Wills and succession planning specialist Rod Cunich discusses why a will is one of the most important documents you should already have.
Let’s face it, preparing a will may not be the first thing you think about when you get out of bed each day; nor is it something you might feel comfortable discussing at the dinner table. But with almost half of the Australian population without a valid will, trillions of dollars worth of property, homes, shares and other assets are not protected, so it’s important to have an open discussion with your family.
Preparing a will is an integral part of any succession plan as it determines how your assets are to be divided in the event of your death. This may include physical belongings such as cash, clothes, jewellery, cars and the family home, as well as investments such as your superannuation or share portfolio.
However there are many other factors to consider. These may include the protection of inheritances should beneficiaries face a failed marriage, remarriage, bankruptcy, loss of mental incapacity, drug or gambling dependency, spending problems or family disputes. It might also include the minimisation of the tax burden for your beneficiaries once they take ownership of your property as well as deciding on guardians to care for your children if they are still minors when you pass away.
If you don’t have a will, after you die your family must apply to the court to have someone appointed to administer your estate. Your estate will then be distributed using a fixed formula determined by the government without regard for your wishes. In addition to the unnecessary cost and delay of this process, the application of the formula may go against your intentions and has the potential of tearing your family apart.
Preparing a will is not just about planning for the time you pass, it’s also about the here and now. As part of your succession plan, you should also take into account problems that you or your family may face during your lifetime such as a failed marriage, remarriage, bankruptcy, physical incapacity or loss of mental capacity.
Whether through accident, disease or death, the day will come when you can no longer personally provide for the financial, health and emotional wellbeing of those you love. These issues are too important to leave to chance. Fortunately, you can plan for that time and put authorities and structures in place to help secure their future.
A well-structured succession plan can give you great peace of mind that your loved ones will be provided for as you intended. Making a will is an important decision in someone’s life, and although sometimes difficult, people are better off when well prepared.
- You can help to make sure your assets go to the people you want to benefit.
- You can help ensure your beneficiaries inherit at a time when you think they will be better able to manage it. Without a will a beneficiary is entitled to inherit at age 18. With a will you can specify a later age or even stagger the giving of the inheritance.
- You can leave out of your will people who would inherit under intestacy (although they may still have a right to challenge your will.)
- You can choose the executor and trustee. This may be very important if you have young children or a disabled child and the trustee must manage funds for a long time.
- Your estate may incur fewer fees and be administered more quickly.
- You can document who you want to be the guardian of your children.
- You can ensure some of your assets are donated to charity, such as the Red Cross, which will use your donation to help families in need.
See a lawyer
It’s surprising how many people know they should have a will but put off doing one. Some are daunted by the thought of death or of dealing with a lawyer. Others think it will be complicated, expensive or time consuming. It doesn’t have to be.
With the advice of a succession planning lawyer you can put legal safeguards in place to prepare for these and other life’s contingencies to ensure you and your loved ones will be provided for. In doing so, you will find security and certainty, not just for you, but for those you care about most.
Don’t be penny wise and pound foolish – spending time and money now on the right legal advice will save you and your family in the future.
A lawyer with expertise in this area of law can assess your personal circumstances and help you set up a succession plan, and work cooperatively with other professional advisors such as your accountant, financial planner and insurance adviser to ensure it is integrated and covers all bases.
Factors to consider when establishing a succession plan
Don’t lock up your will and forget about it. Update it.
Having a will ensures that your wealth is distributed according to your wishes to the people you care about after you die. If you do not make a legal will, your estate will be distributed using a fixed formula determined by the government. This formula is applied regardless of your personal wishes and may lead to unwanted consequences and even family disputes.
Once you have set up your will, it doesn’t stop there. It’s important to keep it up to date on a regular basis. As you accumulate wealth, have children and your life situation becomes more complex, having an up-to-date will becomes all the more important. Even if you are young or yet to accumulate significant wealth, your superannuation and life insurance can amount to more than you think.
Appoint powers of attorney
Losing the mental capacity to manage your financial and legal affairs, and care for your loved ones can occur at any time due to accident or ageing, which is why having a will is only one component of a succession plan. A power of attorney enables you to appoint someone to act on your behalf if you are unable to (or simply don’t wish to) make decisions about your financial and legal affairs. It is important that you have a power of attorney in place to ensure that those people you trust most have the power to look out for your best interests and those of your loved ones.
Appoint an enduring guardian
Losing the mental capacity to make decisions about your own health and welfare can caste a huge burden on those you love. A power of enduring guardian enables you to appoint someone to act on your behalf if you are unable to make decisions about your health and welfare issues. It is important that you have a power of enduring guardian in place to ensure that those people you trust most have the authority to look out for your best interests when you can’t.
Direct what medical treatment you wish to have
Everyone has the right to accept or refuse medical treatment. A lawyer can assist you to prepare an advanced health-care directive that directs your doctors, medical staff and family how you wish to be treated.
Manage assets that are not controlled by your will
While most of your assets can be dealt with in your will, there are many assets that are not included in your estate and must be managed separately in your succession plan. For example, you need to consider and manage the succession of jointly owned property, superannuation death benefits, insurance proceeds and assets owned by companies or trusts most of which will, in the normal course, fall outside the control of your will. The passing of these assets needs to be coordinated with the wishes expressed in your will.
You will also need to consider the tax ramifications for your estate and your beneficiaries when you pass away. In conjunction with your taxation adviser or accountant, a lawyer can help develop a tax efficient plan that addresses factors such as income tax, capital gains tax and stamp duty implications when assets are transferred to your beneficiaries.
Look at the big picture to integrate your plan
The legal components of a plan are only part of your broader succession planning strategy. A well thought-out plan should include legal documents that are coordinated with your retirement, investment and wealth accumulation strategies.
Succession planning encompasses different professional disciplines and involves consideration of asset protection, risk management (insurance and assets protection), taxation, investment planning, retirement planning and the use of legal structures all designed and co-ordinated to meet your needs.
Rod Cunich has 33 years experience in business, corporate and commercial law and practice. A director of numerous companies and Not For Profit organisations over the last 30 years, Rod’s clients benefit from both his extensive legal expertise and his first hand commercial experience.
Rod has lectured nationally and internationally on a range of topics relating to business transactions, business structures, corporate governance, wealth protection, personal succession planning and business exit planning. Currently Rod manages Slater & Gordon’s Private Client Division Nationally. This Division includes, Business Advisory, Property Law, Wills, Succession Planning, Probate and Estate Administration.
Slater & Gordon can help with their dedicated wills, probate and estate litigation lawyers who can advise on completing a will, preparing powers of attorney and enduring powers of guardianship, administration of deceased estate, including superannuation and death benefits.
If you are disputing a will or appointing guardian of a will, they can assess the relevant issues and advise you of the legal options and avenues available to resolve your circumstances.
There are many other factors to consider in succession planning. Slater & Gordon have extensive experience in this area of law and understand the complexities involved. To find out more about preparing a succession plan for your unique circumstances, contact the legal helpline on 1800 555 777 to make a time to speak with a specialist.
National Practice Group Leader
Wealth Protection, Succession & Estate Administration