Keeping your estate out of Court
Dec 22, 2016It is certainly a reality that more and more claims these days are being made by aggrieved family members for an increased inheritance once a family member has passed away.
Such claims are made pursuant to the “family provision” section of the Succession Act 2006(NSW).
If you are preparing your Will, and wish to avoid any such claims being made, then it is important that you take the following steps:
1. Give your solicitor as much information as possible about your assets and your liabilities.
Assets include everything in which you have a legal right, title and interest in – in addition to obvious assets such as bank accounts and real estate, you also have a right, title and interest in your personal property, some of which may have considerable value (such as a rare art collection).
Joint assets - If the assets are owned with another person, or owned in the name of another entity in which you have an interest (e.g. a company), then the asset may or may not be transferrable to your desired beneficiary if the gift is not correctly made in your Will.
Debt - If the asset has a debt attached to it (e.g. a mortgage on a property), then you need to consider whether or not the debt will travel with the asset (e.g. the beneficiary will take over the mortgage, subject to the approval of the financier).
Keep in mind as well that your superannuation death benefit and life insurance may fall outside the estate – it depends on whether or not you have a valid “binding death benefit nomination” in place. To be valid, the nomination must be less than 3 years old and signed by 2 adult witnesses. If the nomination is not valid, then the trustee of the fund may elect to pay the funds to your estate or pay your children or spouse (even if they are not nominated). Whilst your family members may be entitled to make a claim on such funds, trustees tend to prefer applicants who were financially dependent on the deceased person.
2. Avoid any suggestion of undue influence
If you are an elderly person, and particularly if you are gifting a significant part of your estate to a certain family member, it is important that you carry out your estate planning independently of that person, or any other family member, to avoid any suggestion that such persons exercised “undue influence” over you.
3. Get your estate planning affairs in order sooner rather than later
It is not enough to think that you only need to worry about your estate planning once you reach a ripe old age. You can only carry out estate planning if you still have the required level of mental capacity, so that you understand the nature and effect of your instructions and the documents you will be signing. Not only are elderly people at risk of losing capacity, but younger persons could lose capacity if, for example, they suffer head injuries in an accident.
4. Hold a family conference
So that there no surprises after your death, it is worthwhile, if you are so inclined, to hold a family conference to discuss your wishes with your spouse and children. Many times, claims are made by family members because they had a certain expectation as to what their inheritance would be, and do not understand the reasons why the deceased person provided otherwise.
Contact the Shire Legal team if you have any questions.
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