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SeniorLaw Services - Estate Planning
Estate Planning

At SeniorLaw Sydney we know how important planning for the future is to all our clients.

Estate planning is not simply the drafting of a Will. It is a whole process that looks at your present stage in life and concentrates on you, your family and asset protection. A program is put together that will cover your present stage in life, incapacity risk management for the future and protection and transfer of wealth.

Estate planning begins during your life, requires periodic review and can continue long after your death.

When asked if they have an estate plan many believe they own ‘very little’ and insufficient to warrant attention. This often disregards the rising values of real estate, future inheritances and accumulating superannuation.

Sound estate planning is a process involving both the client and solicitor working closely together. To determine your estate planning needs we have included a trigger sheet “My estate planning goals” for your assistance.

One of the first steps in estate planning is taking a complete financial inventory. We then look at your family relationships with a view to minimising will disputes and deciding who will be the key person or people involved in managing your affairs upon incapacity or death. The distribution of your assets that will be included in your estate for probate will be planned having regard to specific gifts, monetary legacies testamentary trusts and residuary estate. No death duties apply in NSW however the transfer of assets must be considered with reference to capital gains tax. This is sometimes referred to as ‘death duty in disguise’!

We strive to link your financial and family details to your estate planning goals to create the building blocks of an imaginative and effective estate plan for you.


Incapacity Planning

We all agree about the need for incapacity planning. The only issue is usually one of procrastination. Incapacity planning should be addressed now, and then periodically reviewed. Unforeseen events, not always age-related, can occur depriving us of our ability to make decisions.

Fact or Fiction?

Fiction
  Incapacity planning can be done any time even if the person is now in hospital.


Fact
  It is not a question of where the person now is - the crucial element to be assessed is whether the person has the necessary legal capacity to make the appointment and be aware of its implications.


Fiction
  I have been appointed by my brother as his Enduring Power of Attorney. He knows I will choose a caring nursing home when the time comes.


Fact
  Although you have been appointed as your brother's Enduring Attorney this will not allow you to make lifestyle decisions for him. While he had the necessary capacity he should have also appointed you as his Enduring Guardian if he wanted you to make lifestyle decisions for him as well.


Fiction
  Dad has dementia but the guardianship question is simple and I will ask his GP to appoint me as his guardian.


Fact
  If your Dad did not appoint you as his Enduring Guardian while he was mentally competent you will have to make an application to the Guardianship Tribunal to appoint you. This will involve additional costs and further time. The family doctor cannot make the appointment.


Fiction
  My aunt is in a coma following a car accident and as I am family I am allowed to help out using her finances to pay bills for her.


Fact
  Unless finances are held by you and your aunt jointly you are not allowed to handle her financial affairs without your aunt having made an Enduring Power of Attorney in your favour while she had mental capacity. This would also require registration if real estate was involved.


Fiction
  I am the oldest child in our family so I presume I can make the final decision for my parents if they lack mental capacity.


Fact
  This is a wrong presumption. Just because you are the eldest does not mean you have any greater rights than any other siblings. If no Enduring Guardianship or Enduring Power of Attorney was created then decision- making for both lifestyle and financial issues is in the hands of the 'responsible person'. There is a statutory order of people approved to make decisions.


Family Agreements

Family Agreements are legal documents drafted to formalise arrangements when a parent transfers property or makes payments to someone, usually a son or daughter, on the promise of future care.

Communication between all members of a family is desirable if considering the move by an aged parent to a son or daughter’s home.

Many who wish to accommodate an aged parent in their own home, rather than a residential care facility, may require an extension to their house to be able to do this. The level of care necessary, particularly if the parent is frail or gradually losing capacity due to Alzeimers, can require almost total commitment (affecting the carer’s own employment).

If the parent wishes to sell the home and lend some of the sale proceeds to the son or daughter who is providing the accommodation/care it may be wise to consider putting the understanding in writing in a Family Agreement. This enables the arrangement to be legally documented as well as being a clear arrangement as far as other siblings are concerned.

There are many important issues to be set out in any Family Agreement. These would include for example what arrangements are agreed to reimburse the carer for any outgoing expenses, what happens if the carer fails to follow the terms of the agreement or what are the repayment arrangements for the loan after the parent dies?

Family Agreements may also provide the aged parent with emotional as well as legal security when entering this arrangement. We welcome your enquiry if we may be of assistance.


Disabled dependant

At SeniorLaw Sydney we encourage everyone to make a Will. For any person with a son or daughter who is disabled or has special needs a Will is an essential part of the estate plan.

If there is no Will the statutory intestacy rules will apply.

The needs of a person with a disability many years after the parent(s) death may be difficult to predict. Future government policy on pensions, community housing or large medical bills or the prior death of a sibling may all cause upheaval.

The parents may have left their assets to the child without a disability believing they would be responsible for their brother/sister in care. But what happens if the other sibling were to die prematurely or fail in this duty? If parents failed to provide for a disabled child an application could be made under the Family Provision Act for the Court to intervene and make adequate provision for the needs of the child.

Consider another scenario. Your spouse has died and you are the sole beneficiary. You now want to update your Will and provide for your 3 children. As one child has a severe disability you may wish to consider an alternative to direct bequest. You may wish to consider creating a testamentary trust in your Will which will come into effect on your death. Under the terms of the trust a one third share could be invested on behalf of your disabled child and your trustees responsible for using the income to provide for your child. It would avoid any conflict of interest if your trustee was an independent person and not a sibling.

You may also consider the appointment of a Guardian in your Will.


Blended Families: What's Mine, Yours and Ours

The term ‘blended family’ is not a legal term. It has come into use to describe a family resulting from the marriage of two people including the children from a previous marriage of one or often both parties. The family may then be enlarged by the addition of children from the new marriage. Blended families can also be linked further when you consider one of the spouse’s children from more than one previous marriage and the ex-inlaws and grandparents.

When it comes to Will drafting and estate planning generally the blending of two families and unrelated groups of children from prior marriages can require creative planning. This is because when it comes to blended families many think of the fictitious happy TV model, The Brady Bunch. Real life situations are often far more complex. Occasionally there is a strong wish to exclude certain ex-family members as well as provide for other members of the family. Divorce or death of a spouse can sometimes provide a tense background to determining new executors, trustees or beneficiary shares in new Wills.

It is important to remember:

If both spouses die together the younger will normally be presumed to have outlived the elder and the younger spouse’s Will, or if no Will then intestacy, may apply to distribution of assets. This can have the effect of excluding any children of the elder spouse’s prior marriage
If a spouse died leaving part of the their estate to his current wife and part to the minor children of a previous marriage the inheritance left to the children may be controlled by the ex-spouse if a testamentary trust has not been set up in the Will with your own choice of trustee to administer it.
Step children are not recognised as ‘issue’ of the deceased willmaker when applying the intestacy formula for distribution of assets (they may however be ‘eligible’ to make a Family Provision Act claim on the estate); ‘issue’ of the deceased includes children of a marriage and ex-nuptial children, adopted children and A.I. and IVF children.

The challenges of successful planning for blended families can be met.
However it helps if your SeniorLaw solicitor is compassionate and possesses an understanding of life’s ups and downs in addition to having the requisite legal skills.

In planning for a blended family our solicitors seek to achieve an orderly and fair distribution of estate assets to all your nominated beneficiaries.

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SeniorLaw Sydney (ABN: 33 560 807 269)
Level 5, Castlereagh Chambers
64 Castlereagh Street
Sydney NSW 2000
Australia

Tel. (02) 9235 3160
Fax. (02) 9235 2733
Email. seniorlaw@seniorlawsydney.com.au

© 2006 SeniorLaw Sydney