• Blyth Staley

ESTATE PLANNING - THE TALE OF TWO BROTHERS

Estate planning is about more than just writing a Will. Asset ownership during your lifetime and after your death is dependent upon the type of asset, whose name the asset is in prior to death, and the governing documents for each asset. To explain the potential consequences, consider the following:


Jim and Tim are brothers. They have both been married twice and have children from these marriages. They have prepared Wills leaving their assets to the current wives and all of their children.

Both men have exactly the same amount of assets when they die.

However, the outcomes from their estate plans are completely different:

Jim

  • The home and bank account are in joint names with his wife which will automatically pass to her. The trustees of his super fund will pay his death benefit to his wife and their children. The insurance company will pay the sum insured to his wife.

  • The term deposit is in his name and will be paid into his estate. His Will instructs the executor to make the bequests to the children from his first marriage with any balance payable to his wife and her children. Probate is simple because a small amount is involved.

Tim

  • The home, investment property and bank account are in his name and will be paid into his estate along with the sum insured from the life policy.

  • The trustees of his superannuation fund identify all of his dependants and ask them to ‘stake a claim’ if they believe they are entitled to any part of his superannuation death benefit. His wife and all of his children respond and the trustees are left with the difficult task of dividing a relatively small amount between competing claimants. Some members of the family are dissatisfied with the trustee’s decision and complain to the Superannuation Complaints Tribunal. It takes nine months for a decision to be made.

  • The executor of Tim’s Will seeks probate from the courts to confirm that the Will is valid and to give permission for it to be administered. With a substantial amount in the estate, the children from his previous marriage are dissatisfied with their bequests and make a claim under state laws requiring a deceased to make adequate provision for their families. The court costs eat into the estate value; further bad feelings are created amongst the family and a decision is delayed for another 12 months.

Although both brothers were conscientious in building their wealth throughout their lifetimes, Tim’s inadequate estate planning failed to provide for his wife and children in the way he would have liked. This also created a stressful period for his family during which they were unable to access any funds or assets from Tim’s estate.

For assistance in creating an effective estate plan through the use of different structures, such as companies, trusts, superannuation and life policies, talk to us. Together with your estate planning lawyer we will guide you in the right direction.

 12/37-39 Albert Road Melbourne VIC 3004
 13000 ACTON
(03) 8692 6959
contactus@actonwealth.com.au 
ActOn Wealth is a privately owned boutique financial planning firm. Our number one focus is our clients.
We strive to provide an exceptional service to help you achieve financial security and prosperity.
  • Facebook - White Circle
  • Instagram - White Circle
  • LinkedIn - White Circle
2019 TSF Community Fundraising Logo-300.
© Copyright ActOn Wealth 2019. | All Rights Reserved. ABN: 56 619 492 974 Corporate Authorised Representative of National Planning Partners Pty Ltd ABN 25 620 741 326 (Representative No. 1270401) Australian Financial Services License 503734.  Squared Home Loans Pty Ltd ACN 162 675 050, Credit Representative 436415 is authorised under Australian Credit Licence 384704.
GET A CALL BACK