Many people think that if they have a will, their estate planning is under control.  Below are the top 5 reasons why you need to consider more than this.

1. You have Superannuation

As a general rule, our superannuation does not form part of your will, so anyone with super needs to nominate who will receive their death benefits when they die.  This can be done by a binding or non-binding nomination.

The important thing with a binding nomination is that you can only pick dependents as defined in the Superannuation Industry Supervision (SIS) Act.  Under this law “a dependant” is:

• Your spouse (including a de facto spouse);
• Your children (including an adult child, an adopted child and a step child);
• Anyone who is financially dependent on you at the time of your death; or
• Anyone with whom you have an interdependency relationship at the time of your death.

If you do not choose a dependent under the SIS Act, your nomination will be invalid.  If you wish to nominate someone who is not a dependant under the SIS Act (i.e. siblings, parents), nominate the estate, then update your Will to instruct that, once the super money is received by the estate, it is paid to those specified beneficiaries.  However you need to be careful here.  Recent case law has shown that the words on your binding nomination need to be as instructed by your SMSF trust deed, or it will be invalid.  Care and advice needs to be taken to ensure this is written up correctly.

Having a valid binding nomination means that the trustee must pay the nominated beneficiaries as directed by you, as long as they qualify as dependants at the relevant time, and the nomination is current.

Please note that tax dependents are different to super dependents.  An adult child will be taxed on death benefits according to the taxation laws.  This needs to be taken into consideration when drawing up your nomination.

2. You have a Self-Managed Superannuation Fund (SMSF)

Your SMSF is run by the trustees.  At this stage, it is you.  When you die, who will be making the decisions?  Your fellow trustee would be the person to decide who else will be the trustee and make the decisions about your money.  There has been many cases where the trustee appoints someone and together, they go against the wishes of the person who passed away.  An example of this is where a daughter appointed her husband and kept the monies themselves, leaving the son with nothing.

Putting protections in place around who the trustees will be is just as important, as your monies are in their hands.

Your superannuation fund deed also needs to be in line with your will and estate planning wishes.

3. You have a Blended Family

Blended families add another level of complexity in an estate plan.  An impartial executor is very important as they are the one who helps execute the instructions.

The most common issue is competing interest of past and present partners, biological children and step-children. The Will-maker is likely to want to look after the current partner and also their own children from their previous relationship. There may also be children of the present relationship and children from the partner’s prior relationship to consider.

When making your Will, you may choose to provide an immediate gift to your children upon your death rather than your children waiting to inherit after the death of your partner. A life insurance policy nominating the children as beneficiaries might be appropriate in this instance.

A testamentary trust may be also something to consider. A Testamentary trust is a trust contained in a Will that comes into effect upon the testator’s death. A testamentary trust provides flexibility and control in asset distribution amongst beneficiaries and assists in protecting your assets from third parties and creditors. Assets can be preserved so that they can pass through future generations and the trust can provide for different scenarios.

4. You have Children

There are many aspects to consider if you have children.  They may be under 18, they may not be wise with money, and they may have an addiction or have a disability.

You may wish to have some control over the funds to ensure your children are cared for properly.  Receiving a lot of money at one time, may be to their detriment.  Using a testamentary trust will allow you control in distributing the wealth among the beneficiaries of your estate.

More information? To find out more, give us a call on 1300 023 782 or email team@cdrta.au.