Wills & Estates
Preparing your Will and planning how to leave your estate is a major life decision that requires careful thought. It is an essential legal task for all Australian adults, yet many of us are reluctant to take the first steps. Fortunately, armed with the helpful advice of your lawyer, this process need not be as daunting as you might think. We can help you structure your affairs to ensure your testamentary wishes are clearly expressed and your family, chosen friends or relatives are protected. We will also discuss options to ensure your affairs can be managed by somebody you trust if you are incapacitated or need help with things as you advance in age. If you are an executor or have lost a loved one, we can also guide you through the finalisation and administration of their estate.
Preparing a Will
An effective estate plan starts with making a valid Will that sets out your wishes and provides certainty for your family (or others as applicable) after you pass away. Your Will should appoint one or more executors who will be responsible for administering your estate, and direct how your assets will be left or divided between your beneficiaries. You may also appoint guardians for minor children and provide directions for funeral arrangements.
When making a Will, if you are widowed or divorced, you should consider how you wish to provide for any children from a previous relationship or how your current partner may wish to provide for their children. There are special matters to be considered in the case of blended families which require specialist advice on the Law to help you make the decision best suited to your situation. If there are certain individuals you wish to exclude as beneficiaries, your decision might lead to a dispute over your estate and a lawyer can provide you the necessary guidance in this area.
The benefits of using a lawyer to prepare your Will
To ensure your Will is valid, certain formalities must be met. If your Will is not correctly signed or witnessed, there is a risk that it may be invalid or contested after you pass away. Similarly, if the provisions of your Will are ambiguous, they can lead to uncertainty and disputes. Your lawyer can help you identify potential pitfalls to ensure your Will is valid and properly reflects your intentions. Your Lawyer can also take steps, if necessary, to minimise the potential for disputes arising after you pass on.
Estate planning lawyers can also help you to structure your estate to achieve its full potential. They will consider your personal and financial circumstances and the potential effect that taxation will have on your beneficiaries’ inheritance.
Dying without a Will
If you die without a Will you die “intestate”. The law sets out how your assets are distributed. This is done using a statutory formula which might be in line with your wishes, with assets passing to your partner and/or children or other next of kin. However, this formula does not take your personal circumstances into account. As everyone’s situation is different, the one-size-fits-all rules of intestacy will not suit everyone. In addition, administering an intestate estate takes additional time, energy, and resources from the family of the deceased, often when they can least afford them. Accordingly it is essential to make and review your Will in your lifetime so it is up to date.
Choosing your executor
Executors have many responsibilities. These typically include arranging your funeral, identifying and protecting your assets, collecting debts owed, claiming under insurance policies, obtaining probate, paying accounts, liaising with your solicitor, and distributing your assets according to your Will.
If the Will is disputed, your executor will be responsible for dealing with the dispute including giving instructions to legal representatives in the event of Court litigation being commenced by the disputing party.
It is common to appoint one or more trusted family members or friends as your executor/s, however this is not always the case or may not be suitable in your circumstances. You should consider whether your proposed executor is:
- willing to accept the role of executor
- capable of managing your estate in terms of their own health and capacity
- suitable to manage your estate in terms of having sufficient time, experience and the confidence to deal with your affairs in the manner you would like
- able to act impartially, which is particularly important if you foresee potential disputes over your estate
- likely to outlive you
You can consider appointing a second alternate executor as a backup in case your first choice is unable to act in the role. Alternatively, appointing joint executors to fulfil the role may be a more suitable option.
Business succession planning
If you are involved in a business, thinking about who will take over when you move on, whether by choice or circumstance, might form an important part of your estate planning. The objective of business succession planning is to minimise disruption to a business if the direction and ownership of the business changes.
Business succession planning can be achieved through a buy/sell option agreement or shareholder agreement. A buy/sell option agreement enables business co-owners to sell or buy a respective share of the business if there is a specified option event (for example the death, serious illness, permanent impairment, or retirement of a co-owner). This document provides clarity on issues that impact business succession, such as how shares are valued and transferred, eligible purchasers, and the inheritance rights of family members.
Similarly, a shareholder agreement sets out the rights and responsibilities of each shareholder in a registered company in the event of a dispute or proposed sale of an interest in the business. For non-incorporated businesses, a partnership agreement can contain similar provisions to determine such matters.
Many people establish their own business in the hope that a family member will eventually take over the reins when they are ready to retire. When it comes to choosing a potential successor, it is still important that you objectively assess the commitment and capability of these individuals.
It is also important to consider the financial implications of succession planning, including retirement income and business transfer expenses. Careful organisation can minimise capital gains tax, stamp duty and income tax for the business owner, their family and business partners.
If you need assistance, contact John Comino at [email protected], or George Caramanlis at [email protected] or call us on 02 9386 5888 for expert legal advice.