When we think about estate planning we often believe that if we have prepared a will then we have done enough, or at the very least we have done something!
Unfortunately there are many cases of wills not being witnessed properly, being out of date or perhaps it has been misplaced. All these issues can be exacerbated if you have used a will kit rather than an experienced professional.
Consider this, you may be married, divorced, separated or single, you then meet someone new or extend a personal or business relationship with someone you already know. What happens to your will now?
Binding Financial Arrangements (BFAs) or “pre nups” as they are known are intended to protect assets for various reasons but how do these fit with your estate planning? BFAs are governed by Family Law yet your will is governed under different laws which potentially allows someone who has signed a binding financial agreement to still make a claim on your estate. This issue raises an interesting question, given that a de facto can make a claim under Family law, what claim do they have over your estate! Remember that you will no longer be here to defend yourself.
If you are certain that you do not have a de facto relationship then this shouldn’t be an issue. However, given that there is no global definition of a “de facto relationship” in Australian law, how can you be certain when the law isn’t? In fact, if this issue arises it is the judge that determines if you are in a de facto relationship as a matter of fact, and the courts will certainly make this decision even when someone is “happily married” to a third person. Imagine this, you are married with three children when you unexpectedly pass away, a de facto comes out of the wood work to make a claim on your estate. Your executor (who could be your spouse) now has a de facto spouse to accommodate under the will. Forget the stress on your spouse and kids, we can only imagine the financial cost on the estate. So let’s take a look at what the courts consider when assessing these relationships;
- Duration of the relationship
- Degree of mutual commitment
- Nature and extent of physical residences
- Support of children
- Degree of financial dependence or other financial support
- Joint acquisition of property
- Public aspects of the relationship ie. facebook pictures, joint birthday presents or party invitations
Not so straight forward after all!
If you have a will kit, a will that is out of date, or perhaps you have no will at all, then there is an increased risk that someone “un-intended” will make a successful claim on your estate. If you are pro-active and realise the importance of addressing these issues, your risks can be reduced, or hopefully eliminated entirely. For my pro-active clients there are some tools available to help protect them, their family and their assets, such as Binding Financial Agreements, Binding Death Benefit Nominations and Testamentary Trusts.
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
