by Cec O’Dea, Partner
One thing to do before you die….
Studies show that up to 45% of the population don’t have a valid Will.
It’s an outstanding statistic when you consider the consequences of not taking the time to prepare an estate plan and keep it updated.
An estate plan typically involves more than just a Will to provide for the distribution of a person’s property and assets upon their death.
People often don’t appreciate what assets actually form part of their estate and what assets are “controlled” by their Will.
If a person’s financial and family affairs are fairly basic, their Will may be all that is required for that individual. This, however, seems to rarely be the case with various considerations usually needing to be addressed such as:-
- How are jointly owned assets (such as the family home, shares and bank accounts) to be dealt with?
- How are assets held in a private family company to be treated?
- Who is to end up in control of assets held in a family trust?
- What is to occur if a surviving spouse was to remarry?
- Who will receive the proceeds of any life insurance?
- How can a person “guarantee” that children will be looked after?
- How can a person provide for a spendthrift or disabled beneficiary?
- How should the various competing interests caused by a second marriage and other “blended family” arrangements be dealt with?
- What will happen to a person’s business interests?
In particular, clients are often surprised to learn that their superannuation (irrespective of whether it is within a self-managed fund or not) does not form part of their estate. It should usually be dealt with by a Death Benefit Nomination.
In one recent case the Court held that the daughter of the deceased had not acted improperly by taking control of what was essentially her father’s self managed superannuation fund and refusing to pay benefits from the fund according to
wishes expressed by her father. A properly completed nomination could have avoided this outcome.
In many cases, superannuation represents a significant proportion of a person’s assets as people seek to accumulate wealth for retirement in the tax favourable superannuation arena.
Superannuation will continue to be increasingly relevant in light of recently proposed legislation to incrementally increase the Superannuation Guarantee rate from 9% to 12% in coming years.
Even where a person has only been in the workforce for a short period of time and their employer contributions are viewed as minimal, there may be an insurance component attaching to a person’s superannuation of several hundred thousand dollars which is also payable in the event of their death.
Problems can also often arise in estate matters where there has been a breakdown of a relationship and a person’s affairs have not been updated.
People often misunderstand the effect of being separated but not divorced from a spouse.
A lot of the problems that are often encountered in estate matters can usually be avoided so make sure one of the things on your “bucket list” is the important step of having an up to date estate plan.