Why Christmas is the Ideal Time to Consider Your Estate Plan

TRANSCRIPT

Speaker 1:

At Big Law, we are big on providing you great legal help. If you have a family law, business law, wills and estates, commercial law, or conveyancing issue, we’re here to help. Now, here is your podcast.

Dan:

When it comes to estate planning, most Australians don’t take it serious enough, which results in their hard earned assets potentially going to the wrong people. Christmas often brings into focus the importance of family, and to this extent, consideration of estate planning generally. So in preparation for this time of year, I’m with estate planning, expert Elise Jakes from Big Law, Elise, oddly enough, Christmas is a good time to consider your estate plan, isn’t it?

Elise:

It is, Dan. Whilst many people don’t think about dying, particularly at this time of the year, our office recommends that you review your will annually, or if the circumstances of someone mentioned in the will changes, or if your circumstances change. So you don’t need to see a solicitor each year, but it’s a good idea that you get your will out and you read through it and you make sure it’s still what you want to happen in the event of your death. So now is a good time as any to actually do that.

Dan:

Elise, you mentioned a couple of examples there, when is a good time to update your will. Are there other factors that really bring the focus into play?

Elise:

There are a number of significant life events, Dan, which can actually affect your estate planning. And I believe we touched on some of these in a previous podcast, but to refresh everyone’s memory after a busy year, some of the circumstances where you should actually look at updating your estate planning or reviewing it is if you divorce, separate, or become a strange from your spouse, whether that’s a marital spouse or a de facto partner. Similarly, if you enter into a defacto relationship or if you marry, then you should look at updating your estate planning.

Elise:

If you have a child, or if any of your children have children, so grandchildren; if you have established a trust, started a company or set up a self-managed super fund; if you have made a gift to a charity, then obviously reviewing that and ensuring the charity is actually still in existence; if an executor of your will actually dies, if they leave the country, or if they themselves becoming incapacitated.

Elise:

And lastly, but not least importantly, if a beneficiary in your will dies. So with the festive season looming and obviously family celebrating together, it’s also important you turn your mind to think about succeeding beneficiary. So what if my intended beneficiary doesn’t actually survive me? Who do I want to receive my estate then?

Dan:

Right. Now what happens in those circumstances, when you might have somebody that actually doesn’t have a will or in fact, if they do, it hasn’t been updated for a long time.

Elise:

This is actually quite common of a case with a lot of our clients. You know, life simply becomes busy and gets in the way of them actually turning their mind to thinking about what happens in the event of their death. What it means in reality is that their wishes may actually not be carried into effect. So if you’ve previously made a will, then it will remain in place and it will be that document, which will be followed in the event of your death, except in some limited circumstances.

Elise:

That can include if you’ve divorced your spouse or you’ve married since actually making that will. So those events in particular can actually cause your existing will to be automatically revoked, either partially or fully. In the alternate instance that you mentioned, that if you do not have an existing will, then what happens is your estate would be dealt with under the rules of intestacy.

Elise:

By way of an example, if you are survived by your spouse and either biological or adopted children, then under the rules of intestacy, your spouse would receive the household chattels, the first 150,000 and either one half or one third of your residual estate, depending if you survived by one or more children. Your children would then receive either the remaining one half or one third of your estate equally between them. If that’s not your intention, which a lot of the time it isn’t, then it’s obviously a good idea to have a look at updating your will.

Dan:

Now what about enduring power attorneys? I know we have spoken about these in a previous podcast, but just for a recap, what if you don’t have one or you haven’t actually updated this document for some time?

Elise:

So firstly, if you have an existing enduring power of attorney, then your attorneys may still be able to make decisions for you to the extent you have authorised in that document, unless you actually revoke it, or unless you make a new enduring power of attorney. If you don’t have a current enduring power of attorney, then it’s a bit of a different story, as no one will have the power to actually make those personal or financial decisions for you if you have lost capacity and you can’t make them yourself.

Elise:

In those instances, an application would need to be made to QCAT, that’s the Queensland Civil and Administrative Tribunal, for someone to actually be appointed to manage your affairs. For health decisions, without an enduring power of attorney and obviously before someone’s appointed to manage your affairs, the law stipulates who would be responsible to make those decisions for you. So that person would act as your statutory health attorney.

Dan:

Right, so quite apart from ensuring your will and enduring power of attorney are up to date, is there anything else that somebody should be considering reviewing this time of year?

Elise:

That’s a great question, Dan, and yes, you should also ensure your superannuation binding death benefit nomination is current. And again, to ensure that it reflects your wishes. So generally if you die, your superannuation death benefits are not distributed as per your will. They will usually be paid to the person or persons you have nominated in any valid binding death benefit nomination. Or if you don’t have a valid one, then the trustee of your superannuation fund may use their discretion to actually pay your death benefits to a spouse, a child, a dependent, or to your estate.

Elise:

If the decision is made that your death benefits do get paid to your estate, then in that instance, they could be distributed in accordance with the terms of your will. What’s important to remember though, Dan, is that your superannuation trustee doesn’t actually have to follow the wishes that are set out in your will. It’s also important to remember that superannuation can obviously be one of your most valuable assets. And a lot of the binding death benefit nominations can actually lapse after three years and have to be renewed. So if your nomination has lapsed, it becomes non-binding. And what that means is the decision as to who receive your death benefits, reverts back to the discretion of the trustee of your super fund.

Dan:

Well, what about in circumstances where there may be somebody listening to this podcast and they think, well, I’ll just go down to the news agent or the local post office and just buy a $24.95 will kit. Are there inherent risks with using those types of things?

Elise:

There is Dan. Obviously I’ve seen both scenarios. I’ve seen instances where the will kits do work. And I’ve also seen instances where the will kits go horribly wrong. They haven’t distributed the estate properly, their intentions aren’t clear, it’s not witnessed correctly. And in those instances, the risk is that significant legal fees can actually be incurred by your estate to try and rectify those issues.

Dan:

It’s ironic, isn’t it? Because for the cost of a will, it could potentially save possibly tens of thousands of dollars if things did go wrong.

Elise:

Yeah, that’s exactly it, Dan.

Dan:

Elise, obviously Big Law, strong experts in estate planning. And if anyone’s got any questions they can reach out to you?

Elise:

Definitely, and we’re more than happy to help. And obviously we recommend that, particularly, as you said, at this time of year with family being such an important gathering time, we recommend they look at making sure their wishes are reflected in their estate planning.

Dan:

Elise, thanks for joining me.

Elise:

Thanks Dan.

Speaker 1:

Thanks for listening. Need further information? Visit us at biglaw.com.au.