifting’ will be done for them by the lawyer.
Several times each year my phone rings and someone asks me how they can locate and view the Will of someone close to them.
The circumstances of these requests vary, but can be broken down into two main groups: Someone has recently died, and their relative wants to know if they are a beneficiary; or an elderly person is becoming forgetful and their relative is concerned that they have been coerced into changing their Will, and want to satisfy their curiosity.
When most Australians think about estate planning, they picture a Will, and perhaps one or more delegations or directives such as powers of attorney.
But there’s one powerful piece of the financial puzzle that often gets overlooked: your ‘superannuation death benefits’.
As the superannuation balances of Australians continue to grow—thanks to compulsory employer contributions, voluntary salary sacrificing, and market growth—it’s never been more important to understand how your super fits into your broader estate planning strategy.
In my four-decade career, I have never come close to charging $10,000 to create a Will for any of my thousands of clients, and that includes an international billionaire who controlled 27 different trusts, each with a corporate trustee!
However, I have acted in plenty of probate applications where a cheap or DIY Will has cost at least $10,000 to ‘fix’ after the testator died.
Here are three true examples from my clients in just the last twelve months:
The COVID-19 pandemic triggered a huge spike in Australians rushing to put their affairs in order, however a lot of the Wills that were created during this time may not be worth the paper they are printed on.
Rod Genders is a senior Australian lawyer from the oldest law from in South Australia (Genders and Partners established 1848), which specialises in Trusts, Wills and Estates.
He warns about the following common problems that he is seeing in his law practice from mistakes made by people in their COVID-era estate planning.
The Western Australian Supreme Court publicly stated in a 2014 judgment that “Homemade Wills are a curse,” and inevitably lead to protracted and expensive legal battles in family disputes involving substantial estates.
The Court said the legal issue around the proper determination of the deceased’s Will could have been avoided if he had “consulted a lawyer and signed off on a Will that reflected his wishes”.