Legal Tip 200: The 3 Contingences to Plan for with Wills

Discussion in 'Wills & Estate Planning' started by Terry_w, 14th May, 2019.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    When making a will you would generally need to consider 3 situations which could play out (most commonly).


    1. You die first

    The reason you are doing the will! Most people doing this will only consider this option, you die before anyone else.


    2. Your spouse dies with you or just before you

    You will probably inherit their assets, perhaps, but also importantly your gifts left to your spouse will not able to be made if they predecease you (or if they die within 30 days of you in most cases).

    Your gifts to them will not be made, this could lead to all assets of you and your dead spouse going to the kids.

    Children receive gifts

    - Could they be underage at the time

    - Who would be their legal guardian?

    - Is ‘your’ money safe in the guardian’s control?

    - Are your kids financially responsible?


    3. One or more of your children dies before you

    If this happens consider would could happen to your assets.

    If you only have 1 child, who do you want to get your assets if no spouse and no children?

    If you have 2 children should everything go to the surviving child?

    If your deceased child has children (i.e. your grandchildren), should the share that the deceased child would have received go to their children, or should it go to your other children?
     
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  2. SatayKing

    SatayKing Well-Known Member

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    I gather the definition of "child" as a Prospective Beneficiary is also a matter to consider from recent talks I've had.

    Very complicated for this tiny brain.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes. I have had clients who had biological children who were not their legal children so we have to define child in a way to include them. similar with step children.
     
  4. SatayKing

    SatayKing Well-Known Member

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    And according to the lawyer I was talking with over coffee, if a child also has assets, isn't married, has no children, has quite a few assets, has a couple of siblings but no Will. Interesting times eventuates it seems.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    if a child dies without a will the intestacy laws would apply and it is likely the parents will benefit
     
  6. SatayKing

    SatayKing Well-Known Member

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    Sole parent was recently deceased beforehand too I understand. I gathered a bit of a bun fight eventuated.
     
  7. JasonC

    JasonC Well-Known Member

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    Our thoughts in our will (if something heaven forbid happens to both my wife and I) are that
    our assets go into trust for our children until they turn 25.

    Does anyone have any thoughts in regard to common practices for guardianship of children and possible payments from the estate for their upkeep until they are financially independent?

    Ie. A fixed payment per year to the children’s guardians? Allowance for “reasonable” expenses to be claimed from the children’s living expenses?

    We will be looking to get our wills rewritten and am looking for some ideas.

    Regards,

    Jason
     
  8. Trainee

    Trainee Well-Known Member

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    Unless you then have a separate party auditing the trusts to check payments or whether expenditure is reasonable, the guardian has a lot of power...... the key is selecting the right guardian.

    Similar to executor. Instead of putting too many limits on the executor, choose your executor carefully. Do it based on ability, personality, etc not based on the person being your sibling or whatever.

    eg parents commonly have all their children as joint executors, even if one child is financially competent and the other is not.
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You could keep it flexible and leave it up to the trustee's discretion.
    Guardian can ask until the children reach 18 and then the kids can ask until they reach the required age.

    I recall a case where the guardian was the trustee and used the some of the trust money to build an extra storey on their house for accomodation for the children - when they were about 16. Court approved.
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Devil's advocate - what claim could the children raise on their guardian's property for the increased value when they reach the required age? Can they force retrospective valuations for the building and force a sale to recoup their contributions towards the betterment of the guardians' house?
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    None in this instance I think