Older Australians urged to take extra care with their bequests

Senior couple planning their investments with financial advisor in living room

You’ve probably seen the criticism that too many older Australians are leaving the bulk of their super as an inheritance and not spending it to improve their lifestyle. That was a finding in the federal government’s Retirement Income Review.

Challenger’s chairman of retirement income, Jeremy Cooper, told YourLifeChoices last week that increased spending by older Aussies would be “a win-win for retirees and the economy”.

But while sizeable inheritances are on the rise, they’re not always plain sailing for the beneficiaries.

While there was a massive 30.6 per cent drop in marriages in Australia in 2020, according to the Australian Bureau of Statistics, there were also 49,510 divorces, an increase of 1.9 per cent compared with 2019.

And along with divorces comes an increasing incidence of conflict due to ‘blended’ families and bumper super stashes.

Read: Review slams big jump in super bequests

Inheritance disputes are at record highs, especially in the self-managed super fund sector.

The Australian Financial Review reports that family disputes about wills and estates have soared partly because of the rise in blended families. That trend is expected to continue as the $730 billion-plus sitting in around 593,000 self-managed funds grows.

Courts are reportedly taking a tougher approach, tightening the discretion given to trustees who distribute assets after the death of a member, which creates new issues for will-makers, trustees and beneficiaries.

“Disputes about SMSF assets and wills have gone from being marginal to mainstream,” Anna Hacker, national manager of estate planning at Australian Unity, told the AFR. “Clients might have once trusted their families to do the right thing. Now we have to really make sure a testator’s wishes are as clear as possible.”

Marie Brownell, national manager of estate planning for Equity Trustees, says another part of the problem is an increase in DIY or off-the-shelf trusts being recommended by accountants to minimise tax.

Read: Is an inheritance tax back on the agenda?

“The accountant uses a trust which is often not understood properly,” Ms Brownell says. “Australians are a nation of DIY fanatics, but trusts are complex legal structures and not something anyone should create without specialist legal advice.”

Specialists recommend that SMSF members regularly review their wills to ensure their wishes are unambiguous and enforceable. They also suggest that, whenever possible, beneficiaries are told about the contents of the will.

They also say that a trustee’s role in distributing an estate can be complicated and warn that legal fees in disputes can consume much of the proceeds of an estate.

Read: How property ownership can affect your will

Suzie Willis, Equity Trustees senior estates and trusts solicitor, says: “We see a lot of people wanting to drag out a dispute over a will. Sibling versus sibling is a very common scenario. Cracks in family relationships tend to go back decades.”

Estate planning lawyer Melisa Sloan says blended families are increasingly prevalent and add an element of complexity to bequeaths.

“However, with the right tools in place you can most definitely put in place an estate plan that is reflective of your wishes,” she says.

Anne-Marie Tassoni, a partner with Cameron Harrison, says testators should talk with family members and other beneficiaries so the intentions are laid out and, if possible, agreed upon.

She says: “A simple letter, written by the member explaining their reasons, can paint a pretty good picture for the trustees as to the member’s intent.”

Are you sure your will is watertight? Have you discussed it with your beneficiaries? Why not share your views in the comments section below?

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Written by Janelle Ward

Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.

Leave a Reply

GIPHY App Key not set. Please check settings

older couple with dog walking down country lane in rural new zealand

NZ care model streets ahead and coming to Australia

scott morrison with a smarmy look on his face while politicians in the background hold up enough is enough signs in parliament

Parliament has a ‘boys club’ culture of ‘bullying, sexual harassment and sexual assault’