Ten point checklist to update your estate planning
New year’s resolutions usually last as long as the beer and cake left over from the Christmas party, but there are some things everyone should be doing around this time of year and that is updating your estate planning strategies.
It sounds dull and tedious, but updating plans for your personal estate is essential if you want to maintain control over what happens to your assets and the future welfare of your loved ones.
Below is a simple ten point checklist to make sure you are up to date and on course to achieve what you want with your hard-earned nest egg.
Estate planning checklist
- Have you or any of your beneficiaries entered into a new personal relationship (for example, by being married)?
- Have you or any of your beneficiaries ended a personal relationship (for example, by being divorced)?
- Have you or any of your beneficiaries welcomed a new family member (for example, a new baby)?
- Have you acquired or sold a new significant asset (for example, bought or sold an investment property)?
- Have you established a self-managed superannuation fund?
- Have you changed the way you own assets (for example, by transferring an investment property previously owned by you to a self-managed superannuation fund)?
- Have you made a significant loan, or given a significant asset as a gift, to a family member?
- Have you or any of your beneficiaries developed a problem with creditors (for example, a business failure)?
- Have you or any of your beneficiaries developed a disability (for example, a health problem or an addiction)?
- Has there been a significant change to a business in which you hold an interest (for example, a partner has retired, or a new partner has been admitted)?
Don’t forget to update Wills and other agreements
Properly administered updates are also required for several legal matters involving contracts and trusts that everyone should be aware of.
This includes your Will, Enduring Power of Attorney, Appointment of Enduring Guardian, Superannuation Death Benefit Nomination, Shareholder Agreement and Funded Business Succession Agreement. (For more information, please see Power of Attorney and Enduring Guardianship – the horror story edition and Revoking a Power of Attorney or Enduring Guardian in NSW.)
It would be wise to consult a lawyer with expertise in the field to ensure that all documents are drafted correctly, in accordance with the latest changes in the law and in keeping with your wishes, so that your life savings are secure.
Why it’s important to keep your Will up to date
A few months ago, one of my clients married his long-term partner. He had made a Will some years previously, making significant provision for his partner’s long-term benefit.
My client did not realise that the act of marriage automatically revoked the Will he had made some years ago, as is the case unless a Will is made specifically in contemplation of an impending marriage. (For more information please see Does marriage or divorce automatically revoke a will?)
This meant that my client’s provision in his old Will for the woman who was now his wife failed. I helped him to rectify this situation by making a new Will, so that the provision for his wife would be preserved.
Tactics to reduce possible risks or threats to an inheritance
Two of my clients recently sought my advice when their youngest son, in his early 30s, married woman with whom he had had a very short relationship. My clients were concerned that their son’s new wife suffered from substance abuse problems and that, if their son received what would be a substantial inheritance upon the death of the survivor of them, that inheritance would be jeopardised as a result of their son’s wife’s problems.
The solution we came to was to establish a testamentary trust for the benefit of my clients’ youngest son within their Wills, with my clients’ oldest son being made the trustee. In this way, my clients’ oldest son would be able to exercise a degree of control over their youngest son’s inheritance, thereby ensuring that it was not squandered as a result of their daughter-in-law’s substance abuse problems.