Review for Accountants & Financial Planners
December, 2015

Juggling responsibilities in your Will - part 2

Two minute scenarios...

Preparing a Will that meets the client's needs requires planning. In particular, the client's personal wishes, legal responsibilities, and financial resources can be at odds and need addressing.

Scenario One... Kevin & Lynne

Scenario: Remember these clients? Kevin and Lynne married about 5 years ago, and both have children from previous relationships. They have changed their house title to tenants in common.

What's the issue? They are each ultimately leaving their share in the house to their children but are giving each other a Right to Occupy until the second partner passes away. Lynne is financially dependent on Kevin and as such he is also under an obligation to provide for her 'proper maintenance and support' in his Will.

Solutions: Kevin can also set up a Life Interest Trust to provide for Lynne's income until her death. Lynne will receive interest for her lifetime and the capital will revert to Kevin's children on her death.

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Scenario Two... Good idea but...

Scenario: Kevin is worried that if he needs to provide for Lynne that he won't have enough left to give his children an inheritance.

What's the issue? Whilst the children will eventually get the capital left after the house is sold, as well as the capital in the Life Interest Trust, that may be a long way off.

Solutions: Kevin could have a binding death nomination put in place so that his superannuation goes to his children. This might work in some states, however superannuation is not exempt from a challenge in all states and Lynne could apply to have that overturned.

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Scenario Three... so now what?

Scenario: Kevin has a dilemma. He is juggling his responsibilities between his new wife and his children from a previous relationship. Like most parents he wants to leave his children an adequate inheritance.

What's the issue? Whilst Kevin and his wife could have Wills prepared leaving everything equally to all their children, that relies on the surviving not changing their Will. Kevin understands things can change and he prefers to play it safe.

Solutions: Kevin's accountant suggests he sees an adviser to have some Life and TPD insurance put in place. Paying the cost of a premium to create an estate asset for his children seems like an ideal solution.

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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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