Estate Planning - Knowledge Shopping for Ideas/Terminology

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  HardQuiz on 06/07/2023 - 14:37

  +4

  Following with interest.

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  Crow K on 06/07/2023 - 15:12

  Discuss a testamentary trust with your solicitor. Hardest bit is finding someone willing to be an exectuor (basically has to run the trust/make sure tax returns get done etc) until Daughter reaches the age you've set for it all to be released etc. Brother is probably the most likely choice.

  • 

    Zeph101 on 06/07/2023 - 15:56

    That was my initial thought. Ideally the trustee would also be the her guardian, or would it be more beneficial to separate them or add another trustee/executor so no shenanigans happen.

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  sumyungguy on 06/07/2023 - 15:17

  You can get a free kit that will help to expand your knowledge: https://www.seniors.com.au/funeral-insurance/discover/downlo…

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  Cappa87 on 06/07/2023 - 15:52

  Solicitor

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    Zeph101 on 06/07/2023 - 15:59

    +3

    Well yes.. was looking at gathering more of a knowledge base to understand the basic concepts that may come up so the appointment isn't wasted by spending time explaining everything.

    I have contacted a few local solicitors that specialise in wills and estate planning and as they charge 450/h or appointment don't really want to waste time/money :)

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  sam-1966 on 06/07/2023 - 16:43

  +4

  I think you've got the most important idea covered - your daughter. My sister and I (and partners) did our wills naming each other as guardians of our children should anything happen and that the estate was left to the children in trust until they reached the age of 18 (or whatever you decide). You should also specify that reasonable (this will need to be carefully defined) costs are given to the guardians so that if the child/ren are attending a private school, playing sport, learning music/ballet etc (for example) the costs are covered, plus also an annuity to cover the cost of raising your children.

  I also happened to mention to my sister that if the worst happened all of my family died in an accident at the same time, we wanted to be organ donors (including our children - I firmly believe that if you are willing to accept an organ transport, you must be willing to also give. And I would be more than willing to accept one for my children). She was glad I brought it up, as they were the same and if it happened to them, I'd be the one getting the call and vice versa.

  You might also like to specify if your house is to be kept in trust for your daughter, or sold - or if you would prefer your executor to decide that depending on the property market etc.

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  Benoffie on 06/07/2023 - 18:03

  +1

  The way I would approach this (having done so in the past is):

  • who do you want to take care of your daughter?
  • can they be trusted with at a minimum, 500k? (possibly $1m+ factoring insurances, sale of property etc)
  • would they always, no matter what their scenario, put your daughter first?

  If you have someone that is a yes for one but you're not sure about the others, you need to think really hard about this. Unfortunately, Cinderella scenarios occur more frequently with orphans than they should (where guardians consume inheritance meant for the child to pay off their own mortgage/debts/fund lavish lifestyles etc).

  Chances are, your daughter will be best placed with a close relative, but this may end up being a grandparent rather than an aunt or uncle, especially if their lifestyles are not conducive to children (or more of them, they may have or want several themselves).

  The fallback, as has been mentioned, is a trust. This is more effort and work. It really is the last resort when you might have someone capable to care but not capable on the financials.

  The next part is the flow - if you die, what's the flow of the estate? Usually it is partner then, if predeceased or dies within 30 days, offspring of THAT marriage.

  They then have the same - they die, you (unless you're dead or die shortly after) > child of THAT marriage.

  Then you have the last one - what happens if all of you go at the same time? Who gets it? And, if you don't stipulate it for the executor, understand it'll all be sold off or dumped. It's important to give the executor the power to have discretion on these things in executing the estate in the best interests of the estate. For example, it can allow the executor to arrange part buy outs of property rather than forcing a sale of a home.

  You should also consider family heirlooms etc. If there is a particular person you would like these to go to, this should be specified.

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  dtc on 06/07/2023 - 18:04

  +1

  If both of you die then chances are everything would go to your daughter anyway, even without a will (through family maintenance laws) but obviously its best to avoid.

  Wills should go deceased assets -> spouse; if no spouse -> any children that survive in equal shares

  This is very straightforward and 98% of wills do it that way. You current will might actually already say that as its standard

  In terms of guardianship, the court will appoint someone as a guardian. You can nominate your preferred person (hopefully with their agreement) who will then be appointed unless the court considers there are reasons not to. Or you can leave it open and your remaining family/the court can sort it out at the time.

  The guardian will have access to the child’s share of the estate but at the discretion of the trustee (the executor). if the guardian and executor are different people, then there is some form of oversight of how the guardian is spending the money, but at the same time it can create tensions if the executor has different views on what the child's money should be spent on (eg holidays or private schools - easy to argue those costs are 'reasonable' or are 'unreasonable'). However if the guardian and the executor are the same person then the person can approve their own expenditure - which obviously prevents any risk of argument, but you have to trust the person to do the right thing (nb: if the money is not spent to benefit the child, the child can - after turning 18 - potentially make a claim against the executor; but if the executor has no money then that's a losing cause).

  You dont need to set up a testamentary trust; the money will be held in what is effectively a testamentary trust until the child is 18 anyway. However a testamentary trust can continue past 18 and then might offer potential tax or other benefits. The biggest potential benefit is (to be blunt) if your child turns 18 and isnt to be trusted with the money (addict or something), in which case the trustee can keep control; or even that at 18 few people are financially savvy so continuing the trust until they are 25 or something might be worthwhile

  The biggest downside is that (unless the trust automatically ends when the child is 18) it allows the trustee to maintain control over the money for as long as the trustee wants/until the trust ends; so the executor can (for example) use the money to make the child act in a certain way (eg no money unless you do engineering or get your hair cut) and can claim they are acting in the best interests of the child (obviously the child can go to court to argue all this, but again court should be avoided)

  There is no 'right' answer to this (and a testamentary trust does not change the situation, you are still reliant on the trustee and the guardian to do their jobs properly regardless). You do not know what will be needed xx years after you die by a child nor do you know how a guardian or an executor will act. Most of the time it 'works out' (to the extent it can in that situation) because most people are inherently good people and will try to do the right thing. But sometimes it doesnt.

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  Terbo on 07/07/2023 - 11:25

  +1

  Try reading info via online providers for better understanding - SafeWill, Willed, Will Wizard, etc. WW offers a TT with their estate planning pack, hence cost more than basic couples wills. Getting the right executor and potential child guardian is harder choice. You may have more children in the future too so Will should provide for that. Dont forget Super and Life insurance isnt covered by Will so need to update those separately or direct to your estate.

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    Zeph101 on 07/07/2023 - 12:16

    Just had a quick read of Will Wizard and it gives pretty clear and understandable information. Definitely a help, thank you.