An estate plan involves more than signing a will and storing it in a ‘safe place’.
Estate planning requires a holistic approach that considers a person’s present circumstances and foreseeable future. A plan needs to consider who matters, what you have now, what you may have in years to come, and what your final wishes will be.
Our role at Douglas Cheveralls Lawyers is to document these wishes to ensure they are legally enforceable and can be carried out when you die.
At Douglas Cheveralls Lawyers, our lawyers have experience in creating an ideal estate plan, which may:
- appoint a trusted person or persons to manage your affairs (attorney or guardian) if you are incapacitated; and a legal personal representative (executor or trustee) to administer your estate (and associated trusts) after you die;
- nominate your intended beneficiaries with certainty or provide for a class of beneficiaries to ensure that your assets pass only to those you intend to benefit;
- prevent undue stress and expense by minimising uncertainty and potential family provision claims;
- maximise the value of your estate through effective tax planning; and
- if relevant, provide for effective business succession or the winding up of a business.
Steps in Estate Planning
Every family is different and there is no one-fit solution for all. You should start with an overview of your family circumstances and a list of all family members, whether or not you would like them to benefit from your estate.
Acknowledging where there is conflict between family members and identifying any eligible persons who might claim on your estate will assist in devising strategies to reduce the potential for future claims. Blended families are common and require special attention as there may be competing interests between past and present partners, biological children and stepchildren.
For more information about beneficiaries in blended families, see our article, “Wills for blended families”.
Executor and Trustee
The executor and trustee will be your personal legal representative and should be chosen with care.
For simple estates, a spouse, child or children (or combination) are usually appropriate choices to oversee the administration and finalisation of the estate.
For more complex estates, with business interests or which will have ongoing trusts, it may be preferable to appoint a professional with expertise in this area. Similarly, if there is conflict within the family, a 'neutral' executor may be more appropriate to ensure that the role is carried out with impartiality.
For more information about choosing an executor, see our article, “How do I decide who to choose as an executor of my Will?”
Powers of Attorney, Powers of Guardianship and Advance Care Directives
You may appoint an attorney, guardian or decision-maker to manage your financial, legal or personal affairs for a defined or ongoing period, and to make health-related decisions if you are incapacitated.
These documents provide for flexibility in choosing the type of functions to be carried out, and the duration for which the authority is given.
Powers of attorney can be made enduring, which means that a person can manage your affairs indefinitely if you lack decision-making capacity. Powers of attorney are not without risk, so it is important to get the right advice from the start.
These documents form an important part of your overall estate plan by ensuring the ongoing management of your affairs by a trusted person if you are incapable.
A detailed list of assets and liabilities will assist in determining the overall value of the estate, how and when assets should be distributed, the appropriate structure of the will, and whether a testamentary trust would be beneficial (see below).
You will need a precise description of the assets, their location, whether they are held individually or jointly and their value. If you are including specific gifts, such as items of sentimental value, antiques, or artworks, these should be clearly identifiable and described in the will.
Remember, your assets are likely to change over time and this needs to be factored into your estate plan. A gift of a specific asset of considerable value which is later disposed of may fail and cause an unintentionally unequal distribution amongst beneficiaries.
In some cases, it will be advantageous for a will to establish a testamentary discretionary trust. This is a trust that comes into effect after the will-maker dies.
Administration of the trust is carried out by a trustee who is appointed in the will. The trustee determines how and when estate assets are managed and distributed.
If managed properly, the flexibility of a discretionary trust may allow beneficiaries to access the most beneficial taxation treatment with respect to their inheritance and may provide protection for at-risk or vulnerable beneficiaries from claims by creditors or ex-partners. Even modest estates may benefit from having a testamentary trust, particularly where the will-maker is part of a blended family.
For more information about testamentary trusts, see our article, “Testamentary Trusts”.
Death benefits, comprising the superannuation account balance and any life insurance payments, are usually paid to a ‘dependant’ determined by the fund trustee, or in accordance with a Binding Death Benefit Nomination (“BDBN”).
Most funds allow members to nominate their intended beneficiaries through a BDBN.
This process forms an important part of estate planning. Without a valid BDBN, the beneficiaries may be decided by the trustee in accordance with the terms of the trust deed and the relevant legislation. This decision may not reflect what the will-maker intended.
Estate Planning Advice and Resources
Effective estate planning takes time and careful contemplation. Your estate plan will usually comprise various documents to ensure the effective management and finalisation of your affairs so that your life’s efforts reward those you intend to benefit.
If you or someone you know wants more information or needs help or advice, please contact us.
For more resources about estate planning, search the following articles on our website which deal with specific issues arising in estate planning:
- Common misconceptions about estate planning.
- Marriage, divorce and your will.
- Does your business have a will?
- Estate Planning Essentials – Digital Assets.
- What happens when a person dies insolvent?
- Why it’s a Bad Idea to Write Your Own Will.