Estate Planning

Estate planning is the process of planning for the management of a person’s wealth and assets if that person becomes incapacitated, and/or the transferring and disposal of those assets upon their death.

An effective estate plan will ensure both you and your assets are protected

not only upon your death, but also during your lifetime.

Estate planning will help manage and transfer your assets in line with your wishes and in the most financially efficient and tax-effective way, and ensure you are taken care of according to your wishes.

An estate plan can include:

  • Your will
  • A testamentary trust (as part of your will)
  • Superannuation binding nominations (as superannuation is not affected by your will)
  • Appointing an executor (as part of your will)
  • Powers of attorney
  • Appointment of Enduring Guardian

You must be over 18 and have mental capacity when you draw up your estate plan.

A will is a legal document stating what you want to happen to your assets when you die. It forms part of your estate plan.

Your will is the only thing that ensures your assets are distributed

to the people you want to receive them.

Your will can cover things like:

  • how you want your assets shared
  • who will look after your children if they’re still young, or any other dependents you may have
  • any testamentary trusts you want to set up
  • how much money you’d like to give to charities
  • plans for your funeral

When writing your will, you must have ‘testamentary capacity’. This means that you know and understand the legal effect of your will and are not inhibited from making rational decisions due to mental illness or impairment.

Why do you need a will?

A will is your chance to provide for your loved ones after your death, state your plans for your funeral and appoint an executor that you know and trust to enact these wishes for you.

If you die without a will, in NSW the Succession Act will decide how your assets are distributed. Not having a will also add additional burdens  which may include incurring additional costs that must be covered by your estate, putting your family through the task of trying to find a will, and making them prove who they are and that they are entitled to your estate.

Without a will, the court will appoint a trustee administrator to distribute your remaining assets according to a strict, pre-determined legal formula and could exclude loved ones you wished to provide for.

Making a legally binding will and keeping it up to date avoids the division of your assets being left as specified by the succession act that is inflexible and which knows nothing about you or your loved ones.

If you are leaving out certain people who may otherwise have a claim to your estate, you’ll need help documenting your wishes in a way which can be evidenced in court. 

Updating your will

It’s important to update your will as your situation changes — for example, if you:

  • get married
  • divorce or separate
  • have children or grandchildren
  • have a significant financial change
  • lose your spouse (or someone else who is named in your will) through death
  • your beneficiaries have financial problems

To be a valid will, it must be both:

  • in writing, either handwritten or typed
  • dated and signed in front of two independent, witnesses who are not beneficiaries.

If you have used a DIY will kit in the past, we can check it for you. We can make sure it’s valid and is properly signed and dated.

Let Farrell Goode help you ensure your hard earned assets are distributed exactly how you would like contact us on  (02) 6977 1155 or send us an enquiry TODAY. 

A testamentary trust is a trust that is written in your will. It takes effect when you die, and it’s administered by a trustee, who you usually name in your will.

The trustee looks after your assets until your beneficiaries can get them. This is set out in your will, and is either when:

  • a child reaches a certain age, or
  • a beneficiary achieves a specific goal (for example, they are released from bankruptcy)

You may want to consider setting up a trust if your beneficiaries:

  • are minors (under 18), or
  • have diminished mental capacity, or
  • may be a spendthrift and waste any inheritance they receive

Another reason to consider a trust is to:

  • quarantine your assets from as part of a divorce settlement, or
  • protect your assets from any bankruptcy proceedings.
  • Minimise any tax your beneficiaries may have to pay due to them receiving an inheritance.

Family trusts and your will

If you have a family trust, it continues after your death. The trust determines who gets your assets, even if your will says something different. You therefore need to mention your trust in your will and appoint someone to control your trust.

A binding death benefit nomination directs who your super fund trustee gives your super benefit to when you die. If you don’t nominate someone, the super fund trustee will decide who receives your money.

Merely nominating a beneficiary does not bind the trustee and therefore the trustee can go against your wishes.

If you don’t have a current death benefit nomination, the trustee can take many months to make a decision.

If you have a public superannuation fund, your binding death benefit nomination must be renew every three years.

The role of the executor is to carry out your wishes as stated in your will. It involves financial, legal and interpersonal skills, so it is essential to think carefully about who you trust to carry out this role.

The executor can be a trusted friend or family member, an appointed professional or a trustee company.

It is a good idea to choose more than one executor in case one is not available at the time of your death. Appointing two executors also spreads out the workload in what can be a time-consuming and stressful process.

The executors you choose should be over the age of eighteen, be in Australia,  and be people that you trust to make decisions on your behalf if necessary.

The executor roles comes with several, often complicated responsibilities. Anyone appointed as an executor in NSW will have the following responsibilities when administering your will:

Locating the Will

The executor’s first responsibility is locating the will. It is therefore important that you inform your executer of the location of your will.

Organising Funeral Arrangements

An executor in NSW will be required to make the funeral arrangements according to the wishes of the deceased. This should be carried out as soon as possible after death.

It is very important for the executor to follow the deceased’s wishes as closely as possible to avoid any legal consequences. For example, it is illegal in NSW to cremate somebody against their wishes.

When organising the funeral, the executor should discuss the arrangements with the deceased’s family where possible, especially if there are religious considerations.

Obtaining Probate

The executor will need to apply for probate.

Probate is official confirmation that the person has died, the will is valid and legal and that the Executors appointed are the Executors appointed by the court. Probate is obtained by making an application to the Probate Registry of the Supreme Court for a ‘grant of probate’. This document recognises the authority of the executor to administer the will.

Banks, insurance companies and super funds usually require probate before they will release any assets in the name of the deceased.

A grant of probate is also required if the executor will be selling or transferring any real estate.

Protecting the Estate

It is the responsibility of the executor to protect the assets of the estate. This may involve storing valuables, keeping surplus funds invested, insuring all property and protecting any business interests.

The executor must also ensure the assets of the estate are not diminished due to their action or inaction. For example, if the executor fails to administer the estate within the prescribed time limits and incurs unnecessary legal costs as a result, the executor may be held personally liable for any reduction in the estate assets.

Seeking the advice of an experienced lawyer will help an executor make sure this doesn’t occur.

Determining Assets and Debts

The executor will need to confirm any assets and debts held by the estate at the time of death of the will-maker. This is accomplished by contacting financial institutions, relevant companies, and performing land and property searches.

The executor will prepare a statement of assets and liabilities covering:

  • Personal effects
  • Taxation details
  • Cash and other securities
  • Business Interests
  • Real Estate
  • Debts Owing
  • Debts Due

Defending the Estate

It is the executor’s job to defend the estate if someone wants to challenge or contest the will. As a lawyer is able understand the legal process relating to defending a contested will, any executor in this position should seriously consider obtaining legal advice to guide them.

Distributing the Estate

Once the assets of the estate have been confirmed, and all debts paid, the executor will then distribute the estate to the beneficiaries. This generally involves transferring cash and assets to the named heirs. However, if the beneficiaries are minors or under the age of distribution as set out in the will, the executer may be required to manage the estate finances until such a time as the beneficiaries come of age. This will include ensuring the assets are secure and safe and the estate tax returns are completed.

Unless there are extenuating circumstances, an executor must administer the estate within 12 months of the will-maker’s death.

Keeping Proper Records and Receipts

Executors are expected to keep proper records and receipts of all assets transferred in the distribution of an estate.

Although the role of executor is generally unpaid, executors are entitled to reimbursement for any out of pocket expenses related to the administration of the will.

Keeping proper financial records and saving receipts will make sure the executor is repaid from the estate for any reasonable administration costs.

Please go to our powers of attorney page for information.

Please go to our Appointment of Enduring Guardian page for information.

If you feel that you have been unfairly left out of, or unfairly provided for in a will there is a way to challenge that will through the Courts.

Certain members of the family or eligible persons are entitled to make a claim against a Will in situations where the Will is valid but adequate provision for the proper maintenance, education or advancement in life is not provided . In such circumstances, the Court can make alterations in the Will or can distribute the estate in favour of those eligible persons.

Claims such as these are known as Family Provision claims

Eligible Persons Who Can Claim in New South Wales (NSW) and their Needs

Under Section 3 of the Succession Act 2006 (the Act), eligible persons are those persons who can make an application for Family Provision Orders to the Court, which is in respect of the estate or notional estate of a deceased person to provide maintenance, education or advancement in their life.

Under Section 57 of the Act, the persons who are eligible to make claims are as follows:

  1. Surviving husband or wife of the deceased person;
  2. A person who, at the time of death, was living in a de-facto relationship with the deceased person;
  3. A child of a deceased person, including an adopted child;
  4. A former divorced spouse of the deceased;
  5. A person who was:
    • Wholly or partly dependent on the deceased person; and
    • A grandchild of the deceased person; or
    • A member of the household of the deceased person;
  6. A person who was in a close relationship with the deceased person.

The above mentioned eligible persons can make a claim on the following grounds:

  • If they were dependent on the deceased;
  • If the share of the deceased’s property is not adequate for their maintenance and support;
  • If the relationship between the deceased and the eligible persons began after the last Will was made;
  • If the Will does not provide enough for the eligible persons who were ex-partners or children from previous marriages or de facto relationships;
  • If the eligible persons believe that the Will is grossly unfair;
  • If the eligible persons can prove that the Will maker was not in sound mind when the Will was prepared;
  • If the eligible persons can prove that the Will maker was unduly influenced by one or more of the other beneficiaries of the Will; or
  • If the Will is not clear.

Two Stage Process of Family Provision Claims

Under Section 60(1) of the Act, the Court applies a 2 stage process in determining Family Provision claims which are as follows:

  1. Firstly, whether the persons making Family Provision claims or the persons in whose favour the Family Provision Orders are sought to be made are eligible persons, and
  2. Secondly, the Court will assess and determine whether to make any Family Provision Orders or not.

In other words, the first step is where the Court assesses whether the applicants are eligible and the second step is where the Court determines whether the wills provisions are already adequate to provide proper maintenance, education or advancement in life of the applicants and whether they are able to meet their financial requirements from their own resources.

For any further advice and guidance on a Family Provision claim, contact our team of experts at Farrell Goode.

Let Farrell Goode help you ensure your hard earned assets are distributed exactly how you would like.

Contact us on (02) 6977 1155 or send us an enquiry TODAY.