Estate planning is not just the preserve of the elderly or the sick. Every Australian, regardless of their age or health, should consider an estate plan that takes into account their assets and family situation.
While there isn’t one single answer or solution that Will suit every individual, one thing that is true is that an estate plan is more than just a Will; it’s a strategy that ensures not only that assets are directed to chosen beneficiaries but that someone else can make financial, medical and legal decisions on a person’s behalf if they lose the capacity to do so themselves.
Financial advisers and estate planning practitioners are key in helping ensure a person’s wishes can be carried out the way they require.
What estate planning means
Developing an estate plan involves ascertaining a client’s estate, determining their wishes and intentions and how they can be fulfilled, and advising about the implications of their intentions.
Estate planners do not simply ask what a client wants and prepare a Will without providing advice, the advice is the important part of the estate plan and without it, the documentation may not be as effective as otherwise.
There is also the importance of considering what the client’s wishes are during their lifetime as, with an aging population, it is becoming increasingly common for people to lose capacity and require another person to act as their attorney or be appointed as their administrator. Unless this is sorted out when they still have capacity, this may not be the person they would prefer and will be decided by VCAT/QCAT/the Guardianship Board.
Different needs at different stages
People will have different requirements for an estate plan depending on what life stage they are at.
Young, single, no dependants
While people who are young and independent like to think they are invincible, they are of course as prone to illness or accidents as anyone else
Furthermore, this category is increasingly likely to be accumulating wealth in their own right. Therefore, it is important for young singles to prepare a Will, enduring power of attorney and appointment of enduring guardian.
This will help ensure that during their lifetime, someone has the power to make financial, legal, medical and healthcare decisions on their behalf if they lose the capacity to do so, and that on their death, assets will pass in accordance with their wishes.
Single but committed
People who are in a serious committed relationship – whether defacto or not – should consider what will happen to their partner if they die or lose the mental capacity to handle your own affairs.
Will they lose their home? Will they inherit all possessions, or will other family members take everything away?
Likewise, what will happen if the partner dies or loses capacity?
Unromantic though it may seem, getting married is an important trigger for reviewing existing estate planning documents. For example, marriage can automatically revoke a Will so this will need checking.
Some points to consider include:
- Has the marriage revoked the current Will?
- Has the marriage revoked an existing enduring power of attorney or appointment of enduring guardian?
- What is the effect of any superannuation nominations? For instance, is a nomination of a previous partner still valid? If so, is this still desirable?
- How has life insurance been affected – are beneficiary nominations still appropriate?
Married with children
Having children is also an important life stage for reviewing an estate plan.
Does the Will provide for the appointment of guardians? It may need to be updated to nominate testamentary guardians to take care of the children if both parents die at the same time.
Does the current Will allow the children to inherit their share of the estate as soon as they reach 18 years of age? If so, is this appropriate? It might be worthwhile thinking about including testamentary trust provisions in a Will so that children do not inherit everything at a young age.
What if both parents become incapacitated at the same time? Who would look after the children then, and what financial arrangements are in place to look after their schooling, maintenance, and so on?
Divorce and property settlement
Unlike marriage, divorce does not automatically revoke a Will, so a review of estate planning is crucial at this stage.
Many couples go through a separation period before getting divorced. In the absence of proper estate planning, a now ex-partner may still inherit if a person dies after separation but before divorce is finalised.
Revise any enduring power of attorney documents, people usually don’t want their ex having a say in their finances and health and medical decisions!
Also revise any trust documents because an ex-spouse may be able to take control of the trust.
Remarriage and blended families
Blended families are increasingly a factor in today’s society, and can cause a number of complications.
Some crucial considerations include:
- Revise a Will and trust documents to reflect the proper beneficiaries
- Consider whether the new spouse will be provided for in the Will
- Consider whether any children of the new spouse from a previous relationship will be provided for
- Be aware of the Family Provision Legislation which in most states of Australia extends to stepchildren, they may be able to claim against an estate
- Determine which assets will be left to the new spouse and which to leave your children, and if any will go to a previous spouse
- Consider a Binding Financial Agreement with the new spouse.
The crucial documents
Regardless of the stage of life, the most crucial documents to include in an estate plan are:
- Wills (and Memoranda of Wishes), instructions to Guardians of minor children
- Superannuation Death Benefit Nominations
- Powers of Attorney and Appointment of Guardians
- Trust Deed
- Superannuation Trust Deed
- Company Constitution
Finding Lost Money
Source – Daryl Wilson of Affluence Funds Management
Has this happened to you?
Millions of Australians have lost money somewhere along the line. It could be a small super account from that temporary job you did years ago, a bank account you forgot you had or share dividends you never claimed. There are lots of ways this could have happened. Some of the most common are:
- Moving to a new house or overseas, without advising your forwarding address to everybody.
- Having a bank account that you haven’t transacted on for quite a while.
- Having multiple jobs, with small amounts of super in many different default funds.
- Losing track of investments, or not cashing dividend cheques.
- Stopping payments on a life insurance policy
Unfortunately, there’s no one place to search for it all, but here’s a few places to start.
ASIC’s moneysmart website has some great information on unclaimed money. Go to https://www.moneysmart.gov.au/tools-and-resources/find-unclaimed-money to find out more.
According to ASIC, there is now over $1.1 billion unclaimed money in Australia and ASIC is making a concerted effort to help people reunite with their cash.
Unclaimed money received by ASIC is transferred to the Commonwealth of Australia Consolidated Revenue Fund but is available to be claimed at any time by the rightful owner and there is now no time limit on claims.
Bank accounts become unclaimed after 7 years if the account is inactive (no deposits or withdrawals). Life insurance policies become unclaimed 7 years after the policy matures and is not claimed. Dividends from shares and other investments can be classified as unclaimed in as little as 2 years.
You can search for unclaimed money directly from the Moneysmart website, but this only covers certain types of unclaimed money administered by ASIC of behalf of the Commonwealth. From 1 July 2013, interest is payable on most unclaimed money administered by ASIC, but not at particularly attractive rates.
If your name is listed on ASIC’s unclaimed money search as a ‘gazette’ record, this means a company has sent ASIC your name but not the money. In this case, you will need to get in contact with the company directly and they will tell you how you can claim the money. The Moneysmart website has contact details listed for these companies.
Lost super is administered by the ATO. You can search for lost superannuation by registering for the Australian Taxation Office’s online services via myGov. By creating a myGov account and linking it to the ATO, you can then find details of all your super accounts, which may include any you have lost track of. Once you find lost super, you can roll it over into a super account of your choice. Before consolidating, it may be wise to check you will not lose valuable insurance.
State governments hold unclaimed money from a variety of sources. This can include deceased estates, share dividends, salaries and wages, cheques, trust money, over-payments, proceeds of sale and many more.
Up to date links to the various state government websites are on the Moneysmart website, but as a starting point, you can go here:
- ACT – Public Trustee and Guardian for the ACT
- NSW – NSW Office of State Revenue
- Northern Territory – Northern Territory Treasury
- Queensland – Public Trustee of Queensland
- South Australia – SA Department of Treasury and Finance
- Tasmania – Tasmanian Department of Treasury and Finance
- Victoria – State Revenue Office Victoria
- Western Australia – WA Department of Treasury
Different State Government agencies can hold different types of money. Also, the funds will not necessarily reside with the State Government where you live now, or where you lived when you lost it. Rather, it will depend on where the funds originated. For example, a company which is located in NSW will most likely send all unclaimed dividends to the NSW State Government, regardless of where the shareholder lives.
Sometimes an employer owes wages to an employee who has left their business and can’t be contacted. Or an employer might have to pay outstanding wages because the Fair Work Ombudsman contacted them as part of a campaign, completed an audit or helped them to do an audit of their records and found that one or more former employees have been underpaid.
Funds collected from unpaid wages are administered by the Fair Work Ombudsman. You can search for unpaid wages at https://www.fairwork.gov.au/how-we-will-help/helping-the-community/search-for-unpaid-wages.
Recovering your money for a fee
There are many companies out there who will search for unclaimed money on your behalf for a fee. While this may be worthwhile, it’s probably better to have a go yourself first and save yourself the cost – it can be surprisingly quick and easy to conduct the search, especially if you know what you’re looking for.