While it’s said that most retirees like to SKI – Spending the Kids Inheritance, the real fact is that you might actually pass away before that last dollar is spent.  And if that happens, what’s going to happen with that dollar of yours?

Most of us would hope that it goes to our loved ones but sometimes the reality is that it goes towards unnecessary legal costs or is even given to family and friends that it shouldn’t have. That’s why you need a Will.

While we all know we should have a Will, about 45% of us don’t have one and those that do might actually be surprised to find that their Will doesn’t meet current legal requirements, effectively making it void.  Did you know that if you die without a valid Will, then your assets are distributed according to a legal formula and doesn’t give you any control over who does the distribution?

This might mean that the money you have saved up in your bank account for that big round the world holiday, that you didn’t quite get to enjoy before you kicked the bucket, could be going somewhere you don’t want.  Like being used for legal costs then distributed to your estranged (horrible, jail frequenting) brother, or your unknown sister from a polygamous father, or even possibly an ex-partner if you’re not careful.

Having a valid Will in place makes sure that what you’ve got, goes to who you want, when you know what happens.  But a Will should form part of your overall estate plan, because there are other things to consider, like your superannuation assets.  Did you know that if you have a Binding Nomination on your super, it doesn’t pass through your Estate/Will?  Or you can have a Power of Attorney while you’re still alive?

So why haven’t you got a Will?  Yeah it might cost a bit but it will cost a lot more if your friends or family have to fight an estate claim from people that shouldn’t have got what they got.  And if you’ve got one, when did you review it last?  If hammer pants were in when your Will was drawn up, it may be time for a review!  While your personal circumstances or your wishes may not have changed, legislation around estate planning and Wills may have.

A Will can give you great peace of mind knowing that things will be taken care of how you want but more importantly, it puts your loved one at ease that everything is set up correctly so they can get on with their grieving (and I’m sure not partying) when you’re gone.

You can get a simple Will kit at the post office but really you should see a solicitor to get one done properly.  Contact the team at JBS and we’ll be happy to provide a referral for you and help facilitate the process.

No one likes to think about that point where they’ll eventually kick the bucket but it is a definite so you might want to plan a little for it.  And while most of us think that assets like superannuation would just go to our partner, this might not be the case if you don’t have it appropriately documented.  This is particularly important if you hold an SMSF as the rules that apply here, can really override common sense.

A case from the Supreme Court (Ioppolo & Hesford v. Conti) in 2015 highlights just how important it is to get your affairs in order.  What happened in this case was that Mrs Conti died and while she had, in years gone by, nominated her husband as beneficiary to her superannuation funds held in their SMSF, these had lapsed.  She did have a valid Will in place that clearly stated that her children were to be the only beneficiaries of her super and not to include her husband in any distribution of funds.  When she died, her husband as a trustee of the SMSF, decided to pay out her balance to himself and therefore the children challenged this in the Supreme Court.  Unfortunately for the children and poor deceased Mrs Conti, the court upheld Mr Conti’s decision to pay himself benefits as the trust deed confirmed that if a valid binding nomination wasn’t held, then remaining trustees have discretion over the distribution of member benefits from the SMSF.

So what can this case teach us?  Simply, to get our estate planning affairs in order.  That might mean reading and understanding the terms of your SMSF trust deed, establishing binding death benefit nominations, a non-binding death benefit nomination, a Will and Powers of Attorney.

Don’t really know what this means?  Well, a binding death benefit nomination is when you have a legal document held by your super fund that you complete, sign and have witnessed that compels them to hand out any superannuation benefits when you pass to those people that you want.  It’s almost set in stone so they can’t choose to pay themselves or anyone else just because they wanted to.  Having a binding nomination is the best tool in your estate planning strategy as it is very hard to distribute your assets to people not nominated.

A non-binding death benefit nomination is a signed document held by your super fund that gives the trustee an idea of how you want your super distributed when you croak it, but they don’t have to follow it.

Your SMSF trust deed will be referred to if you don’t have a valid nomination on file which generally refers the decision of distribution of benefits to the remaining trustees.  While this might be fine now because life is rosy with your husband/wife/partner, if you don’t keep all your estate planning measures up to date all the time, you might find that ex-partner gets all your money when you’re gone.  The case listed above highlights that a Will may have no power over how the benefits are paid when coming from an SMSF with a valid trust deed.

Your Will is best drawn up by a lawyer who can make sure that you’ve got everything written correctly, and structured correctly to make sure your wishes are carried out.  A Will can be contested, meaning someone could go to court to say that they think your dosh should be distributed differently.  You should note that if you have a binding death benefit nomination, your superannuation doesn’t form part of your (estate) assets that would be distributed under your will.  This means that it could be given out quicker and it’s harder to contest.

If you’re unsure of how your superannuation will be handled when you die, it’s best to speak to a professional who can help you review your estate planning needs, and JBS are here to help! You can contact the team here…

Wills aren’t just for the sick or wealthy, if you’ve got a family, a home or investments you definitely should have one – especially if the asset is only owned by you. Your will is your voice after you die and can be drawn up to provide guidance around who gets what and the person in charge of the distribution process.

Dying without a will (intestate) leaves the decision to a judge. Your assets will be distributed by the law of the state where your property is located, regardless of what your wishes were. It could mean that your minor children could be awarded to someone not of your choosing.

If you have minor children, your will should name a guardian for them.  If your children are a little older and perhaps living with partners but not married; the court may deem their relationship to be “de facto” and their partner would have claim to your estate, even if they separate.  Testamentary trusts can assist with greater levels of protection for de facto and other relationships.

If you have a more complicated estate, you may want to consider a trust which can provide much greater levels of protection, control and tax effectiveness.  You should provide your lawyer with clear instructions on how to change the ownerships on your accounts or changing the deed of your assets to reflect your newly created trust.  For example, with a testamentary trust you could give your spouse the annual income from an investment property you owned but at the same time ensure the asset ownership passes to your children.

Trusts can also be useful to stagger an individual’s inheritance over time.  We all know of or have kids who are not the most responsible when it comes to having large amounts of money in their possession.  You could setup your trust to pay various amounts of the inheritance at ages 21, 25 and then 30, or you can tie the release of your assets to particular events, such as marriage, purchasing a house, education or overseas travel.

Having a lawyer draw up a will should generally cost about $500 to $1000. Your “will” should clearly state who gets what’s left to your estate.  Accounts with beneficiary designations (Property, Superannuation, Insurance and Investments) are typically distributed (or assigned) prior to “the reading of the will” – so it’s possible that very little could be left to your estate.  Nevertheless, dying with a will insures that any leftover assets will be awarded to the person or entity of your choice.

JBS can refer you to an appropriate solicitor who specialises in estate planning matters.