Attwood Marshall Lawyers Wills & Estates Lawyer Natalie Comerford joins Robyn Hyland for “Law Talks” on Radio 4CRB to shed light on a crucial yet often overlooked aspect of family conversations – estate planning. Why is it essential for parents and grandparents to engage in open dialogue with their younger relatives about this topic? Here we explore the importance of these conversations and the valuable insights they can offer for the future.
In the whirlwind of youth, most young adults don’t prioritise conversations about estate planning. After all, isn’t that something for the older generation to worry about? The prevailing notion is that estate planning is a concern for those with substantial wealth, property, or a family to protect. However, in an era where life’s uncertainties can strike at any age, dismissing this conversation is nothing short of a gamble.
It’s time to change the narrative. Parents and grandparents who have young adults aged 18 and over in their families should be initiating discussions about estate planning.
While these young adults may not have a million-dollar property to their name, or an expansive share portfolio, almost everyone in the workforce has superannuation and life insurance policies, and these can hold substantial value.
Estate planning isn’t just for the elderly. If you’re 18 or older, seeking advice to ensure your estate is in order is crucial. Although we all feel infallible when we are young, the cold hand of fate can intervene at any time and the shocking run of worldwide and local catastrophic events are testament to the old adage that you never know when your number is up!
Why estate planning should be a dinner-table conversation
This isn’t a topic commonly discussed or taught in school.
While the concept of estate planning may only surface later in life, typically when buying property or starting a family, if these conversations aren’t being had with peers or at school, the responsibility falls on the family unit to introduce it.
Certainly, these aren’t typical dinner-table conversations, and it can be challenging for any demographic to address. However, just like getting a tax file number, paying taxes, and purchasing insurance, preparing for the inevitable is a part of life everyone should be ready for.
Unexpected and tragic events can happen to anyone. It’s heart-wrenching to witness families repeatedly endure the stress and financial strain of dealing with these unforeseen calamities.
With the right plan in place, families can focus on mourning rather than spending long periods ‘fighting the system’ to settle matters after the passing of a loved one who departed too soon and perhaps without having a valid Will in place.
Not only should parents and grandparents share how they have set up their own estate planning (and their reasons for doing so), but they should also be encouraging their children and grandchildren to consider their own estate planning issues and to have a Will and Enduring Power of Attorney done as a minimum. Usually, you should also consider signing a binding death nomination for your superannuation.
Essential components of estate planning for young adults
Young adults often underestimate the assets they hold and their value.
Even if you don’t own a property or have a significant sum in your bank account, if you’re working, then you are likely to have superannuation benefits. With superannuation comes insurance policies, like life insurance or death benefits, which can hold substantial value – sometimes hundreds of thousands or even millions of dollars, depending on your policy and level of cover.
Many people are unaware they even have this cover, and it needs to be managed appropriately to ensure it goes to the chosen person or people if something unexpected happens.
Not having the correct documentation in place, or if the documentation is not updated in accordance with the policy rules, can often lead to dispute over who is going to receive the money.
Example case: disputes over superannuation
A 39-year-old medical student tragically died in Northern NSW in a motorcycle accident in August 2018.
At the time of his death, he left behind a de facto girlfriend who he had been living in a rental home with for 16 months. He was also survived by both his parents.
According to his mother, her son was ready to end the relationship with his de facto partner prior to his sudden death.
His mother claimed that the relationship was volatile, and her son had made statements about being done with it, and the fact she was “needy”.
The deceased’s father, on the other hand, had the view that his son was in a committed relationship and that his de facto partner should be entitled to his estate, which comprised of $566,000 superannuation payments (including death benefits).
The mother took her dispute to court trying to ensure that the de facto girlfriend was not considered her son’s next of kin in relation to benefiting from his superannuation benefits, however she ultimately lost her bitter legal battle, and the girlfriend received the full super entitlements.
Had the son completed a death benefit nomination with his superannuation, then it would have been clear what his wishes were and mitigated the risk of a legal dispute arising.
Consider a binding death benefit nomination as part of your estate plan
People of all ages need to consider their superannuation and any attached life insurance policies.
Superannuation benefits are considered “non-estate assets”, which means they require a death benefit nomination to dictate where they go. Without one, the trustee may use its discretion to distribute the benefits, potentially leading to disputes over entitlements.
Making a death benefit nomination is simple. Obtain the correct form from your superannuation fund, nominate your beneficiaries, sign the document with a witness, and send it back to the fund.
There are several types of nominations available, depending on your circumstance.
This is why it is so important to speak to an estate planning lawyer to understand what option is best for you.
The various nominations available to choose from include:
- A Binding Death Benefit Nomination – where the trustee must pay the death benefit as nominated.
- A Non-Binding Nomination – where the trustee has the discretion to follow the stated wishes of the member or direct the entitlements to another person or the estate.
- A Non-lapsing binding nomination – a request by you to the trustee to pay a death benefit to the person/s you nominate which has no expiry date. Most death benefit nominations expire after 3 years so you must complete a new nomination. A non-lapsing binding nomination eliminates the need for this, however it is critical to update this nomination if your circumstances change. Perhaps you nominate your girlfriend or wife at the time, 10 years pass by, and you are no longer with that person. If you do not update the form and something happens to you, they will still receive the benefits!
Determining what nomination is right for you needs to be looked at in the context of an individual’s goals, if the member wants flexibility on how their benefits will be paid and in what form, then it may not be appropriate to do a binding nomination.
For those who want control and want to ensure the benefits end up with a particular person, or they have concerns that there may be people who will challenge the decision of the trustee, then it may be appropriate for a binding death benefit nomination to be put in place.
An experienced estate planning lawyer can help you determine which options suits you best.
Key takeaway
If you are updating your Will, it can present a good opportunity to discuss this with your loved ones and see how aware they are about things like their super, the value they hold, and what will happen to it if something unexpected happens.
Just as important as putting a plan in place for your assets if something does suddenly happen to you is the necessity to look at having an Enduring Power of Attorney in place.
Unfortunately, most people aren’t even aware of these documents until later in life and don’t discuss them with a professional until the time comes to write or update their Will.
Only then do they realise how imperative they are.
After all, an Enduring Power of Attorney comes into play while we are still alive and if something happens that impacts our capacity and ability to make decisions for ourselves.
That could happen to anyone!
Yes, there are cognitive diseases like dementia that impact so many Australians later in life, but there are also hundreds of thousands of people injured every year in workplace accidents. And there are thousands of people injured on our roads every year in motor vehicle accidents. These types of events can have catastrophic results and change the course of your life forever if they impact your mental capacity.
Who will be able to step into your shoes and make decisions for you if that happens? That’s where you need an Enduring Power of Attorney to be in place, and you really want to be the one to have a think about who the person is you trust implicitly to take on this powerful role, should it be required.
Attwood Marshall Lawyers – experts in Succession Law
By having an estate plan in place (even when you’re young) you can protect your assets and take some of the burdens away from your family who you ultimately will leave behind.
By having an experienced estate planning lawyer guide you through the process, you can ensure you have all your bases covered and you put a plan in place that is as unique and personalised as you are.
Attwood Marshall Lawyers have one of the most experienced Wills and Estates departments in the country, and our friendly team are passionate about helping people document their wishes to give them peace of mind. The process does not have to be overwhelming and is simpler than you may realise!
To understand what documents you may need to put in place for your estate plan, please call our Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call 1800 621 071 anytime.
You can also make an appointment with any of our lawyers by visiting our website and using our online booking app. Our lawyers are available to meet with you at any of our conveniently located offices at Robina Town Centre, Coolangatta, Southport, Kingscliff, Brisbane, Sydney, and Melbourne.
