David Koch explains why estate planning is essential
Being prepared can help prevent a family fight after you’re gone.
BATTLES over deceased estates are getting bigger and bloodier as blended families, longer lifespans, and rising property and superannuation values spark contested wills.
Estate planning experts say that a will alone is often not enough to prevent family friction, but there are other ways to make sure your assets don’t end up in a financial fight.
They say battles over $1 million estates are common and there’s a growing number of estates worth between $2 million and $5 million, and not just among the rich and famous.
Natalie Abela, an estate planning law specialist at Adelaide commercial law firm Cowell Clarke, says Australians may unknowingly leave behind a dispute that tears their family apart.
Super funds and estate planning benefits
Natalie Abela, an estate planning law specialist, has noticed an increase in conflict.
“I’ve noticed a marked increase in claims and estate disputes over the past five years, particularly when there are defacto relationships and children from past relationships involved,” she says.
“In some cases, the biological children from a former marriage of the deceased feel they have been neglected and overlooked in favour of their step-siblings.”
Out-of-date wills and a lack of communication are key reasons for disputes, and older Australians should also consider powers of attorney and advanced care directives, Abela says.
Merthyr Law estate lawyer Steve Grant says times have changed from 30 or 40 years ago when collections were common at funerals to help pay for them.
“Compare that today — in most cases the grandparents have still got a home and usually a bit of super. Even half a house is probably worth $400,000,” he says.
The solution, Grant says with tongue in cheek, is “only get married once and only have one set of children”.
A good estate plan can reduce the likelihood of litigation by disgruntled family members.Source:Supplied
He says life insurance can be a way to send wealth to specific individuals, but policies become expensive as you age.
“Life insurance is free of challenge because it’s a contract between you and the insurance company.”
Communication about your wishes and your wealth is important, Grant says, but many people avoid such hard conversations.
There are also strategies available through structures such as self-managed super and investment bonds, and it’s worth getting good advice about these.
HLB Mann Judd Sydney head of wealth management Michael Hutton says one in two Australians die without a valid will, which means their assets are distributed according to a set formula rather than their wishes.
He says a good estate plan can reduce the likelihood of litigation by disgruntled family members, while testamentary trusts can be set up to distribute wealth in a tax-efficient and protected manner.
“Testamentary trusts are only formed upon the death of the testator and can be very flexible — or not, depending on the testator’s wishes,” Hutton says.
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