Many people underestimate the importance of estate planning and the value in having a qualified professional assist them with their estate planning. We encourage that all individuals, including those with simple family structures and modest assets, should consider and plan for serious events such as incapacity or death.
Estate planning considers who you will appoint to be responsible for your legal, financial and health affairs if you are incapacitated, how your situation will be dealt with whilst you are alive (but incapacitated) and how your property will be distributed after you pass. Estate planning can protect your assets from third parties, minimise the potential for estate disputes and maximise the net proceeds available to your beneficiaries.
Making a Will
A Will is one of the most important estate planning documents you can prepare, as it provides for how your assets will be distributed after your passing. A carefully drafted Will should consider:
- the taxation implications of the distribution of assets to your beneficiaries, including Capital Gains Tax;
- the impact your Will can have on discretionary family trusts, companies and other entities;
- the unique requirements for leaving an inheritance to a bankrupt, mentally incapable, or otherwise vulnerable beneficiary;
- strategies to minimise potential claims made pursuant to the Family Provisions Act 1972 (SA); and
- how best to protect the estate assets from being received by an individual who the deceased expressly wishes to exclude from their Will.
Enduring Power of Attorney
An enduring power of attorney is a legal document which allows another person to exercise control over the financial affairs of an individual including one who has lost legal or mental capacity to make decisions.
An enduring power of attorney can provide assistance where an individual is severely injured, loses mental capacity or is otherwise unable to function, and requires decisions to be made on their behalf and assistance such as accessing funds or liquidating assets.
Without an enduring power of attorney, orders must be sought from the South Australian Civil & Administrative Tribunal (SACAT) to allow another individual to manage your financial affairs, which is a difficult and expensive process, particularly where your needs are urgent.
Importantly, SACAT may appoint the Public Trustee to manage your affairs, which is an outcome most individuals wish to avoid.
Advance Care Directive
An advance care directive allows an individual to express specific wishes about their health and medical treatment and appoints a trusted person to make healthcare decisions when the appointor is incapacitated. This may include:
- outcomes of care that you wish to avoid;
- where you wish to live;
- any dying wishes that you may have; and
- any other personal arrangements that you wish to be made for when you no longer have capacity to do so yourself.
Probate and Estate Administration
Probate is the formal process of approval by the Supreme Court of the last Will and testament of a deceased person. An application for probate is made by the executor of a Will who provides the relevant information to the Registrar of Probates. An executor is the person appointed under a Will to deal with a deceased person’s affairs after they pass.
A grant of probate authorises the executor to manage a deceased estate. In addition to the practical matters required immediately after a person dies, executors must:
- identify, secure and protect estate assets; and
- pay estate debts and distribute the proceeds of the estate in accordance with the terms of the Will.
A grant of probate must be obtained prior to dealing with specific estate assets including but not limited to real estate, aged care refundable accommodation deposits, bank accounts and shareholdings.
During the administration process, executors may deal with accountants, financial institutions, real estate agents and brokers, often relying upon the guidance of an experienced wills and estates lawyer.
What happens when somebody dies without a Will?
Passing away without a Will is referred to as dying ‘intestate’. The rules of intestacy provide for a specific order of distribution to the deceased person’s next of kin, which has been formulated to reflect society’s expectations as to who should generally benefit from the estate. These rules, however, may not consider the real wishes of the deceased, nor the practical considerations of their specific circumstances. Distribution of estate assets in accordance with the Australian rules of intestacy may result in consequences such as:
- family members or friends being excluded from receiving an inheritance;
- a disproportionate distribution of assets between family members or leaving out more needy beneficiaries; or
- a distribution to a family member with whom the deceased shared no significant or meaningful relationship.
Letters of Administration
An application for letters of administration can be made by a person entitled to be the administrator when an individual passes intestate, or where the executors named in a valid Will are no longer alive or are unable to fulfil the role. Individuals with standing to apply for letters of administration are ordinarily relatives of the deceased. If someone close to you has passed without a Will, we firmly advise that you contact our wills and estates team for specific advice before taking any action, so that there are no unintended consequences such as “intermeddling”.
A grant of letters of administration will appoint the successful applicant as administrator of the estate, allowing them to deal with the estate assets and liabilities in the same manner as an executor.
A family provision claim may be made by an eligible person seeking a share or greater share from an estate. An applicant must prove that the deceased failed to make adequate provision for their proper maintenance, education, or advancement in life.
Eligible persons typically include a spouse, former spouse, de facto partner, a child or grandchild of the deceased, or in some circumstances individuals who were financially dependent on the deceased. Strict timeframes apply for making such claims.
Our wills and estates team provide advice, assistance, and strategy on various estate challenges, whether you are an executor defending a claim, or a potential beneficiary that has been inadequately provided for in a Will. In many instances the legal costs of an application may be paid from the estate.
Family provision claims and estate disputes can be both complex and contentious. Our wills and estates team take a client-focussed approach to estate disputes and have experience in resolving such disputes even before formal legal action is commenced. If you consider that an estate dispute has occurred, or is likely to occur soon, we firmly advise that you obtain legal advice as a matter of priority to protect your rights and interests.