Two minute scenarios...
Following on from last month's Brief here are some more common pitfalls we see when people forget to update their Wills.
Scenario One... Tim and his stepchildren
Scenario: When Tim married Laura about 15 years ago, he had an adult daughter and Laura had two young sons. Tim shared the responsibility for them, with his income helping to support the family. Laura died a year ago.
What's the issue? Tim hasn't had his Will updated and now that Laura has died everything will go to his daughter. He has been advised Laura's children may challenge his estate.
Solution: Even though they are step children, Tim may still need to provide for them in his Will. Issues including whether Laura left them anything in her Will and if so, how much, to what degree they can support themselves, and the extent of Tim's daughter's needs will need to be considered.
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Scenario Two... Paul and Susie separated
Scenario: Paul and Susie separated 18m ago with the settlement going through recently. They had Wills done about 5 years ago leaving everything to each other. Susie has just amended her Will as she didn't want Paul to get any of her estate assets.
What's the issue? Paul has not amended his Will. If he dies before he gets a chance to do so his estate will still go to Susie as they are not yet divorced. If they were, then the estate would go to his next of kin, in this case, his siblings, but not via a testamentary trust as he would have been considered to have died intestate.
Solution: It's always a good idea to review your Wills when your relationship status changes.
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Scenario Three... Mike & Ruth's gift
Scenario: Mike and Ruth recently gave their son $300K to put towards a house deposit. It was not a loan as the bank would not lend their son any more funds if he had borrowings. Mike and Ruth will gift the same to their other child when she is ready to buy a property.
What's the issue? Mike and Ruth have not mentioned the gift in their Wills. So if they were to die, their estate would be distributed equally and their son would have benefited from the extra $300K.
Solution: They could update their Wills noting the son's gift in case they pass away before their daughter receives the same gift. That way the estate can be adjusted accordingly so they get a true equal share.
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