BSS Personal Legal Services:

WILLS

What happens if you are run over by a bus tomorrow…..?

Who knows about all your assets and liabilities? Where is your house title deed? Who gets your superannuation? What about the business – can it continue, is there insurance cover in place? Who has enduring guardian appointment to allow decisions about your medical treatment? And, who will look after the children?

LIFE AND ESTATE PLANNING - WHAT IS IT?

Everyone knows what a will is. There are many definitions of “estate planning”. Life and Estate Planning is simply how to get the assets which you have accumulated through your lifetime to the next generation in the best, most efficient way. This involves looking at all aspects of your assets and liabilities and planning for the future. Depending on your situation, this may involve wills, powers of attorney or enduring guardianship documents. It may also involve “living issues” like reviewing your business structures and ownership of assets, risk management and asset protection strategies for those assets (covering everything from liability risk through to Family Law risk or bankruptcy).

WHY NOT JUST MAKE A SIMPLE WILL? WHY SPEND TIME AND MONEY ANALYSING WHAT ALREADY EXISTS?

For some people, a simple will may be suitable. Unfortunately however this is becoming a rare event.

For many people, their financial, business and personal affairs are much more complicated than they were twenty years ago. Issues such as superannuation, trusts, control of businesses, capital gains tax, claims by beneficiaries, risk of being sued, tax problems, second marriages and Family Law claims mean that a simple will just won’t produce the best result. In fact, a simple will could result in some beneficiaries losing their entire legacy due to Family Law disputes or bankruptcy.

There are many reasons why people’s assets can be accumulated in strange or unplanned ways. Historically, assets may have been acquired with other people or in certain tax structures to suit the needs of a particular time. Alternatively, some assets have been acquired with the focus largely being on tax savings rather than having regard to liability risks or control.

Sometimes, assets you think are yours are not really ‘yours’ at all. (For example, assets held in a discretionary trust or company structure.)

Sometimes, things that you think will pass under your will in fact having nothing to do with your will and who gets them will be decided by trustees you’ve never met. (For example, if you have superannuation and no binding nomination, the superannuation trustees may decide which of your dependants get access to your super after you die.)

Sometimes, people just don’t understand their own financial affairs or the ramifications of their structures.

What you need to undertake is a broad overview of all aspects of your business, financial and personal affairs; you need to understand the things that may impinge on what you want to do; and then you can make a sensible and considered decision about how to structure your affairs to achieve what you want.

WHAT DO YOU NEED TO DO TO START LIFE AND ESTATE PLANNING?

The first thing to do is to summarise what you have. Unfortunately, this is often not as simple as it sounds.

The best way is to complete our Life and Estate Planning checklist. Once that is done we can sit down with you and –

- explain any problems or issues we identify from your checklist;

- discuss what you want to achieve;

- set out your options; and

- come up with what you need to do.

COMPLETING THE LIFE AND ESTATE PLANNING CHECKLIST.

Our Life and Estate Planning checklist is available on request. This checklist –

- records basic details such as names of family members and who to contact should you die or become disabled;

- records details of your assets and liabilities, so we can identify any obvious problems (such as company or trust assets which aren’t covered by your will, whether you have a superannuation binding nomination in place, etc);

- helps us to identify the issues you should consider (such as tax consequences, risky business management practices, beneficiaries who may be at risk, etc);

- helps your executors understand your financial affairs and wishes, and makes administration of your estate easier and cheaper;

- may even help you better understand your own financial, business and personal affairs.

WE WILL NOW LOOK AT SOME ISSUES WHICH MAY ARISE AS PART OF YOUR “LIFE AND ESTATE PLANNING” PROCESS.

1. Wills
One of the first issues to discuss will be what type of will is suitable for you – a simple will or a will more focused on your personal situation. Have you considered testamentary trusts?

If you don’t already have one, ask for copies of our “No Bull” booklets and information sheets on wills and testamentary trusts.

Everyone has different circumstances and wishes and it is important that your will is tailored to suit you.

2. Power of Attorney
A power of attorney is a legal document allowing your appointed “attorney” to do things with your money, bank accounts, shares, home and other assets. An enduring power of attorney is one that continues to operate after you have lost mental capacity. Having a current power of attorney in place is a crucial part of any sensible life and estate plan.

If you want more information, ask for a copy of our “No Bull” booklet on powers of attorney.

3. Enduring Guardian
This document allows your appointed “guardian” to make medical and lifestyle decisions for you if you lose capacity. Such powers are not covered by power of attorney. If you want more information, call us and ask for a copy of our “No Bull” booklet on Enduring Guardianships.

4. Reviewing your Assets
Find out what is actually yours!

Remember a will won’t necessarily deal with trust or company assets.

If you have an interest in a trust, do you know who the appointor is? Do you know the appointor can change the trustee and therefore take effective control of the trust?

If you have shares in a company, do you have a shareholders agreement? If you or your business partner die (and you don’t have shareholders agreements with appropriate pre-emptive rights clauses) you may end up sharing ownership and control of your business with an unknown person.

If you have superannuation (and you don’t have a current binding death benefit nomination), your superannuation may not go according to your will, and it may not even go the beneficiary you nominated when you joined your super fund. The trustees of your super fund often have the final say as to who will receive your superannuation.

5. Protecting your Assets During Your Lifetime
We often find that people haven’t planned the acquisition of their assets and may be unnecessarily exposed to lose their assets in the event of being sued or experiencing business problems.

A successful asset protection plan requires the following –

(a) Identify your business and personal assets using our Life & Estate Planning Checklist.

(b) Identify and consider the risks. These risks may come from –

- negligent advice or being sued;
- insurance exclusions or loopholes;
- disputes with partners;
- fraud by staff;
- divorce;
- statutory risks (such as breach of director’s duties, OH&S regulations etc).
- exposure of assets due to personal guarantees, accidents or claims not covered by insurance.

(c) Design and implement structures to protect assets if the risks materialise. Approaches to minimise risks may include –

- transferring assets (subject to stamp duty costs);
- isolating assets from risk;
- various “defensive” measures (such as improving business practices, documenting agreements, reviewing trust deeds, entering shareholders agreements and the like);
- contemplating more “drastic” measures to protect or quarantine assets;
- planning how assets will be acquired in the future; or
- succession planning.

IMMORTALITY!

Unless you have discovered the secret of immortality, you are going to need a will at some time. Unfortunately human nature is such that we either turn a blind eye to the need for a will, or see it as something unimportant that once made can be forgotten.

In fact, your will is something you should review at every significant occurrence in your life, and probably every few years, in any event.

Matters such as marriage, divorce, the birth of children or grandchildren, the buying or selling of property or a business, are all matters which should trigger a review of your life and estate planning needs.

To make sure your wishes and desires are as fulfilled as possible, during your life time and on your demise, we suggest you plan your affairs by completing our Life and Estate Planning Checklist and then discussing the various issues with one of our solicitors.

HOW CAN BULL, SON & SCHMIDT HELP?

We don’t just “do wills”. We consider your overall situation, your assets, your family your business situation and any special factors.

Our broad legal experience means we can understand the multitude of issues affecting your life and estate planning decisions.

We can give you practical advice and help you balance tax, risk and commercial issues, so that you can make sensible and informed decisions about “the big picture” of life and estate planning.

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