Modern wills for modern families

click image to enlarge

Save Print E-mail

Leaving your assets in the hands of fate may be a romantic ideal, but making a legal will is just as important as investing in superannuation or taking out life insurance in terms of sound financial planning. Plus, it protects the future of your loved ones, too.
The trust fund
With strong feelings about the importance of quality education,
Myles and Sam Cronin established a trust as part of their will to ensure their beloved children had access to the very best.
Myles Cronin admits he, and wife Sam, had a head start on most couples when it came to making their will. As a Sydney-based financial planner who had advised others on creating a secure will, Myles took just three hours to run up a will at home using a simple store-bought will kit.
Myles says that while it was important to think carefully about their estate and what they wanted to do with it after they were gone, he believes many people put off making wills because they think it is complex and time-consuming. “The reality for us was that we really didn’t even think about a will until after we had kids,” Myles explains. “A lot of things are automatically taken care of without a will, such as the house, which is in both our names and would immediately go to the other if one of us died. It’s the same with our superannuation and our investments,” he adds.
The biggest issue for the couple was their children. Sam, 42, a stay-at-home mum and keen artist, and Myles, 46, both placed a high premium on education for their three children Rhys, five, Morgan, three and Bryn, one.
Before starting kindergarten last year, Rhys was assessed as a gifted child. Although he happily attends the local public school with children his own age, Sam and Myles wanted to be certain his future educational needs would be taken care of if they were not around. “Education is definitely important in our family,” says Sam. “We wanted all the children to have opportunities in that area if we were no longer around to support them.”
Myles felt the easiest option for achieving this was to write a provision within the will for the creation of a testamentary trust. Such a trust not only helps guide how money can be spent on children, but it also has some tax benefits. “Our will states that if we both die, our estate is to be divided equally between our three children. The money will be placed in a trust and used at the discretion of the trustee,” says Myles. “We’ve noted in the will that the primary purpose of the trust is the upkeep and welfare of the children, but we have also decreed there should be a special emphasis on education,” says Myles.
Although a will cannot ordinarily direct how a person will spend their inheritance, a trust allows some level of control beyond the grave, especially in relation to children. For example, it may stipulate that the trust will not mature until children turn 25, and in the meantime the money can only be used for living expenses and for education.
Myles acknowledges that some people may have more complex situations to incorporate into their wills. “We’re fortunate in that we don’t have a complex family situation. It’s just us and our children. There’s really nobody who would possibly challenge the will, so it’s all quite simple.
”Of course, as we get older, we may redo the will and seek professional advice. The only reason we haven’t done that so far is because we haven’t gotten around to it. I think it’s probably good to get legal advice, especially if you don’t know what you’re doing, but if you keep finding you’re not getting around to doing that, then a will kit is better than nothing,” says Myles.
Expert advice
Peter Whitehead, the NSW Public Trustee, says current figures show 87 per
cent of people over the age of 50 have a will. But only 23 per cent of people aged between 18 and 34 have made a will. “Younger people see it as less of an issue, but the percentage of people who have wills is increasing across the board as people gain more assets and their family responsibilities are defined and redefined,” says Peter. “But there‘ll always be a core of people who think a will is not for them.”
Public trustees exist in all Australian states and territories to act as administrators of deceased estates. When someone dies intestate, or without a will, the trustee has automatic authority to act on their behalf. Where the beneficiaries are clear, the trustee won‘t need to step in. But in more complex matters, the trustee may have to wade in as determinations are made on who gets what. Most public trustees offer assistance with creating a will. Some charge for the service and some charge a commission on the estate when it is discharged.
“People need to see that a will need not be a complex document – it can be quite simple. It can also be quite empowering,” says Peter. “One of the advantages of making a will is not only that you make things easier when you are gone, but you have the ability to manage your estate a bit better in terms of planning the type of trusts the money may go into,” he says. ”We want to encourage people to make a will. Sometimes people don’t want their children or their beneficiaries to be the executors of the will, in which case we can act for them. For some people, being made executor is not a compliment as it can require a lot of work,” he adds.
Justine Marquet, a technical services manager at AXA, says that while many people won‘t need to consult a financial planner for advice on making a will, it’s a topic most will discuss if they do visit a planner for general financial advice. “For some people, their situation is fairly simple, but for others it’s more complex,” says Justine. “Sometimes people don’t understand the implications of not having a will. They assume assets will go straight to their current partner and that’s not always the case.
“For instance, if someone died without a will, and is separated but still legally married, their estate may go to their spouse rather than a new de-facto partner. Second marriages substantially increase the complexity of estate planning and can provide fertile grounds for inheritance claims. Wills are particularly important when people have remarried. We will also advise people on setting up trusts so their children are catered for,” Justine explains.
Mark Robinson, senior estate planner at Australian Executor Trustees, an authorised trustee company, likes to let people know that putting money aside won‘t prevent their children or grandchildren from squandering an inheritance, but says there are options open to those who want to put money away specifically for children’s education.
“Providing a well-rounded education for children is one of the significant costs associated with raising a child,” says Mark. “If the child receives the estate before they‘ve matured sufficiently or are able to make sound financial decisions, it‘s more likely the funds will be misused.”
Several options are open to people who want to leave education funds, the most common being a testamentary trust. To create such a fund, a portion of the estate is held in trust until the beneficiary achieves a certain level of education. When they achieve that level as set out within the trust, they receive the balance of the fund to use at their discretion. If they fail to satisfy the terms of the trust, the money may be directed elsewhere, to a charity or to other beneficiaries.

Words: Kate de Brito.   Photography: Scott Hawkins