Thank you to Nelson Wockner for allowing me to share this article.  Added to the complexities of the emotional, legal and financial issues associated with the end of a relationship the following article covers some very important information that may be overlooked by some people.

When a personal relationship breaks down, your life changes.  A relationship breakdown means that you have to redesign your future plans.  Whilst an unwanted experience, it is the perfect time to make the changes to protect your future.

Estate planning is far more than a Will and may also include:

• reviewing your jointly owned properties
• reviewing your superannuation funds and death benefit nominations
• reviewing your life and risk insurance policies
• reviewing your circumstances to decide whether your Will should include Testamentary Trusts
• reviewing your parents’ Wills & discussing whether a testamentary trust is needed to protect your inheritance
• reviewing any powers of attorney & your arrangements where you are unable to manage your own affairs
• understanding the reasons for asset protection & benefits of owning property in family discretionary trusts

1.  Jointly Owned Property

Where you own a property with your former spouse or partner, you must verify whether the ownership is recorded  as ‘joint tenants’ or ‘tenants in common’.

Where owned as ‘Joint Tenants’, you must change the ownership to ‘Tenants in Common’.  A lawyer can do this for you – it’s a quick and inexpensive process – and no transfer duty is payable.

This process should be actioned immediately to ensure that your interests are protected from the moment of separation until the implementation of the final property settlement, which would most likely involve the property being transferred solely to one person – or the property being sold.

When someone dies owning a property as ‘joint tenants’, the surviving co-owner receives the deceased person’s share of the property.  The deceased’s interest in the property doesn’t form part of their estate and their Will does not apply to that property.

2.  Superannuation Binding Death Benefit Nominations

Review your superannuation arrangements with your Financial Advisor and/or the trustee of your superannuation fund.

Where you had nominated your former partner to benefit from your Binding Death Benefit Nomination, notify the Trustee of your superannuation fund as to whom the death benefit will be paid following your death.

If you don’t maintain a current authority, the Trustee will make the decision – which may not be what you want.

3.  Life & Risk Insurance Policies

Whilst an Enduring Power of Attorney and a Will are essential, your Attorney and your Executor will need sufficient cash to provide the support and care needed by you and your children and any other people who may depend upon you for financial support – potentially for many years.

Unless you have substantial reserves of cash and assets, you may need various risk insurance policies to provide a source of finance.

4.  Companies & Trusts

You will need to engage your lawyer to review the shareholding and officeholders of private companies that you have an interest in.  You will have to do the same process regarding family discretionary trusts that you have an interest in.  These reviews will be undertaken by your family lawyer, and the necessary action taken as part of any property settlement.

Your accountant and financial planner will also need to participate in this process – or at the very least be informed as to what changes have been made to your financial planning arrangements.

5.  Your Will & Testamentary Trusts 

When you separate from your spouse or partner, you must review your Will.

A simple Will may be sufficient to provide the immediate assurance you need.  Later, you can implement a more sophisticated estate plan to better protect your family.

As your Will does not deal with all of your assets and financial affairs, the first thing to do is to identify what assets are owned by you and will be distributed by your Will.

You also need to review who should be the guardian of any of your children where your former spouse is unable or predeceases you.

6.  Parents Wills containing a Testamentary Trust

You may substantially improve your future financial security by ensuring that your parents create Wills containing a testamentary trust.

The benefit to you is that your parents’ assets can be protected from most claims made by any current or future spouse, or anyone else who seeks to take money from you.

Regardless of your matrimonial circumstances, where your parents are alive and mentally alert, it is crucial that you discuss with them the benefits, and you can take a pro-active role in ensuring that advice from an estate planning lawyer is obtained.

7.  Power of Attorney

Where you have an Enduring Power of Attorney nominating your former partner as your Attorney, you will need to revoke that document.  It is recommended that you obtain all signed original copies of the document.

You may wish to appoint a highly trusted and responsible person as your Attorney, as you may appreciate the comfort and security of knowing that if some unexpected event were to happen, you had made prior arrangements to ensure that you and your family were well looked after.

Where you lose the ability to make decisions for yourself, a trusted friend or family member is unable to make those decisions unless you have previously authorised them – using an Enduring Power of Attorney.

There are many issues to consider in appointing an Attorney, and you can appoint more than one Attorney for different tasks.

Appointing 2 separate trusted persons to act jointly may provide some additional protection.

As with an Enduring Power of Attorney, where you had previously signed a General Power of Attorney in favour of your former partner, you will need to revoke that document in writing.  Again, it is also recommended that you obtain all signed original copies of the document.

8.  Asset Protection – owning assets in your name

One of the more essential strategies used by professional people and business owners is that they do not own assets in their own name. 

Why?  Because if someone sues them personally & obtains a judgement against them, only assets owned by them can be taken from them – exceptions apply.

When someone contacts a lawyer about suing someone, if there are good prospects of success, the lawyer investigates what assets are owned by the “Defendant”.  If a lawyer spends time and money suing someone, they want to know that there are assets available.

A strategy successfully used by many Australians is to create a Family Discretionary Trust to hold assets, often using a company to act as the Trustee of the Trust.  The effect is that whilst you control the company and the Trust; it is the Trustee that owns the assets – rather than you.

There are other issues to be considered, and your lawyer and accountant will advise on the various issues that apply to your circumstances.

 

 

Disclaimer: The above is to be considered as general education. This is not advice and it is not to be acted upon without advice from a qualified professional who understands your personal circumstances.     Copyright © 2017 Wockner Lawyers. All Rights Reserved.