Rod Genders is a senior Australian lawyer specialising in Wills and Estate Planning, Probate and Estate Administration, Trusts and Guardianship and Inheritance Claims and Contested Estates in South Australia. His boutique specialist law firm, which was founded on 1848, is one of the oldest and most respected in Australia. Rod is an international author and speaker. Rod is the 3rd generation of Genders in the law and has been practising specialised law since the mid 80’s. For over 10 years he served on the Council of the Law Society of South Australia and is a senior member of its Succession Law Committee. For 8 years Rod was a founding committee member of the South Australian branch of the London-based Society of Trusts and Estate Practitioners (STEP) and was the founding Chair of the international STEP Digital Assets Special Interest Group. For over 25 years Rod has chaired a private committee enquiring into the affairs of protected persons. He is a member of the Law Council of Australia, a member of the Notaries Society of South Australia and an associate member of the American Bar Association.
Estate planning for your second or subsequent marriage is more of a challenge than it was the first time around.
If you have children from your first marriage, then those kids may have an entirely justified concern that their new step-parent could throw a big roadblock in the path of their inheritance.
When you got married again, it automatically revoked your previous Wills. If you don’t make a new Will after the latest marriage, the law of the State where you live will create a default Will for you, according to a statutory formula which probably won’t suit your intentions.
Protecting your assets is one of the most important financial decisions you will ever make. Asset protection is a valuable and important part of a modern integrated estate plan. No matter how many assets you have, you should make an effort to protect them, but try to avoid these common mistakes:
1. Lack of Knowledge
Lots of people misunderstand how asset protection works. Some people believe asset protection makes them “judgment proof.” Even if your assets are protected, you may still cop an adverse court judgment. In some cases, efforts you have made to protect your assets can be overturned. This is why it is important to work with a professional when creating your protection plan.
Don’t make the mistake of assuming asset protection and estate planning are the same thing. Asset protection is part of any strong estate plan but they are not the same thing. Some trusts do nothing to protect you from creditors, and Family Court issues can interfere with the best-laid plans.
Don’t make the mistake of confusing bankruptcy law and asset protection law. In a state like South Australia, newer bankruptcy laws do not prevent the “clawing back” of assets you may have tried to unsuccessfully protect. You have less protection in bankruptcy court, so filing for bankruptcy should be used as a last resort.
As Baby Boomers, we are leaving the workforce in record numbers.
This leads to some uncomfortable predictions about the lifestyle we can expect in retirement, and what the Government will do to help us.
In Australia, we have not felt the impact of the GFC (Global Financial Crisis) as quickly or as hard as many other countries (like Greece or Ireland).
But recently, the International Monetary Fund said “The global economy is in a dangerous new phase”, so it is natural to be concerned about our own futures – especially if our most productive years are behind us. It is not easy to recover from a financial reversal when our ability to earn is diminishing with age.
With market volatility in recent months reaching levels not seen since the GFC, it is worth looking at the key factors affecting our economy in this new financial climate.
Populations in most developed countries like Australia are ageing. As people retire, incomes fall and spending patterns must be adjusted downwards. In some countries, economic growth has been extremely low and price deflation has occurred. An ageing population lowers the number of citizens available to work and requires more government assistance in terms of pensions, health care services and other benefits.
Some people resist or resent spending money on estate planning, because they think (wrongly) they won’t gain the benefits themselves.
In difficult financial times like these, some folks may be tempted to postpone or minimise what might seem like a non-essential expenditure.
Every week, thousands of television advertisements from insurance companies encourage people to bypass lawyers and create their own Wills, using cheap or free “Will kits”.
The big ugly truth about these kits is that people make a lot of mistakes when they try to create their own Wills and estate planning documents. They have been lulled into a false sense of security. But answering just one question incorrectly or overlooking something such as appointing a guardian for children can lead to major problems down the road.
There are lots of traps for the unwary, and this whole area of law regarding deceased estates contains a hidden minefield which you absolutely want to avoid. And with a bit of education & planning, they can. Otherwise they won’t know the questions to ask, or what to do with the answers.
What do you want to be remembered for, after you’re gone?
Traditional Wills describe the worldly possessions you want your loved ones to have. This sort of document is the oldest and best known component in estate planning.
In addition to the Will there are additional types of documents that are now widely recommended as part of modern integrated estate planning. These include Advance Medical Directives which may be used to express your wishes with regard to medical preferences in case you subsequently find yourself in a situation where you can’t make your own decisions. This sort of “Living Will” can address issues relating to end-of-life decisions such as life support and to define the extent of use of artificial means to keep you alive if there is no hope of recovery. There are also all sorts of other documents which allow you to delegate control and decision-making, such as various categories of Powers-of-Attorney.
- Write your own Will. Use one of those cheap kits from the post office. The cheaper the better – why waste money on expensive stationery?
- Even better, download something from the interweb, preferably from another country. Try to get something that doesn’t have any creation date on it –it won’t be hard – that way you can be pretty sure that your Will won’t comply with local laws here and now.
- Don’t pay for professional legal advice. Just do it yourself. Type up (or better yet handwrite in a shaky hand) your own Will. Just in case, write up several Wills all on the same day – each slightly different.
- Make your gift to your daughter conditional upon her divorcing her loser husband. Put your son’s legacy in trust for 50 years, unless he completes 6 years in the army. Tell your wife that she can only keep the house as long as she never even thinks about another man AND never again speaks to her interfering busy-body mother.
- When writing your Will, talk about the assets in incredible detail – down to the serial number on your television. Then forget to keep track of those assets throughout your lifetime. Sell some, give some away, and junk some. It will be good for a laugh as you look up from Purgatory at your family trying to work out which assets are actually part of your estate, and who is to get what.
- Also, don’t bother trying to distinguish between your own assets outright, compared with assets that you might own jointly with someone else, or assets that are owned in a trust or company. Just treat them all the same.
- Try not to talk about your testamentary wishes with your family. After all they won’t get anything until after you’re dead, so they can jolly well wait until then.
- Be as secretive as possible with your own family, especially about your financial affairs. Don’t talk about what you are planning to do. Passively encourage your spouse and kids to assume they know what you want. Leave it vague enough so no one really knows.
Baby Boomers were born between 1945 and 1965. As a segment of Australian society we represent a BIG chunk of our national population, and account for a massive percentage of the nation’s private net-worth.
According to the Australian Bureau of Statistics people aged 65 years and over made up 13% of Australia’s population at 30 June 2007. This proportion is projected to increase to 25% in 2056 and to 28% in 2101.
As we prepare to transition into retirement & beyond, we are about to witness the greatest transfer of wealth ever in Australia’s history.
However 2010 Australian research commissioned by the Salvation Army from Roy Morgan Research reveals that nearly two thirds of the adult Australian population does not have a Will. The research also shows 40% of Australians aged 25+ have experienced or know someone who has experienced family conflict as a result of a family member not leaving a Will.
Dying without any Will is called intestacy. When that happens, the government of the State where you die will determine what will happen to your assets. This can lead to unintended people (or even the government) gaining ownership of your hard-earned assets.
Many Australians have no idea what happens to their assets after they die, and sadly many rely on the misguided notion that a Do it Yourself Will is sufficient to protect their family and assets.
As we age, advances in medical science continue to improve our life-expectancy, so we are living longer and longer on average.
But as we age, we are more likely to require care towards the end of our lives. Some of this care is provided by voluntary caregivers and friends & family, in addition to paid carers. Sometimes we want to provide for those caregivers or friends in our Will. Such bequests however can be suspected, resented and possibly challenged by family members and other beneficiaries after we die.
Imagine an elderly man changes his Will three months before he dies to leave all of his assets to an individual who had recently befriended him and “taken care of him” in recent times. To many people the word “gold-digger” might spring to mind.
As people age, their mental abilities age as well. Their judgment, wisdom and discernment in making decisions may no longer be as acute, and they may be more willing to trust strangers.
Sadly, some people take advantage of such elderly people, causing them to sign over assets and benefits or even whole estates to people they hardly know.
If you are in a second or subsequent marriage that involves different sets of children, then you have a blended family.
If you are planning to start a new life, and maybe buy a home with your present spouse, then this time around you really need to develop an integrate plan to ensure that all the important people in your life receive their fair share of your assets after you die. That’s what modern integrated estate planning does.
In most Australian jurisdictions, divorce will invalidate all gifts to an ex-spouse under a Will. However re-marriage will automatically revoke the entire earlier Will (with only rare exceptions).
Estate planning following remarriage after being widowed or divorced is complicated by a number of factors, including differences in asset-ownership between the parties, one or both of them having children by an earlier relationship requiring provision/protection, disparity in ages, and concerns about the financial effects of a relationship breakdown (once bitten, twice shy).
Joint ownership of assets, and Family Law considerations of “Community Property” can give a surviving spouse certain property rights which can cause problems for the children from prior marriages.
