Estate Planning FAQs
Do I need a will?
Not having a will means you have no control over who gets your estate. The law sets out a strict formula as to who will receive your estate based on those you leave behind. There is no room for any adjustments. This often leaves family members upset and can result in estate disputes that are costly, time consuming and often devastating for the entire family.
Why have a testamentary trust?
A testamentary trust allows the whole or part of your estate to be placed into a trust for the benefit of a primary beneficiary, or into several trusts for several primary beneficiaries.
Using a testamentary trust can provide tax advantages and asset protection for your chosen beneficiaries.
As the trust structure results in the inheritance being held ‘on trust’ for your beneficiary, rather than an asset in their name, it provides protection from the inheritance being subject to claims from creditors or being considered property that can be divided in a family law settlement.
The trust structure also allows income (e.g. dividends or rental) earned on the inheritance to be distributed to lower earning family members and to children to maximise tax benefits. Income up to the tax free threshold (approximately $18,200) can be annually distributed to each child under the age of 18 without any tax being payable.
You can appoint your primary beneficiary as the controller of the trust, or you can appoint someone else to control the trust where the beneficiary is a minor, or if there are asset protection concerns, or concerns about the beneficiary’s ability to manage the inheritance. Testamentary trusts are particularly useful if the beneficiary has a disability, addiction issues or is not good at managing their money.
Do I need enduring powers of attorney?
People often assume that if they lost capacity (as a result of an injury or illness) and could not make decisions, their next of kin would be able to make those decisions for them. This is incorrect. If you have not appointed someone you trust to make financial decisions for you and you can’t make those decisions because of incapacity, an application will need to be made to the VCAT to appoint an administrator. This can take time and you have no way of knowing who VCAT may appoint. The person or organisation appointed will also need to have their accounts audited every year by VCAT at a cost to you.
Not making an enduring power of attorney means you miss out on the opportunity of controlling who makes your financial and personal decisions if you cannot.
Why can’t I just use a will kit?
Will kits provide you with the bare basic structure of a will and leave it to you to fill in the blanks. We commonly see will kits filled out incorrectly, either because the will maker did not use the proper legal terminology when making gifts, because they gifted property they didn’t technically own (like joint property or trust assets) or did not sign the document properly. Fixing any of those matters retrospectively is costly to your estate and ultimately they might not be able to be corrected. Having us draw your Will provides you with peace of mind that you have a thoroughly considered estate plan, and a legally enforceable document that is tailored to your circumstances and family.