This may be because they are concerned that something may happen to them whilst on holiday.
Spending more time with family members, who they may see infrequently but do so in a confined environment over Christmas, can also lead to family disputes.
These may ultimately turn into legal disputes should an individual die or lose the ability to make decisions themselves.
However, we understand that contemplating your own mortality and making time to plan can be difficult, so is often left to the back of the pile of things to do.
Preparing or updating your Will and personal estate plan does not need to be difficult but doing so will ensure your estate and other entities (such as family trusts and superannuation which do not automatically form part of your estate), are managed smoothly and in accordance with your instructions.
It is also crucial that the plan you have is appropriate for your unique circumstances and meets your needs, as failing to prepare or getting it wrong can result in adverse consequences such as:
• Disputes between family members.
• Your family missing out on asset protection and tax benefits.
• Delays and extra cost associated with administering your estate.
• Additional taxes, or….
• Your wealth passing to people you did not intend to.
In a series of articles over the coming months, we provide general guidance tips on updating your estate and succession plan and points you need to consider. This will include:
1. The role of executor and the importance of choosing the right person.
2. Key considerations when preparing or updating your estate plan.
3. How to deal with succession to family trusts, businesses and self-managed superannuation funds.
So, let's first look at executors and more specifically what's an executor and what do they do?
An executor is responsible for managing the administration of the estate, including ensuring the assets are distributed in accordance with the Will. The role of the executor includes:
• Identifying and protecting the deceased’s assets. This could include running any business owned by the deceased to maintain its value or selling it.
• Paying all debts of the deceased from the assets of the deceased (including funeral and other expenses).
• Distributing the remainder of the deceased’s estate in accordance with the Will.
In most cases, the executor will apply for a grant of probate (formal recognition by the Supreme Court of their status as executor under the last Will of the deceased). This allows the executor to deal with the deceased’s assets.
Who should you appoint as your executor?
It is important that the person you nominate as your executor can take on the responsibilities and is trustworthy.
It is also important that the person is asked if they are happy to take on the role, as they can refuse to act as executor after death.
Executors can seek professional advice from accountants or lawyers or business advisors in relation to the role. It is common for a person to nominate their spouse and/or some or all of their children.
In certain circumstances people will appoint an advisor (lawyer or accountant or business advisor), other family members, or a trusted friend to be executor, or co-executor with their immediate family members.
This may be appropriate where children are not considered old, or mature, enough to take on the responsibilities of an executor, or there are circumstances within the family (such as family disputes or a business which needs to be sold or run without losing value due to the deceased being a key person in the business), that would make it difficult for immediate family members to take on the task without the assistance of an ‘independent’ person.
In some cases, a trustee company is appointed. This may be appropriate in complex estates or where it is not appropriate for family or friends to take on the role, for example due to long running family disputes.
Where a professional (lawyer or accountant) is appointed as an executor, it is usual to include a provision allowing them to charge professional fees for work undertaken by them in relation to their role as executor.
An executor may also apply to the Supreme Court to charge a commission for acting in this role. This should be considered when determining who to appoint as executor.
So, what's next?
In our next article, we will consider:
• How a Will works including the distribution of one’s estate.
• Tax effective and asset protective testamentary trusts.
• Guardians for minor children and dealing with a family disaster ‘plane crash’ scenario
• Letters of wishes.
• Succession to discretionary or family trusts.
• Enduring powers of attorney for financial decisions and
• Appointments of enduring guardians for medical and lifestyle decisions.
James Whiley is a special counsel in the Private Clients team at Hall & Wilcox. Visit www.hallandwilcox.com.au
