In Brief
Estate planning is not something we generally think about as we go about leading our busy lives. But what many of us fail to see is that neglecting to carry out this process could have serious ramifications for our families and their futures.
Having properly considered and drafted estate planning documents in place presents a range of significant benefits for you. For example, solid estate planning reduces the possibility of disputes over estates, minimises the amount of tax paid by the estate's beneficiaries and avoids unnecessary delays, expenses and uncertainty in the distribution of the estate's assets.
Below are some cases we have witnessed when people have failed to put the right plans in place.
Rules of Intestacy
A husband and wife own a medium sized family business. They have four children, two sons who work for the business, who work for less than market pay and the promise of inheriting the business, and two daughters who do not have any ties to the family business.
The parents die unexpectedly and it's discovered that they had not included the two sons as successors to their business in the case of death in their will. The sisters now want to sell their share of the business, with the sons having no real legal right to contest. The sisters sell their share of the business to a third party, meaning the business is no longer solely owned by the family. The circumstances caused a family rift with the siblings no longer talking and the sons left to work with the new business partners to work out remuneration structures and corporate governance structures.
Inadequate Will
A husband, wife and their son are in a car accident, the parents don't survive and the son is left mentally disabled as a result of the injuries he sustained. Upon the parent's death, all assets are transferred directly to the son, with no trust in place.
As the assets from the will are legally gifted to the son in his own name, the son loses his rights to Centrelink disability benefits and his health care card.
The son is then befriended by his carer who convinces him to transfer the assets to her to take care of and he is left with nothing.
If the parents of the son had put in place a testamentary trust, it would have mitigated the risk of the son being left with nothing. The assets would have been managed appropriately and allowed the son to live as comfortable a life as his circumstances would allow and would have also permitted him to have access to health and Centrelink benefits.
Change of Circumstances
A man and woman had been married for 20 years. During their marriage they had each written valid wills and put in place enduring guardians and enduring power of attorneys, each appointing the other as their attorney and enduring guardian. The couple decided to legally separate and shortly after the wife fell ill.
The couple had not amended their wills upon their separation so the husband was still the legal enduring guardian and enduring power of attorney of the wife. Despite no longer being married, the estranged husband had complete control of the decisions made on behalf of his estranged wife, including not only financial decisions but also decisions to be made about the medical treatment of his estranged wife.
For further information please contact:
Phone: + 61 2 9233 5544
Email: axh@swaab.com.au
Swaab Attorneys was the highest ranking law firm and the 13th best place to work in Australia in the 2010 Business Review Weekly Best Places to Work Awards. The firm was a finalist in the 2010 BRW Client Choice Awards for client service and was named the winner in the 2009 Australasian Legal Business Employer of Choice Awards.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.