Marriage, separation or divorce

It is important that you review your Will after marriage or divorce to ensure that it meets your current wishes and properly reflects your changed circumstances.

As a general rule, your Will shall be revoked if you marry after its execution. If you and your partner are not yet married, but intend to marry in future, your Will can include a provision expressing your intention to not revoke the Will by your marriage and that it is made in contemplation of that event.

Similarly, if you and your spouse were to divorce, any bequest to your spouse will cease to have any effect and your former spouse will also cease to be your Executor under the Will without the need for amendment. While this rule may suit most divorced couples, you may have a positive ongoing relationship with your ex-partner and still wish for them to act as Executor (especially if there are children of whom you are both the parents).

Alternatively, your divorce may have seen a radical change in your circumstances, necessitating the appointment of new Executors and the selection of new (or additional) beneficiaries, such as step children. This is true especially if a new relationship results in the blending of the assets which the parties bring (or have brought) to this new relationship.  Blended relationships may give rise to the need to enter into an agreement that the parties will not change their Will without the agreement of each other, or after the death of the survivor, thereby ensuring that the children of the first partner don’t miss out by what might otherwise be considered to be an occurrence akin to “Russian Roulette”.

Separation of spouses is not covered by the Wills Act in the same way as marriage or divorce. If you and your partner separate, any gifts or powers given to the former partner under your Will remain in place. In the case of separation, we recommend acting quickly to update your Will to match your current circumstances to avoid the undesirable outcome (at least from the deceased partner’s perspective!) that the majority of their Estate is to go to someone from whom you are now separated.

Children

The birth of children is a major change in your family’s circumstances and an obvious catalyst for reviewing your Wills. Important issues to consider after you have children include:

• Who will look after them if you and your spouse both pass away (Guardianship)?
• Are there any specific items (chattels), such as family heirlooms, which you would like your children to have?
• Is there a particular Will structure, such as a discretionary testamentary trust, which will deliver increased tax benefits for the surviving parent when providing for your children?
• Is there a particular age that your children should reach before they are entitled to anything from your Estate or from the estate of the surviving parent?

These are all questions worth discussing with us as experienced Estate Planning lawyers. If you are not sure yet whether you will have children, or intend to have them in future, it is also important to discuss these different outcomes with your lawyer – whilst it is better to update your Will after having children, we can build some flexibility into your current documents to cover such an occurrence.

Changes in your assets

Most people’s assets change a little bit every day – your bank balance, the value of your home and the items in your possession all fluctuate regularly. When there is a significant change to your asset pool, however, it is important to ensure that your Will reflects this pool, including superannuation benefits and life insurance policies (and noting the potential need to update the level of cover).

One example may be where you have left a specific property (say, ‘my holiday house at Blairgowrie’) to your son in your Will, which you then sell. Your Will may have originally ‘balanced out’ that gift by leaving other gifts or cash of equal value to your other children. Now that the house is gone, the gift to your son fails and he will not be compensated for this loss from your Estate. This would lead to an unequal distribution between your children and subsequently potential for conflict. Any changes to specific gifts, particularly large gifts of significant value, should trigger a review of your Wills.

Another example may be where you and your spouse previously lived in a house that was in only one of your names, but have now purchased a new main residence as tenants in common. It may be appropriate now to change your Will to reflect the change in ownership, perhaps including a life interest for your spouse so that they can continue to live in the property after their death.

Changes in relationships, health and age

Family dynamics and friendships can be complicated. It is not unusual for a client to come into our office who has previously appointed a friend or relative as Executor under their Will, only to say that “we’re not that close any more” or “I haven’t seen them in ages”. When these relationships change, it’s important to reconsider whether your friend should act as your Executor. Similarly, clients may realise when reviewing their Wills that they have left a gift to a friend or family member who is deceased, or although still alive, with whom they are no longer in contact. These are just further examples of reasons to update your Will.

Part of the review process is also considering whether the Executor(s) you appointed are still ‘up for the job’. For example, it may have been appropriate when you were younger to appoint your parents as your executors, but if they are now of an advanced age, it may be time to consider who else could act in their stead. Other changes in the lives of your Executors, such as illness or relocation overseas, may also lead you to reconsider the ongoing relevance of their appointment.

If you can relate to any of the above scenarios, it is time to undergo the review process. Depending on the changes, you may require only a Codicil amending your old documents, which allows incidental amendments without the need to have a new Will prepared.

The team at Tony Kelly Lawyer & Estate Planner primarily focus on the creation of succession and estate plans together with Wills and the associated documentation tailored to cover all aspects of your needs.

Please contact me today to arrange a meeting, videoconference or telephone call to discuss any of the foregoing issues with Tony and me.

Claire L Stollery
LL.B(Hons), B.A, GDLP
Australian Legal Practitioner

Suite 1, Level 1
Stalbridge Chambers
443 Little Collins Street Melbourne, Vic 3000
Tel: (03) 9017 6800
Mob: 0412 261 709
e-mail: cs@tonykellylawyer.com.au
www.tonykellylawyer.com.au

The post When it’s time to update your Will appeared first on Tony Kelly Lawyer & Estate Planner.

This response recently came to mind when reading Hedley Thomas’s articles in the “Australian” of March 7 & 8. Thomas reported on a case now before Brisbane’s Supreme Court where two daughters are currently suing their 91 year old father and their youngest sister over steps which were taken some 4 years ago to take assets owned or controlled by the father from the reach of the plaintiff’s by putting them into an entity controlled by their sibling during his life time.

It appears that this entity, which now is the repository of those assets, is a trust structure and as the re-structure occurred during the father’s life time, the assets which have been transferred to it will not form part of his estate at the date of his death and therefore will not be included in any claim for “further provision” brought against his estate by his two elder children. It may well be as the father now resides with his youngest daughter that his estate has been “stripped” of any assets and an application for probate of his will shall not be necessary.

The issue of the father’s capacity is also before the court, despite him scoring 28 out of 30 when being tested by his doctor as to his cognition at the time of the restructure. This is because the main thrust of the proceeding seeking to overturn the re-structure appears to not only be based upon the premise that the father was unduly influenced by the youngest daughter, but in addition it appears from the article that his capacity at the time of the re-structure to fully understand the resultant outcomes has also been called into question.

The reported reason for the restructure was the patriarch’s dissatisfaction with the behaviour of his two eldest children and one of their spouses. The behaviour complained of was the anticipated interference of the spouse in trying to gain control (or at least have some involvement in the management) of an investment portfolio of public company shares and property with an estimated worth of $10m; which the father had accumulated during his lifetime and general interference (real or threatened) by the two daughters in relation this asset pool.

The “fall out” has been an estrangement of the father from his two eldest children due to their disinheritance and possibly also that of their children. It is not apparent from the articles whether such disinheritance was only as to part or they are excluded from any share of the asset pool.

The outcome

The proceeding has not only pitted sibling against sibling but the elderly father has been subjected to cross-examination in court over the manner in which he has elected to divide his asset pool, and as a result, becoming clearly affected from the involvement in what would be very stressful to anyone, let alone someone who should be enjoying his longevity with an abundance of assets from which to make provision for not only himself, but also all the members of his immediate family. It appears that his cognition some four years after the restructure is not as clear as it once was. Anyone who has been subjected to cross-examination can only sympathise with the father’s distress and possible confusion. The family asset pool has unfortunately become a “poisoned chalice”, rather than a cup from which all family members can drink.

Could the outcome have been avoided?

Perhaps with more open discussion and the involvement of a trusted advisor, this could have been avoided. However, the interference of partners is not an unusual cause of family disharmony (if that is what has occurred here as the articles have so reported).

My experience over my 45 years post admission is that it is normally vital that beneficiaries are brought “into the tent”. If conflict is anticipated over the estate “carve up” then independent executors and or trustees should be appointed to keep the peace. The irony of this case is that the asset pool of $10m would normally be considered as “abundance” and a third of this pool for each child is more than adequate to underwrite the security of each of them and their family.

It will also be interesting to see how the restructure was documented and the diary notes that hopefully were kept. This is because capacity is also an issue that any lawyer involved in advising an elderly client in such circumstances must be satisfied with. In essence, the test is concerned with whether the father understood what the asset pool either owned or controlled by him at the date of the re-structure and who he wished to benefit as a result of the restructure and the reasons for that outcome.

Here the unfortunate outcomes have been an alienation of his children by the formation of the two warring “camps”, an unseemly airing of the family’s “dirty washing” in a very public manner, the incurring of what is obviously a significant amount of legal fees and great emotional distress to the family’s patriarch, all because his children couldn’t wait to fight over their legacies until after he was dead.

TONY KELLY LAWYER & ESTATE PLANNER 

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I am often referred clients from other practitioners and professionals in complimentary fields.

Recently I received an email to the following effect:

“Hello Tony,

I referred a gentleman to you last August to have his estate planning updated.  Unfortunately, he had an accident whilst cycling over the weekend and has since passed away.  The family are now trying to confirm the current standings of his arrangements. 

I recall you advising me that you had been unable to make contact with him, however, if you subsequently connected, could you please let me know so I can pass on your details to the family for follow up.”

The gentleman referred to me did not make contact with me, nor did he return my calls. This factual situation resulted in his family not only grieving their loss, but they were now faced with the following sets of circumstances:

1.   An outdated Will that did not reflect the deceased’s wishes; or
2.   An intestate estate.

When someone dies without a Will (or one that is appropriately drafted), this can result in an estate being distributed according to an inflexible statutory formula; a process which does not take into consideration either the deceased’s wishes or the personal situation of the beneficiaries. This is known as an intestacy distribution.

Some of the disadvantages of dying Intestate (i.e. without a Will) include:

1.  The potential for the statutory distribution resulting in the allocation of the estate’s assets in a manner which is insufficient for the needs of certain family members;
2.  The potential for distributions contrary to the deceased’s intentions or distributions that overlook individuals who would otherwise be beneficiaries of a Will;
3.  The forfeiture of any asset protection benefits that a properly drafted Will could potentially provide; and
4.  The additional cost and effort involved in applying for a Grant of Letters of Administration and the coordinating of the distribution of the estate.

All of the foregoing can be avoided by having a properly drafted Will, which also has the added benefit of:

1.   Distributions according to the will-maker’s intentions, which can include distributions to extended family, friends or charitable organizations, as opposed to immediate family members only;
2.   Minimizes the expense and delay in the administration of the estate;
3.   The possibility of including in the Will a Discretionary Testamentary Trust(s) which afford greater asset protection, tax effective distributions (especially to infant beneficiaries) and wealth preservation
   opportunities; and
4.   Minimizing the potential of incurring unnecessary taxation and othr liabilities.

If you wish to create a Will or update the current details of your existing Will, please contact my office in relation to any estate planning advice.

TONY KELLY LAWYER AND ESTATE PLANNER

Find me on LinkedIn:
https://www.linkedin.com/in/tony-kelly-lawyer/

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