Money after Death…when Wills go Wrong!
Life is immeasurably more complex for the average Australian now than it was a generation or two ago.
We are wealthier than previous generations and we typically have a mix of investments of shares and properties and managed funds. We have blended families, multiple bank accounts, multiple cars, multiple holidays and a handful of online social identities.
With this in mind, it’s no surprise that our traditional estate and will planning needs to be upgraded to cope when disaster strikes.
Drawing up a modern, well worded, Will is an essential way of ensuring that your savings and assets are distributed according to your final wishes. The implications of getting this wrong can be serious and may result in unseemly squabbles over money. Wills are emotional documents as much as financial and practical ones and can create havoc and distress if unclear. Even families who previously enjoyed harmonious relations can end up in court. Your legacy could be eaten away by legal bills or unnecessary tax.
“If you haven’t reviewed your will in the last 2 years…do it now!”
Protect your children’s inheritance!
There is no one-fit solution for protecting your children from challenges from past or present partners, biological and step children.
Traditionally a will for a married couple provides for the estate to pass to the surviving spouse but this is unlikely to be appropriate for blended families – there is a risk that the surviving spouse may change their will so that the deceased’s own children miss out or the assets diminish over time leaving little to the deceased’s children.
A testamentary trust can be a useful vehicle for blended families. It is established in a person’s will and activated after death to hold assets including property and investments. It can allow for a life interest to be given to your surviving spouse and then once they pass away or remarry, the capital can go to your children.
Alternatively, you may wish to protect your children from unscrupulous partners who take advantage of them to get to their money. Provisions can be made to include bloodline capital restrictions for inheritances which are legal structures that make is difficult to attack.
Don’t forget your super!
Most people do not realise that superannuation generally doesn’t form part of someone’s will. Super balances are not directly held by an individual, so they can’t form part of a will. Rather, super is held by the trustees so when you die, the trustees have a say in how that money is dealt with. There are a number of legal cases which repeatedly show the trustee has made a different choice, even when the will states the funds should go to the children of a previous marriage. Without a binding death benefit nomination, the trustee has the absolute discretion to decide what happens to your super.
- If you die without a will your savings and assets are distributed according to the intestacy rules in your state.
- Talk to your spouse and children about your objectives and identify those whom you wish to benefit from your estate.
- Contemplate if your choice of beneficiaries might leave open the potential for dispute in the family court and discuss these with your advisor.
- Review your will regularly and immediately if you marry or divorce as any previous will is no longer valid.
If you or someone you know wants to find out more, please contact us.