Notwithstanding Australia’s wealth, Australians are generally apathetic towards their estate planning. We see all too often people opting to cut corners and save costs, which frequently results in financial disaster for the families and loved ones left behind. This is no more starkly seen than the not infrequent occasions where the Supreme Court of WA is required to deal with either homemade Wills or incorrectly or inadequately prepared Post Office Wills, whereby the surviving family and beneficiaries must spend thousands of dollars remedying errors made by the deceased simply to save a few dollars when they were alive.
Whilst homemade, post office or online Will packs may in limited circumstances be a cost-effective option, the value of obtaining legal advice in preparing your Will and estate plan to protect your family cannot be overstated enough.
Consider this not uncommon scenario: You are young, fit and healthy and have one minor child, to an estranged ex-spouse, who you have sole custody of. Then you unexpectedly pass away. Your family thinks that is ok, there is a Will he made from the Post Office to deal with the assets. The entire estate is left to the minor child, and your elderly father is the executor – again, the family thinks that is not a problem, the money will be held for the benefit of the minor child until they are 18.
Think again – Because you didn’t obtain appropriate legal advice and put in place a Binding Death Benefit Nomination with your superannuation fund, the superannuation fund requires that the estranged mother of your child must be paid the entirety of your superannuation death benefit as the child’s biological guardian. Your family is now left with thousands of dollars in legal costs to engage with the superannuation fund to ensure that the estranged spouse is not paid the superannuation monies, because if this occurred your minor child would likely never see a dime.
Then there is the badly worded Will – Now your family have fought to have the superannuation death benefit paid to your estate so it can be managed for the benefit of your child, there is the issue of your ageing parents. Again, you did not obtain the appropriate legal advice to set up a Testamentary Trust in your Will for your child’s benefit, and as a result, the estate monies are now held in an estate bank account until your child turns 18 years of age.
“That’s ok, we can prepare a Deed of Family Arrangement, alter the terms of the Will by unanimous agreement and establish a Testamentary Trust to best protect your child’s inheritance” – wrong. The Deed of Family Arrangement requires your estranged spouse to agree as your child’s legal guardian. If the estranged spouse knew there was large sums of money, there would be issues for your minor child, so your elderly executor is now left to manage the funds in the estate account until your child turns 18 years of age.
If your father passes away before your child is 18, then the executor of your father’s Will becomes the executor of your estate – whether this is the appropriate person for the position or not. Worse still, consider if your father lost his mental capacity so that he is incapable of being the executor of the estate. Any application to have him removed and replaced as executor would again require your estranged spouse’s consent as the legal guardian of your child.
Had you been prepared to invest the money and take the time to obtain legal advice, you could have put in place an estate plan that:
- provided asset protection and tax benefits for your child’s inheritance;
- made appropriate provision to enable the removal and appointment of a new trustee to manage the assets for your child if the need arose; and
- implemented a legal structure which would not require your estranged spouse to be involved in any part of the management of your child’s inheritance.
Yes, post office, homemade and online Wills are quick, easy and inexpensive. But is it worth the stress, time and financial burden with which you may be leaving your family?
It is easy to obtain the correct legal advice and the peace of mind that comes with knowing you have provided for and protected your loved ones when you go – priceless!
Please contact us should you wish to discuss your Estate Planning. We would be happy to assist you with setting up an estate plan that best meets your family’s circumstances.
-Bronté Foale
