Category

Wills and Estates

Are you left out of a will? Call us today.

What Can I do if I Have Been Left Out of a Will?

By | Articles, Wills and Estates

If you have been excluded from a will, it probably seems like a slap in the face. You may be feeling hurt and angry – especially if the person who passed away was a parent or another close relative. As a result, you may be wondering if there’s anything you can do. In Queensland, the answer is “yes.” In fact, there are a few ways in which you can challenge – or contest – a will.

One way to do so is by making a Family Provision Application – but only in certain circumstances.

You may qualify to make this type of application if you were:

  • The deceased person’s husband or wife
  • The deceased person’s child
  • Less than 18 years of age and legally classified as a dependant
  • The deceased person’s former husband or wife (as long as the two of you were the biological parents of child who is less than 18 years of age)

and your needs have not been properly addressed through his or her will, or because he or she died without making a valid will.

If you meet any of these criteria and wish to pursue this option, you have nine months from the time the person died to file this type of application. However, it is important that you notify the executor of the estate that you intend to do so as soon as possible. This is because he or she has the authority to make the allocations specified in the will and wrap up related matters six months after the person’s death as long as he or she has not been notified about any potential claims on the estate.

Missing this deadline does not automatically invalidate your ability to make a Family Provision Application. However, you’ll have to convince the court that you had a valid reason for missing the deadline before you can proceed.

It is also important to note that just because you feel you have been treated unfairly doesn’t mean the court will agree. Ultimately, it is up to the court to decide whether or not the will fully addresses your needs. It will make this determination based on:

  • Any provisions previously made to you by the estate
  • Your financial situation and other circumstances specific to your case
  • How much money the estate has on hand
  • Whether anyone else is contesting the will based on lack of adequate provision
  • Your relationship with the deceased

Courts will also consider challenges based on some other contentions. The first is that the person who created the will – and left you out of it – was bullied, intimidated or coerced into doing so. The second is if the person who made the will in question was mentally or intellectually capable of doing so. And lastly, the court will consider a contention that the person who made the will made a legally binding agreement to do craft the will in a certain way, a breach of the agreement ensued and you were adversely affected.

Keep in mind, however, that you can only challenge a will in Queensland if the person who died had land and/or a home in the state; or if he or she was a permanent resident of Queensland at the time of death, but held his her assets elsewhere.

Having said that, you do not have to live in Queensland in order to contest a will here. In fact, you can do so without leaving home. Before you initiate the process, however, it is important that you fully understand it – so if you do live somewhere else, be sure to consult a Queensland lawyer before pursuing this option.

Finally, you may be wondering how much all of this costs.  Generally, the Court decides who must pay the legal costs associated with the contention of the will.  In most cases, if he or she rules in your favor, the estate will pay for any legal costs you have incurred.  However, if the ruling goes against you, the Court may order you to pay the legal costs incurred by the executor.  This underlines the importance of seeking legal advice from a reputable law firm who have experience in this type of litigation.

Clearly coping with the death of a loved one is never easy – and discovering that you have been left out of his or her Will while you are grieving complicates matters even further. If you feel that you have been wrongfully excluded, it is important to consult a qualified lawyer about these and any other legal remedies that may be applicable to your case.

how to choose an executor

What is an Executor and How Do I Choose One?

By | Podcasts, Wills and Estates

If you’re like many people when it comes to estate planning, you probably don’t give the attention that’s necessary in choosing who your executor will be but rather simply opting for your partner or adult child. But it’s an onerous job, and the choice is very important. In this podcast, OMB Solicitors’ Jessica Thomas helps you consider your choice.

TRANSCRIPT

Jessica: Well, Dan, the first step in choosing an executor is to choose someone that is honest, that is organised, and that is able to communicate with the beneficiaries in your will. So, suppose we can go back to basics, what is an executor? An executor is someone named in your will who is given the legal responsibility to take care of any remaining financial obligations that the deceased may have had. So what the executor, their job is to do is to bring in the estate, pay off any debts that there may be, and then distribute in accordance with the terms of the will.

Jessica: The key qualities, as I said before, are that you firstly need someone that you can trust. A lot of the times, people will appoint their spouse, their adult children, or sometimes their [inaudible 00:01:12]. It’s a big job. It’s very important that the executor is organised and able to communicate with those beneficiaries.

Dan: Jessica, I was just sort of thinking that not only is it challenging in the respect of trying to distribute the estate generally, but also there must be some family dynamics or relationships that can possibly be difficult to navigate for the executor, as well.

Jessica: That’s right, Dan, so we always say when there’s a will, there’s a family. The difficulty with appointing say, for example, one adult child as opposed to both of your adult children, is that the other adult child could potentially feel that they’re being left out of making the important decisions. So if you do appoint someone impartial to the estate, such as a solicitor, or an accountant, even for that matter, you’ve got someone there that they don’t actually have the emotion attached to actually distributing that estate. They can use their professional judgement as to how the matter needs to be essentially wrapped up as soon as possible for the benefit of those beneficiaries.

Dan: Now, here’s why it’s important, I suppose, to speak to your lawyer about this as opposed to going online and jumping in for a free will kit or going down to the newsagent and just filling in the details.

Jessica: Yes, it’s very important to speak to your solicitor when setting up a will, obviously. Post office will are better than nothing, but in saying that, if you don’t actually completely understand how the succession of Queensland or any state, for that matter, works, it’s very important to speak to a solicitor so they can set up your estate planning properly. Also, on the other hand, when someone does die and you are appointed the executor of that estate, to speak to your legal professional or your accountant as to what the process is. We handle these matters daily, assisting families with the administration of their loved ones’ estates. Being an executor, as I said before, it’s a very big job. You essentially are liable if you do anything wrong, so it is so important to have a solicitor there acting in your best interest as the executor of the estate and assisting you with the administration of that.

Dan: Jessica, thanks for joining me.

Jessica: Thanks, Dan.

estate planning

A Ten Point Strategy to Make Sure Your Estate Planning is Up to Date

By | Articles, Wills and Estates

It’s one of those things that we all know we should do – but we don’t necessarily want to do it. As adults we’re all aware that it’s important to have a will – and other measures – in place to ensure that our affairs are handled properly if something horrible were to happen. So at some point, most of us bite the bullet and “put our affairs in order.” For those of you who are still procrastinating, however, here are some tips to help you create an effective estate plan, and manage it once you’ve done so.

Begin by taking stock of your personal circumstances. Do so by making a comprehensive list of all of your assets, including but not limited to your investment portfolio, and all personal and real property.

Then consider the following:

  • How do you want you assets to be distributed?
  • Have you nominated a beneficiary under your superannuation policy?
  • Who will look after your children if something happens to you and/or your spouse?
  • Who can you trust to ensure that your wishes are carried out as stipulated in your will?
  • Who will handle your financial matters if you are unable to do so?
  • Who will make medical decisions on your behalf if you can no longer make them yourself?

The next step is to draft your will. You can do this (and draft other legal documents in your estate plan as long as you are at least 18 and don’t have any physical or psychological issues that would render you legally incompetent) with the assistance of a qualified legal professional, or on your own using legal resources available online. Although choosing the latter may seem like a more affordable option, consulting a lawyer can save you time and money in long run. Specifically, he or she can help determine which assets you can automatically include in your will – and which ones (such as joint assets, superannuation and life insurance policies) you can’t and most importantly, the implementation of strategies to ensure your hard-earned assets go to the beneficiaries you have chosen, as opposed to those you have not.

Don’t forget to choose an executor. This is crucial because the executor is the person who will oversee the distribution of your assets and other matters as stipulated in your will. Make sure it is someone you trust and is equipped to cope with family squabbles and any unpleasant issues that may surface. He or she may be a friend, relative or a financial or legal practitioner.

Next, make sure you’ve assigned power of attorney. By doing this, you’re giving someone the legal authority to make decisions and/or take certain actions on your behalf in certain circumstances. You can designate power of attorney to someone for only a limited time; in the event that you are no longer able to make your own decisions; or to make decisions regarding your medical care if you are unable to do so.

You should also consider creating an advance health directive.  Creating this document is another way to ensure that your wishes about medical treatment and related matters are known in the event that a catastrophic illness or injury renders you incapable of making decisions about your care.

While you are at it, talk to your lawyer about the pros and cons of creating a testamentary trust. This is a trust that is included in your will, can be used to protect your assets, and will only take effect when you pass away.

This may be a viable option for you if:

  • Your beneficiaries are not yet legal adults
  • Your beneficiaries are mentally incapable of handling certain responsibilities
  • You want to keep your beneficiary/ies from squandering their inheritances
  • You do not want family assets to be divided in a divorce settlement
  • You want to protect family assets in the event of bankruptcy

The trustee, or person who administers the trust, will also be appointed in your will. He or she is in charge of the assets set aside for the beneficiaries until the trust is no longer in effect. How long the trust remains in place is up to you. Usually, it will be effective until a minor becomes an adult, gets married or successfully completes their education.

Once you’ve conferred with your lawyer and drafted all of the legal documents you’d like to include in your estate plan, let your executor and relatives know what they are and where you keep them. You should also keep and let them know where to find any other significant legal and financial paperwork including your:

  • Birth certificate
  • Marriage certificate
  • Personal insurance policies
  • Documents pertaining to real estate holdings
  • Financial and retirement information
  • Superannuation papers
  • Investment documents (securities, share certificates, bonds)
  • Health insurance documents
  • Pensioner concession card
  • Any deposits for funeral investments

You should also get into the habit of going through all of the paperwork in your estate plan at least once or twice per year. Doing so will allow you to be proactive when it comes to making any changes. This is especially important when it comes to your will, which should be amended in the event of:

  • The sale of important assets
  • The creation of a family trust
  • The acquisition of new assets
  • Additional financial obligations
  • Changes to your personal affairs
  • Changes to your super or SMSF

Whenever you make changes to your will, you should also ensure that any beneficiary designations on insurance policies and so forth also reflect the changes. 

Finally, it is important to keep the lines of communication with relatives open throughout the estate planning process. By being candid about your wishes from the outset, you’ll reduce the likelihood any misunderstandings and hurt feelings in the long run.

Could an unsent text message be a valid will?

Will Shock: Could an unsent text message be a valid will?

By | Articles, Wills and Estates

In Queensland, a valid will is written and signed by either the person making the will (the Testator) or directed by the Testator in their presence.

The testator must sign or acknowledge the signature in the presence of two or more witnesses and the Testator must sign with the intention of executing the will.

The Queensland Supreme Court Case of Nichol v Nichol[1] recently delivered, saw the Court validate an unsent text message as a will.

A man died in October 2016 and was survived by his wife Julie of one year, who had left him days before. The deceased had a very close relationship with his brother David and nephew Jack. His death was sudden and unexpected.

No formal will was ever found, but when the body was discovered, his mobile phone was nearby.

There was an unsent text message saved to drafts which read:

“Dave Nic you and Jack keep all that I have house and superannuation, put my ashes in the back garden with Trish Julie will take her stuff only she’s ok gone back to her ex AGAIN I’m beaten. A bit of cash behind TV and a bit in the bank Cash card pin 3636 MRN190162Q 10/10/2016 My will”

The Nichol’s case is one of many cases all over Australia where a suicide note, draft will, unexecuted will and electronic wills, such as a Facebook status or Tweet on twitter, have been valid wills. Without the intent, the application for the informal will to be validated won’t proceed.

The judge held[1] that four elements constituted the text being a valid will.

  1. Was there a document?
  2. If so, did the document purport to reflect testamentary intentions?
  3. When the document was created, did the deceased demonstrate that it was his intention that the document operate as his will?
  4. Did the deceased have testamentary capacity?

 

[1] [2017] QSC 220.

Having a valid will is the only reliable way to ensure that your estate goes to family or friends of your choice after you pass away. A valid up-to-date will can help reduce stress for your family and friends, limit the costs to administer your estate and lessen the possibility of disputes over your possessions.

Please call OMB Solicitors to plan your estate.

gold coast estate lawyers

Why Simple Wills Rarely Work Anymore

By | Podcasts, Wills and Estates

The fabric of the traditional family unit has changed and continues to change! Once, Mum, Dad and the 3 kids, were locked into family bliss, or maybe not, but nevertheless they stuck together and consequently from an estate planning perspective, all was relatively easy. But now throw into the mix, second and third marriages, blended families and children that are now adults, who similarly may have broken relationships or other issues, culminating in the once simple estate plan, not being so simple after all.

In this podcast, Estate Planning expert, Richard Dawson of OMB Solicitors discusses the matter.

TRANSCRIPT:

Dan:     Richard, how complex are families today?

Richard:    Very complex, in a word. We have about half of our families are blended families, as you mentioned second and third marriages. Those blended families have children. There’s a number of ways that we can approach estate planning, and there are some common denominators that I always look for in my estate planning with clients so that they can avoid the traps and the pitfalls that may follow. Some of those can avoid family disasters.

Richard:  I think one of the most important things that a person can do as part of their estate planning is to discuss the affairs with the family so that the family members have a realistic expectation of what they can expect to receive by way of an inheritance and so that avoids surprises. It’s really important to discuss your intentions about how you plan to divide your estate, before you go, with your children and other loved ones. You should have open and frank discussions with family members so that you can manage their expectations and flush out any areas of conflict that may be unsettled between siblings for many and varied reasons. Adult children have their own expectations and beliefs. They also have their own investment strategies and their own family dynamics. We’re all human; we’ve all got issues. Quite often adult children have predispositions about what they should receive in the form of an inheritance, but more so some of them even expect to receive an inheritance in a certain way.

Richard:     What we’re trying to do as part of estate planning is to avoid a conflict in a family after death. Because poor estate, or no planning at all, is a recipe for a family disaster. It can also be an extremely expensive exercise if there is no will in place when someone dies.

Dan:  What you’ve just mentioned there … It does certainly deconstruct that whole idea that simply going down to the newsagent and grabbing a will kit isn’t going to cut the mustard.

Richard:  The $20 will kit is what you use before you spend thousands and thousands and thousands of dollars on your lawyer fixing up the problem.

Dan:  Mm-hmm (affirmative).

Richard:  I’ve seen will kits used time and time again, and very few of them are prepared properly and some of them are often invalid and a waste of money and time in the first place.

Dan: There are sort of other examples, I suppose isn’t there … Of organisation, big publicly owned organisations who may offer free wills or whatever the case might be, where you can actually have a lawyer not involved in the construction of these really important documents.

Richard: That’s right. The most commonly used service for free wills is the Public Trustee of Queensland. They promote the free will service, which is a great idea for the community. They do about … From memory, about 35,000 free wills a year. That’s great, but what happens is there a government body and they charge a percentage on your estate administration regardless of how easy or complex it is. With no disrespect to the Public Trustee because there are some very good people who work in there, but they are a government body and we all know that the wheels of the government machine roll very slowly. Whereas, if you’ve got a lawyer engaged in commercial practice, they’re very experienced and they’re usually specialised in estate administration, as am I. We have a lot of systems in place, we’ve got a lot of precedents in place which make estate administration as pain-free as we possibly can. It’s also important the quicker you work and the more experienced you are at it, generally means we can resolve estate administrations and finalise them for the beneficiaries and the executors in a time and cost-effective manner.

Dan:  Now some of the practicalities I suppose Richard, in terms of constructing a good estate plan, fundamental today is choosing the right executor?

Richard: Absolutely. The executor is the person, or persons, who are appointed in the will to administer a deceased person’s estate. They’ve got a number of roles and responsibilities; in particular, they’ve got to identify assets and liabilities of the estate. They’ve got to pay out any debts. They’ve got to pay for the funeral. They’ve got to pay out any estate administration costs. They would have to apply for probate if the estate warranted it. That’s all done before any of the beneficiaries receive their inheritances.

Richard:  There can be more than one executor, but there can be no more than four. I find four is a very impractical number. A sole executor has autonomy, so if you’re choosing a sole executor then it’s important to choose the right person because they will be stepping into the deceased’s shoes, identifying the assets, paying out liabilities, and in a word upholding the terms of the will. So that person must be experienced and have the necessary acumen to be able to administer an estate.

Dan:  Richard I’m assuming that key to this is trying to make the life of an executor as simple as possible. So is there something that can be practically done in terms of making sure that banking details and superannuation details, insurance, et cetera are readily apparent and available to the executor?

Richard:  Yeah, very much so. That’s a good point. I say to clients that estate administration shouldn’t be a game of Sherlock Holmes. The executor has a difficult enough job as it is, and the will-maker should really get their banking, superannuation, insurance, and other investments in order. This greatly assists the executor in managing the estate, and it also saves a lot of time and cost. All too often do I see executors asking for advice as to where they should be searching for a deceased’s assets or investments. The lawyer is not going to know. It should have been the will maker who told the executor, “When I pass away, I’ve got this bank account, I’ve got that superannuation, I’ve got that life insurance. Here’s all my details.” It makes the executor’s job very easy.

Richard: What I try and encourage people when they come in to do their wills … And there are times when I don’t know those person’s assets because they’re closely guarded or they might be new clients, I ask them to put all their bank details and 30 June statements in a sealed envelope, sign across the back of it, and then we keep that with the will. I ask them to update their details, and replace that envelope as time goes by. So that when the time comes for the estate to be administered, we can go to that envelope, open it, and it’s all there. It makes that so much easier than to be digging through all old, outdated paperwork, writing to banks, and … Basically going on a fishing expedition for stuff that may not be there.

Dan: Now we know that there has been this exponential increase in estate litigation, and I’m assuming that it’s front of mind for many people that are considering estate planning. Is there things that people can do to minimise the possibility of their estate being contested or disputed by someone within the midst that’s not happy?

Richard: Most definitely. Every time I take instructions for a will I consider who is an eligible person to contest an estate. A will maker must consider spouses, children, and dependents. Where somebody for whatever reason leaves out a spouse, a child, or a dependent, or leaves them a minimal amount, up goes the red flag. I talk to the client and I explain to them the pros and cons of leaving out or minimising an inheritance for those category of people. Because at the end of the day, a disgruntled beneficiary has the rights in all Australian law to contest an estate and apply to a court for what we call Further and Better Provision from the estate. To get that Further and Better Provision from the estate, lawyers are involved and it’s expensive. It’s very expensive. 99.9% of the time it comes out of the estate. There are exceptions, and there’s a Judge’s discretion as to whether or not if someone’s being vexatious or frivolous in their claim that they can personally have costs awarded against them. But in most cases it is commercially the option that the estate pays. Which means there’s less for everyone to go around. And the lawyers get paid.

Richard:   It’s just not necessary because of improper estate planning or no estate planning at all.

Dan:   Mm-hmm (affirmative). Look, it’s an area of law isn’t there where there are lots of myths, and unfortunately, a lot of these myths do inform the wrongful practices of people who are considering estate planning.

Richard:   That’s exactly right, yes.

Dan:  I’m thinking fundamentally just going through what you’ve discussed, having that open discussion with the family and others that may well be a beneficiary is really important. Secondly choosing the right executor, thirdly getting the legal paperwork in order. Also approaching this piece of very important work through the lens of what can I do to ensure that the estate is safe and not going to be disputed? They seem to be the take-home messages.

Richard: Absolutely. That’s for sure. Probably to add to that is keep everything up to date. If we have a look at where we were 10 years ago, our lives were completely different. We didn’t have iPhones, we didn’t have large superannuation accounts. We were building; property values in some places have doubled or tripled. We’ve had children, we’ve had grandchildren. They’re all the things why you would keep a will up to date and why you would review your estate plan, I recommend, every say three to five years depending on your circumstances. It’s really important to have an up to date will so that it reflects your current wishes, and it also meets your family’s expectations.

Dan:  Great advice. Richard, thanks for joining me.

Richard:  Lovely to have you. Thank you. Bye for now.

Wills – The Unavoidable Topic

Wills – The Unavoidable Topic

By | Articles, Wills and Estates

It’s human nature to refuse to accept the obvious – nothing is more certain than death and taxes. Making a Will isn’t morbid – it is the only way to protect hard earned assets.

Most people wouldn’t leave their car door open with a wallet displayed on the front seat. Few people leave their homes open so thieves can help themselves but many people leave their estate wide open to claims. A valid will ensures assets go to those who are near and dear. The absence of a Will leaves the estate open to claims from all and sundry and this includes the taxation office.

There is no legal obligation to make a will, but it is the smart option. Without a Will, assets can be distributed by anyone to anyone. When people die without leaving a will, assets are distributed according to a legal formula.

The process applies to financial assets, property, and may determine the guardian of children under 18 years of age. Avoid creating ongoing hassles and legal wrangles by preparing an estate plan.  This usually means writing a straightforward will and an enduring power of attorney.

Enduring power of attorney offers protection if an accident or a medical condition prevents people handling their own affairs. An executor is appointed to ensure a will is followed to the letter. Power of attorney allows a trusted person to deal with financial and legal affairs of another.

A will can be relatively straightforward or a complex legal document incorporating protective clauses and tax effective structures such as testamentary discretionary trusts (TDTs). TDT’s are not for everyone, but can be very advantageous.

TDT’s may offer tax advantages and protect assets involved in Family Law Court proceeses or creditors threatening bankruptcy.

TDT’s also protect spendthrift beneficiaries from themselves and ensure ongoing care for children, grandchildren and mentally disabled beneficiaries.

Legal advice is recommended when making a will. It is essential to cover all likely eventualities, choose an executor to administer the estate; appoint the guardians of children, list assets and liabilities (individual, jointly owned or placed in a trust), name beneficiaries, show how assets should be distributed and make provisions for the future of any children.

Recent legislation allows people to place large proportions of their wealth into superannuation.

Superannuation is not always distributed according to a person’s will because the asset is controlled by the trustee of the superannuation fund.  This is not usually the executor of the estate.

The superannuation fund trustee may decide who receives the proceeds of the fund.  This is an important estate planning issue.

O’Keefe Mahoney Bennett Solicitors has almost 40 years estate planning experience. For further information contact Simon Bennett on 07 5555 0000.

This article was featured in Label Magazine, by Simon Bennett

Signing a Power of Attorney

Don’t Get Lost in the Shuffle

By | Articles, Wills and Estates

Volcanic ash created an international debacle as people were stranded far from home; it highlights the need for a back up plan

Life does not always go to plan but most people are unprepared for the unexpected according to Gold Coast solicitor Simon Bennett. Simon says responsible people prepare for all eventualities. “Life is unpredictable, we must hope for the best and be prepared for the worst,” he says.

“People can sometimes become incapacitated due to a so-called act of god like the volcanic ash eruption or as the result of an accident or illness. It is essential to have a plan of action in place to avoid compounding the problem. A power of attorney ensures a trusted family member, friend or professional person is able to take over financial and health affairs,” Simon says.

A power of attorney is a legal document that allows any person aged 18 years or over to nominate another to deal with financial, health and any other situations if they are not capable of dealing with these matters themselves. An enduring power of attorney continues if the loss of capacity is ongoing. It allows the person with the enduring power of attorney to make decisions on behalf of another.

Simon says government officials take over when people who are no longer capable of dealing with their own affairs have failed to arrange a power of attorney. “It would be terrible to rely on state officials.

“These people have no idea of what an incapacitated person would want or expect. The individual becomes a faceless subject of the State. A power of attorney ensures individuals don’t get lost in the shuffle. OMB Solicitors experienced legal team can help everyone plan for the unexpected,” he says.

Do not get lost in the shuffle

This article was featured in Label Magazine, by Simon Bennett

Taxman Pays For Education

Taxman Pays For Education

By | Articles, Wills and Estates

Save thousands of dollars on private education with savvy estate planning

You can take advantage of legal tax benefits and save on education costs with a trust. That statement comes from O’Keefe Mahoney Bennett estate planning manager Richard Dawson who says trusts are established in a will and funded by assets of a deceased estate or payments to an estate.

“A Testamentary Discretionary Trust (TDT) is otherwise known a lineal descendants trust,” he says. “The trust is controlled by a trustee. The trustee is usually the primary beneficiary and able to enjoy the benefits of the trust. TDTs often include other beneficiaries. These may be the children and grandchildren of the primary beneficiary because current tax legislation allows the proceeds of a trust to be distributed to beneficiaries.”

The benefit of correct estate planning is that tax savings result when the trustee distributes gains to the beneficiaries with the lowest marginal tax rate in a particular financial year. “These may be the mother, father, child, or grandchild of the deceased which means that the beneficiaries pay tax on trust proceeds at normal marginal tax rates.

“These beneficiaries are usually children as they are unlikely to be earning an income. Therefore significant tax savings can be gained by distributing trust income to children because children aged under 18 years are taxed at marginal adult rates as opposed to adults on high incomes who pay significantly higher tax rates,” Richard says. “Those tax savings from the trust income can therefore be used to subsidise children’s education costs and living expenses. By effective use of estate planning, we can ensure that those savings via the taxman can pay for their education and lifestyle.”

For more information on tax effective estate planning contact O’Keefe Mahoney Bennett Solicitors 5555 0000

Will Kit

Will Kit

By | Articles, Wills and Estates

Do-it-yourself Will Kit – What you use before they come to see the lawyers to fix everything up…

Most of us work tirelessly over 30 or 40 years to accumulate our wealth with the intention that we pass that wealth on to the next generation after our death. In the interest of saving a few dollars people often resort to the use of Do-It-Yourself (DIY) Will kits, colloquially known as newsagency Wills. DIY Wills have a myriad of pitfalls for the unsuspecting user.

Respected Gold Coast Estate Planning Lawyer Richard Dawson says to avoid these DIY Wills at all costs. DIY Wills have many “fill in the blanks” sections which, if completed correctly, created a legally binding document. If not, then lawyers are usually engaged in a very expensive exercise of determining what the Will-maker intended before his or her death.

DIY Wills usually cost between $20-$40 and then the Will-maker has to spend time completing the DIY Will with the hope that it reflects accurately their wishes. On the flip side, a simple and straightforward Will prepared by a lawyer can cost but a little more. Knowing you have peace of mind it is a very small price to pay. The Succession Act stipulates very strict requirements regarding the preparation of, signing and administration of Wills. One tiny error could render the Will entirely invalid. If this occurs then the deceased person is said to have died ‘intestate’, that is, without a valid Will.

When a person dies intestate an application must be made to the Supreme Court before a deceased person’s estate can be properly and legally administered. Depending on the circumstances, the person who has the right to apply to the Court may be very different from the person the Will-maker original intended. Richard says that any person contemplating making their Will should always use a qualified, experienced, estate planning lawyer so as to avoid the costly expense and anguish associated with Supreme Court applications.

Newsagencies should be seen only as a place to purchase your newspapers, magazines and lotto tickets, not a one-stop-shop for your legal documents. Having a lawyer prepare your Will is not only sound estate planning advice but highly recommended if you want to protect your family assets. He says the cost of professional legally prepared Wills is insignificant in comparison to the costs of a Supreme Court application.

This article was featured in Label Magazine, by Simon Bennett & Richard Dawson

All in the Family

All in the family

By | Articles, Wills and Estates

Let the tax man pay for your children’s and grandchildren’s education.

Ever wondered how you could save tens of thousands of dollars on your children’s or grandchildren’s private education? Well the answer is quite simple, completely legal, and better still the tax man pays it for you!

The tax savings are achieved through a Testamentary Discretionary Trust or TDT. A TDT is a trust set up in a person’s Will and establishes on their death. TDT’s are funded by deceased estate assets, such as real estate, life insurance payouts or superannuation benefits.

A TDT is controlled by the trustee who is usually also the primary beneficiary. That is, the person who controls the trust also enjoys its benefits. TDT’s generally include children and grandchildren of the Will maker as beneficiaries.
TDT’s have a wide range of benefits and are designed to protect a beneficiary’s creditors and predators. A beneficiary’s creditor can include the ATO.

Proceeds of a TDT must be distributed to the nominated beneficiaries such as the Will maker’s children or grandchildren. The relevant tax law applying to TDT’s means children under 18 years are taxed as adults. This is different tax treatment under a
family trust where children taxed at extremely high rates.

The potential tax savings when income from a TDT is distributed to benefit a child or grandchild under 18 is significant. If the child’s parent is a high income earner and pays a high rate of tax, then TDT income paid to children under 18 years is very tax effective.

For example; Fred Smith’s mother died leaving him an inheritance of $1.5M and a TDT was setup in her Will. Fred is a doctor. Heearns $250,000.00 a year and pays the highest marginal rate of tax of 49%*. Fred has 3 children, Peter, Paul and Mary all under the age of 18 years.

The TDT receives income of $75,000 per annum from its investments. Fred, as the TDT trustee, distributes $25,000.00 to each of Peter, Paul and Mary. The first $18,200.00 is tax free. The other $6,800.00 is taxed at 19% or about $1,300.00 per child. Had this $75,000.00 been added to Fred’s $250,000.00 annual income, Fred would have paid $36,750.00 in extra tax. The total tax saving to the Smith family is $32,850.00 per year. Multiplying this tax saving by the average 15 years of private education (including university) potentially saves the Smith family nearly $500,000.00.

The moral of the story is through proper estate planning, setting upa TDT can create a completely legitimate tax-effective way to pay for your children’s and grandchildren’s education and lifestyle instead of seeing your hard earned dollars end up in the tax man’s pocket. To find out more on TDT’s and other estate planning strategies, speak with Richard Dawson, Partner and Estate Planning Manager at O’Keefe Mahoney Bennett Solicitors, phone 07 5555 0000.

*As at 1/7/2015 including Temporary Budget Repair Levy of 2% andMedicare Levy of 2%. Tax rates are subject to change and may be varied by the Income Tax Assessment Act.

Book now