Estate Planning – do I need to do anything more than make a will?

Before addressing those issues however, the following points should be noted concerning the making of Wills:

  • Wills which were made years ago may no longer be adequate to deal with the assets and family circumstances which now exist. For many clients, Wills were made when children were very young (or before they were born) and when the family assets were relatively small
  • In recent years, significant advances have taken place in Will-drafting techniques. This has been driven by the increasing sophistication of clients’ affairs and the taxation issues that arise out of their business, investment and superannuation structures
  • In particular, the emergence of Wills containing “testamentary trusts” provisions have become increasingly popular. This has been the case especially for willmakers who want to provide adequately for such things as education of children and grandchildren and to protect estate bequests from third-party claims.

We recommend that clients review their Wills not less than every 5 years to ensure that the provisions remain current and suited to their requirements.

Considerations additional to the Will

The making or reviewing of your Will should be considered as part of your broader estate planning objectives.

In identifying those objectives, it is important to realise that a Will only disposes of the assets owned by the willmaker at the time of death.  However, for many people, a significant portion of the assets accumulated during their lifetime will not be owned personally.

In particular, substantial proportions of these assets are likely to be found in:

  • superannuation funds; and
  • family trusts.

Those assets are not owned by the willmaker and, therefore, are not able to be disposed of by Will.  They need to be addressed as part of a broader estate plan.

In addition to dealing with assets resulting from a death, attention should also be given to how assets and personal affairs can be managed in the event of mental incapacity resulting from accident, illness or old age.

A brief overview of those additional estate planning issues is set out below.

Superannuation

Assets in your superannuation fund are not legally owned by you and can only be dealt with by your Will indirectly and in limited circumstances.

On the death of a member, it is the fund trustee who determines what benefits are payable and to whom, in accordance with the superannuation fund deed and rules.

Depending on the type of fund and the provisions of the trust fund deed, it is possible for a member to make a written nomination during their lifetime stating the portion of benefit and to whom they should be paid. That nomination can be in favour of the member’s legal personal representative. Only by this mechanism can super fund assets be effectively included amongst the assets disposed of by the member’s Will

In the case of ‘self managed’ superannuation funds – those with less than five members – nominations can be permanently binding (although a nomination may be revoked or varied at any time up to the member’s death).  In other cases, such nominations will only be binding if renewed every three years.

In an individual’s estate plan, it is important that superannuation fund entitlements be reviewed and addressed as a separate exercise in conjunction with  the drafting of the willmaker’s Will.

Incapacity – Powers of Attorney

The time of making or reviewing your Will is also the appropriate time to consider the consequences for yourself and your loved ones if, as a result of accident or illness, you were to lose your mental faculties unexpectedly.  Consideration should also be given to the common practical problem of being able to have documents signed when a person is interstate or overseas.  These issues can all be addressed by the appointment of an appropriate person as having a power of attorney.

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