Well worth reading for those considering Estate Planning

Article by Jacqui Clark |  Published in The Australian on 28 April 2023

How to get your will sorted and avoid squabbles so you can rest in peace

The Family Provision Act allows family members to challenge your Will after you die.  The Court will then consider the financial needs of the Applicant, the size and nature of the Estate, the relationship between the Applicant and the deceased and other relevant factors.

While it’s meant to protect those who have been unfairly left out of a Will, it can also lead to extensive disputes and legal battles if you haven’t been transparent about your Will and intentions.

It’s easy to think “this won’t happen to me”, but there are more than 3000 Family Provision Act cases in Australia each year.

That’s 300 families battling it out for their fair share of a loved one’s Estate and possibly spending a lifetime if savings in the process.

In NSW alone, there were almost 900 cases filed in 2021, and most were in the range of $3m-$15m.

What can you do to prevent this from happening to your family?

First the preparatory step is to ensure you are clean on your balance sheet (your net worth). It also pays to consider the needs of the family members you are planning to leave your Estate to.

Do they have the necessary financial and/or business acumen to manage this money? Is now the time to introduce them to your network to assist building their knowledge?  What are the other needs of your beneficiaries?

Second, and most critical, is to ensure that your Will is clear and transparent. This mean being up-front an spelling out exactly who gets what and why.

If you have a good reason for leaving more to one person than another, make sure you explain it in your Will (and if necessary, ensure you have historical financial records set aside with your Will to back this up.)

If your family understands you intentions, they are less likely to fight about it later. According to the Australian Research Council, although 60 per cent of Australian have a Will, many of these are inadequate.

Third, talk to your family about your Will.

This might sound awkward and most people avoid it altogether. If your family knows what’s in your Will and why you make the decisions you did, they are less likely to be surprised or upset later.

You might even discover some potential disputes that you can work out together before it’s too late.  In my experience, you might find that opening the door for discussion brings a positive dynamic to the family relationship such that your legacy becomes a broader conversation that your family wish to protect.

For example, you might ordinate donations to a charity that your family would like to support, so that not only does your estate make a donation but perhaps but perhaps your surviving family continues with this over a period of time.

Finally, make sure you update your Will regularly.  Your circumstances change over time and you want to make sure your Will reflects those changes.

For example, if you have a new child or grandchild, a new house, a new mortgage, you get divorced or remarried, you might need to change your Will.  Remember, it’s not just your circumstances that change, it’s your family too.

The Family Provision Act can be a double-edged sword.  On one hand it can cause a lot of problems for your family after you die.  On the other, it provides an avenue for family members to seek fair provision from a deceased person’s estate if this was not the case.

Globally, there are many famous disputed Will cases where family members have battled over how much money they want from an estate.  Michael Jackson has a short, simple Will;  Jimi Hendrix died with no Will; Whitney Houston had one beneficiary, who in turn died without a Will;  Phillip Seymour Hoffman has a 10 year old Will that considered one child but when he died he had three children; and James Gandolfini’s poor planning led to 80 percent of his assets being subjected to taxes.

It does take time to secure a well-considered legacy, one that enables your wealth to transition to others in a straightforward practical manner, free from complexity and worry.

If there are pain points or even unresolved issues, do what you can today to resolve them and then document the solution.  Planning now means dodging disaster later.  Don’t let fights over your estate tear your family apart – take action now so that you can rest in peace.

Jacqui Clark is co-founder of advisory firm, Maxima Private and author of Stop Worrying About Money.