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|Medical POAs, Guardianships, Directives & Medical Treatment Decision Maker – lifestyle & healthcare for each State of Australia||$88|
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|Estate Planning Package – 3-Generation Testamentary Trust Wills, Enduring and Medical POA|
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|Contractual Will Agreement – for 2nd marriages||$220|
|Codicil to change Executor in your Will – remove Public Trustee as Executors||$77|
|Forgive a Debt Agreement – also gets rid of Family Trust’s UPEs||$185|
|Deed of Gift||$109|
|Spouse Loan Agreement||$99|
|Loans to Children – override with the Family and Bankruptcy Courts||$99|
|Loans to Parents||$99|
We were the first lawyers in Australia to prepare Testamentary Trust wills. This was in May 1994. We stopped preparing them in 1997 when we invented the 3-Generation Testamentary Trust. These are the advantages:
For example, you die leaving everything equally to your three children. The first child sets up one 3-Generation Testamentary Trust for herself. The second child sets up none – just takes the money (that is not tax effective but it is their decision). The third child sets up five 3-Generation Testamentary Trusts. Whey did the third child set up five trusts? You would need to ask them that question. Perhaps there were high-risk business assets and their accountant wanted to quarantine them. Perhaps they had a succession plan for their own children. Perhaps some of their inheritance is going to be invested overseas.
In contrast, the Testamentary Trust is mandatory. There is one trust per beneficiary. Each beneficiary must set up the trust. That is not flexible.
3. Sadly, a Testamentary Trust Will requires, that all assets go straight into a Testamentary Trust – it is a mandatory requirement of the Will. In contrast, in a 3-Generation Testamentary Trust Will, the beneficiaries decide what goes or does not go into a 3-Generation Testamentary Trusts. It is not always appropriate to automatically put every asset into a trust. For example, for a family home, your beneficiaries have 2 (often 3) years to sell it and not pay any CGT on the increased value from the date of your death. However, they lose that 2 years upside if you put a dead parent’s family home into a trust.
4. If all the beneficiaries agree they can take specific assets without stamp duty or triggering CGT. For example, you may have $1m in shares, $1m in real estate and $1m in cash. One child wants only shares. The other only wants real estate. The youngest wants cash. Not a problem. With a 3-Generation Testamentary Trust Will, they can distribute your estate in that way and not incur any stamp duty or CGT. In contrast, with a Testamentary Trust, the children have to pay stamp duty and trigger CGT to obtain that outcome.
5. Your beneficiaries can use these additional trusts which are in the 3-Generation Testamentary Trust Will:
It is all about flexibility. As tax and superannuation lawyers we believe the art in preparing Wills comes down to one word: flexibility. You don’t know:
When you build the Wills and POAs you are given advice on where to store your legal documents. You generally store them at home or in the bank, or with the executors (for a Will) or attorney for a POA.
You don’t need to destroy old Wills. You don’t need to tell anyone you made new Wills. It is a private and personal matter. You can if you wish, contact the old lawyers and ask them to destroy the old Wills. The Public Trustee often get upset when you tell them you made new Wills. They stamp their feet and demand that you send them the original Will or at least a copy. Most people tend to ignore the Public Trustee and State Trustee in Victoria’s demands – which is good advice.
If your family home, superannuation, shares and life insurance are over $1m then you should build 3-Generation Testamentary Trust Wills. However, if you can afford it you should always build 3-Generation Testamentary Trust Wills. They 1. reduce the 30% tax on your Superannuation 2. contain a Divorce Protection Trust in case your children, grandchildren or beneficiaries ever get divorced, and 3. generally save tax for up to 80 years from the date of your death.
Sorry, but that is not possible. You can only have one original signed Will. You cannot have two signed Wills. To labour the point: if you sign a Will now, and in 2 minutes time sign another Will then the second signed Will is the only Will in existence. When you sign a Will it automatically renders all older Wills null and void. In contrast, you can have many signed original POAs.
Q: How do I get certified copies of POA’s to store with the POA’s so they have immediate access to the power in the event of an emergency? Is this just getting photocopies of the original document and getting a police officer to certify each page?
A: Certified copies are usually not accepted by a bank. They are never accepted by the local titles office. In the covering letter that you get with each POA, it suggests that you print out two copies of each POA. But you can print out and sign more if you wish. If you want 5 copies of each POA then print out 5 copies and sign all of them. (As you see from above, you can only have one Will, but you can have many POAs.)
Your financial planner and accountant consider your assets and how they are owned. However, this is of little interest in the building of the Will. For example, if you are leaving ‘everything’ to your spouse and then everything to your children once both dead then what assets you own are not relevant. ‘Everything’ is going to your spouse. Also, as you don’t know the time of your death you do not know what assets you own at death.
I assume that you have young children that travel with you. The car could roll over and you and your spouse, together with your children could all die together. When you have young children select ‘yes’ to the Disaster Clause question. Read the hints on this topic as you build the Will.
Normally, you would, in the Disaster Clause, leave 50% of your assets to your side of the family. And the other 50% to your spouse’s side of the family. For example:
As with most Australian Wills, there is a ‘blood giving clause’ in all Legal Consolidated Wills. (The Latin is ‘per stirpes‘ – down the bloodline.) This is where, if a person dies before you then what they would have got goes to their children. So, for example, if your child has died before you and they themselves have children then what your child would have got goes to their children. For example:
Dad and Mum die. They leave everything to their two children: Mary and John. Sadly Mary died many years ago leaving behind Ross and Ken (your grandchildren). What Mary would have got now goes, in your Will, to your grandchildren Ross and Ken.
(Obviously, if Mary died never having had children, then her brother, John, would inherit everything.)
Yes, all our documents have a sample that you can see before you start building the document.
Yes, all out documents have a checklist which you can download and print.
You may also consider:
Yes, there are two training courses (which are currently free) you can complete online:
A 3-Generation Testamentary Trust Will contains many trusts. For example, if you die with a child under 18 then the ‘Maintenance Trust’ is automatically activated. When the child turns 18 they take control of the trust. The adult child can, at any time, change the trustee. Whether the trust ‘vests’ (finishes) is a question you need to ask the child – it is their decision. However, the child is likely to continue using the Testamentary Trust because:
You can increase the age of majority to above 18. You can make it 21 years of age – or even 99 years of age if the child is mentally challenged.
Q: What happens if, when we die, there is still a mortgage attached to the properties? If we were to die soon, each house would have a $400k mortgage. Most of this ($300k) could be cancelled out using the equity from our primary residence, but what happens if there is some debt left over? Should we try to make sure there is enough cash/ insurance to wipe it out? Given there would be a lot of equity (the investment property plus half the primary residence) for a small residual debt ($100k), would the banks allow the girls to borrow to cover that debt, paying off the borrowings over time?
A: You should address this question to your beneficiaries – your children. They, themselves, make the decision as to what they do with ‘their’ new assets and debts. Usually, the executor pays out all debts first. And then transfers the properties (or whatever is left) to the beneficiaries. The net value goes to the children. The children can keep on selling assets, perhaps one of the properties to, keep reducing debt. Or a child can seek to take out a loan. I don’t know. Ask your children and they will answer this question.
Death is a default in the loan and the bank can demand payment within (usually) 7 days. This is unless you can rectify the default. But it is hard to come back from the dead!
The children are entitled to seek to borrow money, secured against their new assets if they wish.
I think it is a very good idea to speak to your financial planner and accountant about taking out insurance. You may also be able to do this in your superannuation fund. This often makes insurance premiums more tax effective.
Your question suggests that you have a house for each child. That is all rather nice. But it is often the case the child no longer lives in Australia. Or does not want that particular house. In any event, you will be happy to know that because you have 3-Generation Testamentary Trust Wills your children can move the assets around. Each can have their own property. This is without triggering Capital Gains Tax or transfer (stamp) duty. You also have a Divorce Protection Trust in your Will so your assets are protected when you children, grandchildren and greatgrandchildren divorce.
Family Trusts have nothing to do with Wills. And Wills have nothing to do with Family Trusts. They have separate laws and tax rules. A Will gives away what you own. In contrast, you don’t ‘own’ the assets in your Family Trust you merely control the assets. To put in place a succession plan for a Family Trust build a “Deed of Variation to update the Appointor“.
Does it really matter? All Australian trusts vest after 80 years. See here. But for trusts in Wills, the 80 year period only starts on the date of your death. So your spouse and children are all dead by the time the 80 year period comes about. Probably your grandchildren have died of natural causes as well.
No one knows what is going to happen to Australia. We have no idea of the tax laws that will apply. It is likely that the 80-year law of perpetuity will be abolished. That is why if you narrow estate planning and Wills to one word it is ‘flexibility’. The 3-Generation Testamentary Trust is the most flexible structure you can put in a Will.
But to answer your question: under the current Australian CGT laws when a trust vests CGT is payable on those assets as if they were ‘disposed’ of. However, during the 80 year period, the beneficiaries can sell and manipulate your estate assets as they see fit. They have 80 years to plot and plan. However, generally with a 3-Generation Testamentary Trust, your beneficiaries have the highest chance of reducing CGT and stamp duty to zero. And obviously, cash can be distributed from a 3-Generation Testamentary Trust for free at any time.
An advantage of Legal Consolidated Wills, POAs and all our legal documents is that if:
then you do not need to update your Wills, 3-Generation Testamentary Trust Wills, Enduring POA or Medical Lifestyle POAs. Your estate planning documents remain valid even if addresses change.
Your address, your attorneys, your beneficiaries and your executors’ addresses must be correct at the date of signing.
What if an address changes before you get a chance to sign the Estate Planning document? Don’t waste your time signing out of date Wills and POAs. Update the Will or POA before you sign. You can update your Wills and POAs as often as you wish. This is for any reason for the rest of your life. Just email us your Tax Invoice. We email you a voucher to update your Wills and POAs.
Q: My autistic child is on invalid support from Centrelink. He is set to inherit under my 3-Generation Testamentary Trust Will. How does it affect his Centrelink pension?
A: Best to watch the Vulnerable Children in Wills course for the full answer. The short answer is that the 3-Generation Testamentary Trust is designed to allow the Centrelink pension to be drip feed just the right amount of income to continue to get Centrelink disability support. But let your Accountant and Financial Planner help you with how much that is. See also: