Making these top five estate planning mistakes could be costly

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These top five estate-planning mistakes earn that ‘honour’ because they are not only the most common mistakes, they also have some of the most devastating consequences.

1. Delay
Putting off making a start. It is never too early to commence your planning. But it can be too late. Why? In some cases people need a long lead time to arrange their affairs so that their assets are in the best structures to ensure that on passing away, their assets go to the right people with the minimum of fuss and tax payable. In other cases it is simply to avoid the risk of losing mental capacity through accident or aging leaving it too late.

2. Not understanding what happens to assets on death
A will only controls assets that form part of your deceased estate. There are many assets that may by-pass your estate and won’t be controlled by your will. These might include: superannuation death benefits, life insurance proceeds, jointly owned assets, funds in joint accounts and assets held in trusts. Many people prepare a will without considering these issues and their assets don’t end up where they wish. Again, the best time to consider these assets is when you create them, not after they have been in place for decades as it can be difficult and costly to make changes to ensure assets end up in the hands of the right beneficiaries.

3. Don’t surprise people 
Communication, communication, communication. Many disputes arise because the person preparing their will doesn’t communicate with the family the will affects. There may be a good reason why you nominate one child over others as your executor, or why you leave a larger gift to one person than another, or your favourite artwork to a particular individual and the list goes on endlessly. Talk to those involved and explain yourself. In most cases those involved will accept your reasoning and matter will rest there. 

If you don’t explain yourself then those left behind are left to guest why you did what you did, and most imagine the worst. If you think your will may cause conflict deal with it yourself while alive, don’t lob the problem amongst your family like a grenade from your grave. If you are not prepared to deal with the consequences of your actions yourself then you have to ask whether you are doing the right thing. And remember, even little things can be blown out of all proportion, like for example “How come mum appointed you her executor and not me too? She didn’t trust me!’’ Hurt can be unintended but felt deeply non-the-less.

4. Not telling your executor or relevant family where your original will can be located 
People change solicitors and homes over time. Wills get lost. A missing will at best will cause delay and extra cost (assuming it is eventually found) and at worst (if never found), delay, unnecessary cost, and you having no control over who receives your estate. It could end up in the hands of someone you did not wish to receive anything.

5. Not preparing a new will as soon as you separate from your spouse 
It takes at least 12 months to get a divorce and if you die before you are divorced with no will, or your old will still in place, then you will make your ex very happy indeed. 

Estate planning is just that – planning. Take time to think about issues.  

If you learned a lot from reading Rod’s article, then you should hear him speak! Come along and meet Rod, as well as other YourLifeChoices’ experts, in person at our Sydney Retirement Bootcamp on 15 July and you could have your own questions answered on retirement, estate planning and much more.

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Total Comments: 5
  1. 0

    If you hold property in NSW, don’t bother! All it takes is one greedy, malicious relative to overturn your will and the lawyers will take most of what you leave. A claimant under Family Provisions can literally hold a gun to the executor’s head – sanctioned by the courts – and the legitimate beneficiaries have no defence.

    But be alert. If a claim is loss than $250K, a contest can be heard in District Court and you might have a fighting chance. Lawyers will lie and bully to get it into Supreme Court so their fees are huge and barristers are involved. They will say the Supreme Court judges are better experienced to resolve claims. BS!!! Settlement conferences are a total farce. Often the parties don’t even get to talk to each other. Barristers just make ”sweetheart deals” that work for the lawyers. Evidence often can’t even be presented due to the cost of hearings and virtually NOTHING will be considered except respective means and claimed needs. If the legitimate beneficiaries aren’t poor and sick, they lose. Regardless of how carefully you explained your wishes, and what evidence you left to explain your reasons, your wishes will be ignored.

  2. 0

    Great article Rod. Just an addition, everyone should consider having Testamentary Trust in their Wills for:
    1. Bloodline protection; and
    2. Creditor risk of future generation.

    A lot of times you expect your estate will eventually be passed on to your grandchildren, but will young people’s divorce statistics nowadays (50% divorce rate for 1st marriage, 66% for 2nd, and 75% for 3rd. Geez you thought you’d learn as you had more marriage wouldn’t you), the chance is real that your a portion of your estate may end up in the hands of those children in-laws that you don’t like from the beginning (yes, your children never took your advice!).

    Another thing, with no job security, younger generation will be more likely to start their own business. And if the banks on their back because the business was failing , then the banks may have the first dip of your estate.

    Let me know if anyone is interested with Testamentary Trust. We are affiliated with an estate planning lawyer who can do it at a competitive price.



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