For executors in particular who are likely to have to deal with a wide range of issues when distributing the estate, lack of guidance could result in disputes, or result in their decision making being seen as unfair or arbitrary, damaging family relationships. Similarly, beneficiaries are unlikely to make the most of their inheritances given a lack of professional guidance.
2. Failure To Take Into Account the Client’s Family Trust or SMSF.
This means that ‘who’ gets control of these entities is left open, leaving room for disputes, abuse or misuse as the entities can have extensive assets. RetireLaw Wills direct the control of such entities to be shared equally by all children just as the ‘owned’ assets (house, cash etc) of the clients are usually distributed equally amongst all children.
3. Lack of Guidance Regarding Super Paid To The Estate.
This means that an ignorant executor who does not seek proper advice may make decisions that deny some beneficiaries financial opportunities and tax savings such as the receipt of a tax effective pension. The executor is essentially left to muddle through, or is forced to rely on paid advice from an experienced solicitor or other professional adviser.
4. Lack Of Guidance To Executors About Inheritances For Children.
This means that the executor is given no guidance as to how best to manage or allocate the income of a child’s inheritance until they attain 18 years of age or a later qualifying age if one is set. This potentially denies the proper level of support and maintenance that your client would want for their child.
5. No Options in Terms of the Types of Trusts Beneficiaries Might Wish To Elect To Use That Would Be More Suitable To Their Needs at the Time.
It is extremely common for inadequate Wills to not provide options in terms of the types of trusts beneficiaries might wish to elect to use (tailored to their needs). It is difficult to predict just what type of trust might best suit a beneficiary, and most Wills do not provide options for beneficiaries to use Right of Occupation trusts, Parallel or Multiple Testamentary Trusts or more Restricted Testamentary Trusts, all of which may be more suitable depending on the beneficiary’s particular future needs.
6. Lack Of Authority To Deal With Inequality Amongst Beneficiaries.
For example, when relying on such a Will, if one of the children is under 18 or a full-time student at the time of death (while their siblings are tax paying adults), they will likely receive the entire super payout plus an equal share of the remaining estate. Inheritance inequality can also occur if unrecorded loans were made pre-death to certain children and not others on the understanding it comes out of their inheritance, or if one child ends up in control of the family trust set up by the parents.
7. Lack of Authority to Hold Family Home in a Testamentary Trust
There is no right of occupation provision in respect to the family home allowing for it to be held in a trust. If the home is held in for example Mrs Smith’s name (a common practice to limit exposure from husband's high risk job and potential for being sued), should Mrs Smith predecease Mr Smith, he would end up receiving the home in his own name instead of in a testamentary trust, removing the crucially important asset protection advantages provided by testamentary trusts.
8. No Capacity to Allow Testamentary Trusts To Pass From One Generation To Another.
This means the inheritance loses the many advantages of a testamentary trust (asset protection, tax advantages) far earlier than necessary. In NSW, a testamentary trust can pass down through a family for 80 years."
9. There are Too Often Very Limited Trust Terms. Inadequate testamentary trust Wills usually set very limited trustee powers.
They often do not include directions about who will receive the trust when the initial primary beneficiary dies, provide no details about how to manage and operate a testamentary trust in the long term and provide no crisis provisions among other omissions. The major benefit of crisis provisions is that it temporarily removes an affected beneficiary (i.e. bankrupt, addict, mentally ill) from control of their inheritance while they sort out their problems, further distancing their assets from potential trouble.
10. No Directions to Executors and Beneficiaries to consult with Willmaker's Professional Advisers.
RetireLaw Wills embed the client’s financial adviser and accountant details in the Wills, with directions to executors and beneficiaries to consult with them.
11. There Are No Special Trust Provisions To Ensure Younger Children Don’t Have To Pay For The Types Of Outlays Their Parents Paid For Their Elder Siblings.
This omission commonly causes disputes, as younger beneficiaries can feel hard done by. Disputes can cost the estate up to $100,000 per day in court.
12. No Crisis Provisions Should a Trustee Beneficiary Fall Ill or Is Unstable or is in Financial Difficulty or Goes Through a Divorce or Bankruptcy Etc