Review for Accountants & Financial Planners
August, 2015

The in-laws and estate planning

Two minute scenarios...

Clients are sometimes concerned about how a relationship break-up in their family could impact on an inheritance.

Scenario One... David & Robyn's son

Scenario: David and Robyn died leaving three sons. They left them $500K each via Standard Wills. Their eldest son, Sean, is now going through a divorce.

What's the issue? An inheritance is not always safe from divorce. However, if there are enough other relationship assets to be able to provide for his ex-wife, then the Court may leave the inheritance with Sean. However not all couples keep their finances separate and an inheritance could end up being used to fund joint expenses or assets. It then becomes difficult to isolate what is left of the inheritance in order to direct it to the original beneficiary.

Solutions: David and Robyn should have Wills with testamentary trusts in them so that their sons can keep their inheritances isolated in a trust that is easier to keep separate from other relationship assets .

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Scenario Two... David & Robyn's family trust

Scenario: David and Robyn owned a business via their family trust. The trust nominated the appointor's executor as the new appointor. The executor was Sean. Sean had a heart attack and passed away last week. His brothers are wondering what will happen now? They are still working in the business.

What's the issue? Sean's estranged wife was his executor and he had not changed his Will to reflect his new circumstances. His estranged wife now gets control of the trust and the family business.

Solutions: Sean should have reviewed his estate plan and updated his Will.

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Scenario Three... David & Robyn

Scenario: David and Robyn come to have their Wills prepared.

What's the issue? They want to appoint their eldest son as executor but are worried about his current marital scenario.

Solutions: The family trust deed can easily be amended so that the deed allows for the appointor to be replaced via a direct nomination in the Will. This means they could then appoint all three sons as co-appointors.

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More information for clients

Please feel free to forward this insight on Wills and Testamentary Trusts to your clients. Or if they would like to discuss how we can help them please call 03 8621 9000 or email with their details and we will contact them, obligation free.

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