For many parents involved in separation and divorce, organising a plan for your estate that is consistent with your wishes, dreams and desires is often overlooked.
You might think, “it’s not important right now” or “I’ll do it later”, but this may be a crucial part of your separation journey and an incremental step towards setting up the new chapter of your life for happiness, prosperity and clarity.
Here are 5 reasons why if you are separating, you need a Wills & Estates package.
(1) If you have not updated your will, there can be serious implications regarding who receives your estate if something were to happen to you.
Not updating your will post-separation or post-divorce can have a significant impact on who might be entitled to your inheritance. It’s even worse if you do not have a will.
I have previously written a Support Space article about this where I go through the separation journey and discuss not having a will, updating a will and the intestacy laws. To read this article, click here.
(2) You always need to have an emergency plan, it’s your children and your property!
We often say that separation can involve two of the most important things in people’s lives – finances and family.
You have worked hard to build the family and wealth that you have created. Like anything important in life, you should always have a backup plan especially for something that is the most important thing to you, right?
Depending on what your wishes are, this plan can be tailor-made to your circumstances. You may wish to reap the benefits of a Testamentary Trust for taxation purposes or asset protection from creditors. You may wish to have documents regarding the medical treatment you receive if you were to be incapacitated or appoint someone to manage your finances if that was to occur.
The most important thing to take away about all this is have a backup plan!
(3) Recent global events mean that life can change in the blink of an eye.
Further to the above reason, reflecting on the past two years it is clear that life is so short and it can change in the blink of an eye. I’ve seen videos of people in Shanghai, China in a further lockdown. People are travelling and may get stuck overseas. The war in Ukraine may progress further involving the entire world. The Australian Federal Budget may have an impact on your finances.
In short, there is a plethora of issues which do not really make things more “urgent” as regardless of these recent events, tomorrow is not guaranteed, but it has really illuminated the importance of putting the foundations in your life to keep your family safe and secure.
When going through separation, there can be many onflow effects that have an impact on different areas of your life that you might not be aware of. It’s important to do all things necessary to lay the building blocks for the next chapter of your life as a separated individual that does not solely address the separation itself.
(4) Make the most of the benefits that your family can achieve.
There can be several benefits that you might not be making the most of if you have not set up an estate plan that encourages you receiving these. Setting up a Testamentary Trust within your will has significant tax benefits.
A testamentary trust has the significant advantage of enabling the trustee to stream or split income amongst the trust’s discretionary beneficiaries in a way that minimises overall tax paid on the trust’s income. The trustee may decide which beneficiaries receive trust income. The beneficiaries that receive the trust income then include this income in their own assessable income which is taxed at that individual’s marginal tax rates.
Income received by your children through testamentary trusts is taxed at normal adult rates rather than the higher tax rates that generally apply to minors. This means that with the current tax-free threshold of about $18,000 beneficiaries of the trust such as your children are able to receive up to this amount tax free from the trust each year.
(5) There is something worse than death… it’s incapacitation.
At any point in time you may lose the capacity to make decisions regarding your life moving forward. If you were to lose capacity, consider how you would want your financial and personal affairs to be managed.
An Enduring Power of Attorney (EPA) is a document in which you appoint one or more trusted persons to control your financial affairs in the event of losing your mental capacity to conduct those financial affairs. An Enduring Guardianship may also be desirable to ensure the right person(s) are empowered to make decisions about your welfare and medical treatment when you are no longer able to make those decisions. Another useful document is an Advanced Health Directive which can be made if there are concerns about the form of medical treatment you might receive after you become incapable.
All in all, there are so many reasons why you need to be laying the foundations in to express your wishes through a Wills & Estates Package.
To learn more about the packages we offer, click here and be sure to contact us if you would like to learn more about how we can assist you in fulfilling your legacy.
Contact us to meet with our team of Collaborative Family Lawyers today.
Written by Collaborative Family Lawyer, Stefano Cammarano.
Want to learn more about Stefano? Click here.
