Estate planning – vital for all – including business owners!

There’s no escaping the fact that one day we are all going to die. While I don’t wake up every morning thinking about my inevitable demise, I do have plans in place to ensure my wishes are carried out when I am no longer here. The Australian Securities and Investments Commission estimates that nearly half of all Australians have not prepared a last Will and Testament.

Younger people, in particular, believe that preparing a Will is only for “oldies”. They are too busy living life to the full to be worried about some distant morbid event. But eventually we will all be confronted by our mortality and death often catches us by surprise. Such was the case with “Sam” (a fictitious, self-employed businessman based on a real-life scenario).

Sam was always going to get around to preparing a Will. Unfortunately, he didn’t. He died unexpectedly at age 48 from a heart attack and if the shock of his death wasn’t enough for his de-facto wife, Rebecca and their son Ben, the bigger shock came when Sam’s former wife made a claim on the estate on behalf of the children of his first marriage.

As Sam died without a Will, he is said to have died intestate. If you die intestate, your estate is administered according to the relevant state’s Succession Act covering “intestate succession”. Even though Rebecca was aware of what Sam wanted to do with his money, the legislation did not give effect to his intentions.

Rebecca knew that as a de-facto partner she had inheritance rights under the Succession Act but discovered that a spouse doesn’t automatically “get it all” if children are involved.

As Sam did not have a Will identifying those who were to inherit and what each would inherit, certain of his relatives became beneficiaries in the proportions set out by the Act.

To make matters worse, there was an argument over the funeral arrangements and another over whether Sam did or did not want to donate his organs. Also, a dispute arose over a charitable gift to one of Sam’s favourite aid agencies. Further complications arose over Sam’s self-managed super fund and the payment of death benefits.

These conflicts could have been avoided if Sam had a Will specifying his funeral wishes and the bequests he wanted to make. He could also have appointed an enduring guardian to make medical decisions on his behalf and instructed that person that his usable organs were to be donated following his death.

It can be seen that dying without a Will is rife with problems. An intestate death invariably causes unnecessary hardship and extra work for family and dependants. It also means the government may become the default administrator of your affairs. This is why you should safeguard the interests of your family, friends and dependants and make a Will.

If you are a business owner like “Sam” imagine how much more complicated your estate would be to manage and finalise without a will?

Death is a morose subject and most people don’t want to talk about it let alone plan for it. But like taxes, death is inevitable and that’s why estate planning is a must for everyone. More than just a Will, an estate plan also considers your superannuation, powers of attorney and the appointment of an enduring guardian.

Contrary to popular opinion, Wills and estate planning are not the exclusive domain of the rich. Making a Will is the best way to make sure your estate is passed on to family and friends exactly as you wish. So, don’t leave your estate to chance.

If you don’t have a Will, you’re making a deadly mistake!

John (JT)Thomas

This opinion piece is provided by John (JT) Thomas, a 47-year veteran of the financial services industry and since 1987 a specialist in commercial mortgage funds. Considered by many to be the father of the modern commercial mortgage fund sector, JT helped establish and then managed – for 17 years – what became the largest and most successful commercial mortgage fund in Australia – The Howard Mortgage Trust – with assets exceeding $3 billion. Under JT’s stewardship, investors never lost one cent of their investments and indeed, investors always received competitive monthly returns. JT was also Chair of the $40 billion mortgage trust industry sector working group.

JT has been proudly involved with Princeton for nine years and sits on both the Princeton Credit Committee and the Princeton Compliance Committee as well as being an advisor to the Princeton Board.