Make your will in iron
- Do not sign each page of the will with two adult witnesses all using the same pen.
- Voluntary property that the testator cannot assign. Many people believe that bequeathing property over which they have had control their entire life means that it will automatically go to the designated person or institution mentioned in the will. This does not apply to property held jointly with someone else, joint bank accounts and assets held in trust, including superannuation pensions.
- Forgetting to revoke a previous will.
- Don’t give it your all.
- Failure to correctly identify beneficiaries, such as particular charities.
Worried about your child’s marriage problems? Or maybe your offspring is involved with a partner you don’t trust?
One in three married couples in Australia end up divorcing, with an equal percentage of couples married for at least 20 years, according to an analysis by the Australian Institute of Family Studies.
Late separations and the sharp increase in stepfamilies (when a couple creates a household with children from one or both of their previous relationships) are likely to increase the value of the commons and the complexities of their division into case of marital or relationship breakdown.
A testamentary trust can offer protection against the financial consequences of a relationship breakdown long after the will’s death by holding the inheritance in the beneficiary’s name.
“It makes them beneficiaries without giving them control,” says Anna Hacker, national estate planning manager at Australian Unity.
On the death of the will, control of the assets subject to the testamentary trust passes to a designated third party trustee.
This trustee generally has the discretion to decide which beneficiaries receive income from the trust each fiscal year. Usually, these beneficiaries are family members or close friends.
The beneficiary does not own or control the assets that make up the trust. This means that the beneficiary’s ex-spouse or partner cannot claim a property trust interest in property claims.
Blended family conflicts are on the increase as more relationships break down (due to separation, divorce, or the death of a partner) and new families are formed.
“They get very complicated,” says Fiona Reid, family lawyer and managing director of Reid Family Lawyers, who specialize in negotiating divorce settlements.
One diplomatic way to defuse future bombs is for the testator to discuss with family members what they can realistically expect, structure financial affairs, and settle the ownership of assets.
A traditional legal solution is for husband and wife to make a will that gives their interest in the family home – usually with all contents – to each other.
On the death of the survivor, the combined property of the two families is divided among all the children.
The risk is that the surviving spouse will change their will to benefit only their children, says Brian Hor, special advisor for retirement and estate planning for Townsends Business. & Business lawyers.
This can be avoided through a “mutual will agreement” that can be applied after the death of one of them, he says.
Alternatively, rather than giving the other assets to the surviving spouse, the deceased spouse’s will can establish a trust over the assets. This gives the surviving spouse the right to live on the income for the rest of their life or until they start a new relationship.
“When the right expires, the estate reverts to the children of the deceased spouse,” says Hor.
The will must ensure that whatever is provided to the second or next spouse is sufficient for their needs, he adds.
“If you can put these mechanisms in place to protect children from a previous relationship, it is still important to look after the current spouse who can take legal action if that is not considered sufficient.
Fluid family relationships mean it’s important to make updates to reflect changing circumstances.
About 4 percent of Australian families are blended. This includes families with two or more children, at least one of which is the natural or adopted child of both partners and at least one other child who is the stepson of one of them, according to the Australian. Institute of Family Studies.
Another 6 percent are stepfamilies, where there is at least one resident stepchild but no child who is the natural or adopted child of both partners. There has also been a significant increase in the number of families headed by grandparents and more “rainbow” families headed by lesbian, gay, bisexual, transgender or intersex couples.
Children under 18
While it might not be a pleasant thought, it is worth taking active steps to ensure that your wishes for your children under the age of 18 are formally documented in the event that both parents pass away.
If there are no specific instructions in a will, relatives, such as grandparents or close family, can apply for guardianship, which will be assessed by the family court based on interest. superior of children.
A parent can name a guardian for their children under 18 in their will, says the Australian Institute of Health and Welfare, a government agency. Key criteria for choosing a guardian include an aligned lifestyle, religious beliefs, the ability to bond, and the financial and emotional ability to take on the role.
“It is very important to discuss your intentions, obtain consent and discuss your expectations with the potential guardian,” explains the institute.
An appointed guardian should not face financial hardship or loss as a result of their role. This means that the guardian will have access to the child’s share of the estate at the discretion of the trustee.
“It makes sense that two different people act as executor / trustee of your estate and guardian of your child, respectively,” explains the institute.
The executor / trustee of your estate will be responsible for distributing the money to your child’s guardian according to the terms of your will. The child’s guardian will be responsible for making decisions about your child’s lifestyle.
This helps to avoid conflicts of interest or any potential misconduct.
Keep in mind that for the children who inherit your super, they are subject to tax, which means they will receive it tax free. The super that’s left to adult children is taxed at 15 percent (or 30 percent from an untaxed fund such as an old government plan) plus two percent from Medicare levy.
When additional help is needed
Making additional payments to a child who needs more support can cause friction with other beneficiaries, such as siblings.
“Problems arise when children think they are being treated unfairly, so you have to do it with care,” says Hacker.
She recommends that the testators divide the estate equally among the children and make an additional bequest to the children most in need explaining that it is necessary for additional support.
There are strategies for testators, usually parents, who are concerned that their children will waste their inheritance by gambling or taking drugs, but still wish to provide financial support.
“People don’t normally exclude someone from their wills because of addiction concerns,” Hacker explains. “They hope they will recover and continue to want to offer help, even if there has been bad behavior, theft or an assault.”
A restrictive trust can be established in an open legal structure that attempts to balance the needs of a beneficiary with appropriate controls to ensure that an inheritance is not wasted on an addiction.
The trustee, usually an expert third party, has the power to supplement capital distributions and even change the terms of the trust if the beneficiary overcomes his dependency.
But the trustee also has the power to say “no” if there are concerns that assets are being misused.
Paul Huggins, investment banker and vintage car collector, is setting up a charitable car trust that could help those who fear what might happen to their collections.
“What happens to these wonderful cars? Huggins asks. “What if the beneficiaries do not have the skills to properly manage their disposal? “
This is a problem faced by many people who have spent their lives building collections, ranging from classic cars to art, which will likely be sold by recipients soon after they pass away.
“After the mourning and grief, after the probate payment, the beneficiaries sell,” Huggins says. “Over 90% will automatically sell the assets and the chances are they will only get 60 ¢ or 70 per dollar because they don’t have the contacts or the network to achieve fair value.
Its Momentum Heritage Classic Charity Trust project will handle the expert sale of vehicles to local and overseas buyers, with a portion going to charity.
Huggins, who has built his own collection of nearly 70 cars over 40 years, says the prices of rare classic cars are rising “faster than gold.”
Certain family objects, such as war medals or jewelry, have sentimental value far beyond their financial value and can be the cause of bitter family disputes.
Meiliunas says the best strategy for a testator is to explicitly state his intentions, such as donating an item before his death, or making a specific bequest in his will.
“It is imperative that the article is clearly described,” he says. “Don’t leave instructions vaguely referring to a painting in the living room. “
Some people avoid confusion by putting stickers on items that indicate the beneficiary.
Alternatively, you can write a “declaration of will”, which provides guidance on the last will but does not bind the executor.
A nonprofit service called Include a Charity encourages will donations from a selection of around 1,200 charities, ranging from global heavyweights such as World Vision to community groups.
The IAC allows donations to be directed only to charities registered with an Australian Business Number assigned by the Australian Taxation Office which are audited annually, reducing the risk of funds being misdirected or defrauded by disproportionate administrative costs.
Gifts range from an entire estate to a percentage or specific assets, such as money, stocks, and property. Alternatively, there are residual gifts, which are the remainder of an estate after first leaving gifts to other beneficiaries.
The average individual donation is around $ 50,000, split between three to five charities.
Parents can also include a “disaster clause” in their will so that the money goes to a charity if their children die before them.