Here, lawyer Greer Oliver reveals the truth about five common estate planning myths.
Only elderly people need an estate plan - WRONG!
People of all walks of life, young and old, wealthy and not so wealthy, business savvy and those who aren't so much – everyone should think about and implement an estate plan.
Your estate plan need not be particularly complicated. What it does need to be is holistic. It must take into account your personal circumstances – your family arrangements, your business arrangements, your assets and liabilities, your superannuation and, of course, your wishes for how your personal estate is to be administered following your death.
In addition to leaving assets to your chosen beneficiaries, there are other goals that can be achieved by considering and crafting a personalised estate plan – for example, the appointment of a guardian to look after underage children, or the establishment of a testamentary trust to meet the future financial needs of family members and other beneficiaries.
All I need is a Will that covers everything – WRONG!
Not all of your personal estate will be dealt with under your Will. There are particular items of your personal estate which sit outside your Will and which are not governed by the terms contained in your Will. One such example is superannuation. Everyone has it, but a large number of people aren't aware that they need to take steps (separate to the preparation of a Will) to ensure that their superannuation entitlement is given to who they wish, following their death. This common misconception is frightening when we consider that a fair portion of our individual wealth sits in our super funds.
Testamentary trusts are only for the super wealthy – WRONG!
Testamentary trusts are a fabulous vehicle to distribute your assets following your death and are suitable not only for the wealthy. Some benefits of a testamentary trusts include:
- They are useful in blended family situations.
- Certain tax benefits can be derived from testamentary trust distributions.
- They are useful when there are beneficiaries who display risky behaviour or who have disabilities and require the assets or funds to be managed by a trustee
My Will can be challenged after I pass away – RIGHT!
It is an unfortunate reality that the plan you put in place for your estate can be challenged after you pass away. If you do not make adequate provision for your dependents, spouse or wife (and other beneficiaries of a particular class), then those beneficiaries can ask a court to make further provision for them, from your estate.
The details of who, how and when these types of applications can be made vary slightly between the states, so you should seek specialist advice. However, what is consistent across all states, is that to avoid any challenge to your estate, you should be mindful of the needs of your immediate family and ensure that your estate plan adequately caters for those needs.
I only need to prepare an estate plan once in my life – WRONG!
People and circumstances change, and as a result your estate plan will also change. It is important to revisit your estate plan every few years to ensure that it still fits your circumstances. The things that can affect the operation of an estate plan are numerous, for example:
- Did you recently marry? In some jurisdictions, a marriage can cause an existing Will to become inoperative.
- If a substantial asset is sold or its value compromised, this can have a knock on effect in terms of your estate plan. It may cause distributions to beneficiaries to become unequal, which could ultimately lead to a challenge being made against your estate.
- Is there a new child or grandchild who should be included in your estate plan? If so, changes will need to be made.
Comprehensively reviewing your estate plan every few years is important. It will help capture those small changes and ensure that your wishes are carried out following your death.
Greer Oliver is a solicitor in the Brisbane office of CBP Lawyers.