This short six part case study series examines some highly important issues parents must consider if they want their Will to plan for the best and worst their spouse and children will likely be forced to deal with unnecessarily. 

Case Study Series One

Dying To Get Her Message Across

 

 

 

 

After the death of his wife Sally, the break-up with his volatile de facto partner Ginger, and his unfortunate business failure following the GFC, John’s life was spiraling out of control. Drinking too much, John lost his life leaving his three children as young adults without any family support. Due to their reluctance to ever seek professional financial and legal advice, both John and Sally lived with underfunded estates and simple Wills with disastrous results for their loved ones. In this issue we look at the common problems that simple Wills fail to protect beneficiaries from, and how the ‘crisis provisions’ of an estate planning Will would have helped to negate these problems. This ‘serial’ case study highlights the advantages and protections provided by professional financial advice coupled with a modern estate planning Will.

 

 

The Circumstances

John and Sally Standard had very typical circumstances – the type of simple circumstances that would have certainly benefited from proper estate planning advice and documentation.

 

Personal circumstances

 

  • John 47, public servant on $110k per year.

  • Sally 44, part-time physio on $60k per year.

  • Married 16 years - no previous marriages. 

  • Kids - Toby 12, Alex 10  and Alice 6.

 

Assets circumstances

 

  • Family home held jointly, with $350k owing.

  • Spent $100k on renovations, current value est. $800k.

  • Sally inherited $50k of BHP shares from her aunt.

  • John has a 20% share in a holiday shack, approx. value $60k.

  • John $105k super, Sally $60k super, nominating beneficiaries.

 

At the time of John’s death, Toby is 20 and at university, Alex is 18 and just finished high school, while Alice is only 13.

 

Issue 6: Crisis Provisions

Toby, John’s eldest child successfully went into business for himself after gaining qualifications as a landscape gardener, using his inheritance to kick start his new business. However the responsibility and stress of being the new head of the family led Toby to start gambling. Soon his addiction had become unsustainable, and eventually his debts forced Toby to file for bankruptcy. 

 

Alex left school to study music with aspirations of being a rock star. The music lifestyle led Alex to experiment with drugs. He soon began to suffer mental health issues such as clinical depression and severe anxiety disorder as a result.  Alex ultimately withdrew from his friends and family to shack up with a heavy pot smoking woman five years his senior who slowly drained Alex’s inheritance through her favourite skull faced porcelain bong. 

 

Alice, at the tender age of 18 and without her parents to support her, became obsessed about her looks and her weight.   Alice became addicted to prescription drugs to keep herself thin, eventually becoming anorexic and mentally unstable. Alice spared no expense in her pursuit of physical perfection, blowing the last of her inheritance on breast implants.

             

Unfortunately for his children, John’s simple Will said nothing about what should happen if in the future any of them should fall into trouble. Had John sought professional advice, he would have been advised that modern estate planning Wills provide detailed crisis provisions to protect beneficiaries in these life changing situations. 

 

Much like when a modern estate planning beneficiary goes through a divorce, John’s children could have been temporarily removed as trustee (controller) of their own testamentary trust, with access to their trust fund (their inheritance) limited to living, health, housing and education expenses, until such time that John’s executors believed that the beneficiary is mentally fit or legally ready to resume full control of their inheritance - thus protecting their inheritance until they are once again fit to make sound decisions about it. In Toby’s situation, the bankruptcy trustee cannot access assets held in a testamentary trust, saving his inheritance despite his bankruptcy. 

 

CASE STUDY 1.6

 

Crisi Provisions

From 'Dying To Get Her Message Across'

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