Protecting vulnerable children in Wills Training Course by Adj Professor, Dr Brett Davies

Protecting Vulnerable Children in Wills Training Course Book Cover
  • Protecting Vulnerable Children in Wills Training Course

  • FREE

  • The Training Course covers how to protect vulnerable children in Wills.

Welcome to Legal Consolidated’s Protecting vulnerable children in Wills training course. 

I am an adjunct Professor, holding seven university degrees including a doctorate in Estate & Succession Planning. Since 1988, I have specialised, as a lawyer in Estate Planning, Superannuation and taxation.

The Vulnerable children in Wills Training Course shows how to build a Will that protects beneficiaries. This is not just your children or spouse. It is for any beneficiary in your Will that suffers from these situations:

  • spendthrift
  • can’t handle money
  • gives money away to ‘friends’
  • too immature to handle money if you and your spouse were to die in the next few years
  • mentally challenged
  • suffers from a mental illness
  • alcoholic
  • drug affected

The training course empowers you to build Wills on our law firm’s website.

You should also speak with your financial planner and accountant.

Protecting a vulnerable child in your Will

When you build your Wills on our website you are asked for the general Age of Majority. Usually, you select 18, 21, 25 or some other age. 

But you may wish to set a higher Age of Majority for the vulnerable beneficiary.

As you build the Wills on our law firm’s website the Age of Majority question allows you to select a higher Age of Majority. This is just for this one vulnerable Residuary Beneficiary.

Age of Majority

Age of Majority

 

Consider increasing the Age of Majority for a Residuary Beneficiary in any of these situations:
protecting vulnerable children in Wills disabled and drug affected children age of majority

1. Set a higher Age of Majority

If the Residuary Beneficiaries’ challenges are permanent or life-long then consider increasing the Age of Majority to 99 years of age.

Alternatively, if the child’s challenges may be temporary then consider increasing the Age of Majority for this person by a few extra years.

As you see fit, you can increase the Age of Majority for that particular child to a higher age.

Example: you may wish to increase the Age of Majority, just for one particular child to, say, 35 years of age. That means that the Backup Executors (which may include the child, as well) drip feed that child, or their carer or institution, the money the child needs. However, once that child reaches 35 years of age then that child takes the money and does with it as that child wishes.

Is the money protected for that particular child while it is in trust?

The inheritance for that child is protected in a Maintenance Trust. (This is just one of the many trusts that are in your Wills.) The inheritance for the child can only be used for that child. So while the child can’t get their hands on all the money (well, not until 35 years age) the money can only be used for that child’s benefit.

The Backup Executors must act in the child’s best interest at all times. This is an obligation under trust law. It is strictly enforced by the Australian Courts.

Young and vulnerable children tool kit

Free resources to help protect young and vulnerable children:

2. Or, the child is never allowed to control the inheritance

The Residuary Beneficiary may be mentally disabled or an alcoholic so you may wish to increase the Age of Majority to 99 years of age. In that instance, type in ’99’.

The Backup Executors drip feed this Residuary Beneficiary (or their carers) money that they need throughout their life. The challenged child may also be one of the Backup Executors – they all have to act together.

What if there is a medical cure or the Residuary Beneficiary recovers? Then the Backup Executors, when acting unanimously, may wish to get some or all of the capital to the Residuary Beneficiary at that time.

Otherwise, for the child’s life, the money is looked after for them by the Backup Executors.

The Backup Executors must always act in the Beneficiary’s best interest. The Courts strictly enforce that requirement.

Alcoholic child recovers

The child had been an alcoholic for most of his life – even before he had turned 18 years of age. His parents decided to increase the Age of Majority for the alcoholic child to 99 years of age.

His parents died.

His brother and sister, as the Backup Executors, looked after the money for the alcoholic child. Our law firm had put in a Maintenance Trust in the Will. We put a Maintenance Trust in all our Wills, in case they are ever needed.

Over the years a miracle occurred. The child stopped drinking he got married and had children. He completing his engineering course at University. Eventually, his brother and sister released his inheritance to him.

I continue to act for the family. Twelve years have passed and I am happy to report he has grown to be a well-respected member of the community. His parents would have been proud.

How do Maintenance Trusts work?

A Maintenance Trust is just a tool to hold and use the inheritance. This is for the benefit of the particular Backup Beneficiary. The Beneficiary does not own the assets directly.  The Maintenance Trust allows your Backup Executors (as trustees) to look after the Maintenance Trust. The Backup Executors must always use the inheritance in the best interest of the Beneficiary.

The Maintenance Trust provides an alternative to leaving property outright to your challenged child. This is because they may have little capacity to manage and protect their inheritance themselves.

In all our Wills we put in Maintenance Trusts – just in case they are ever needed. Like many of the trusts, we put in your Will, the Maintenance Trust is dormant until needed.

The Maintenance Trust under your Will allows the assets to be used for the benefit of the challenged person.  The challenged child won’t have to administer their own affairs or have an unknown third party do so. It reduces the risk of them being left isolated, with nothing.

Without a Discretionary Maintenance Trust in place, the challenged child may end up with an inheritance they don’t understand. In any event, in Australia, the law prohibits the direct transfer of property where there is no capacity to manage it. In these circumstances, the challenged person has a government official appointed under the Guardianship Act. This is costly and difficult. It allows the government to take control of your child and their inheritance. Instead, the Maintenance Trust puts that power back to your Backup Executors. The Backup Executors are usually your other children and family members.

The Backup Executors, under the power of the Maintenance Trust, can put some of the inheritance into a Special Disability Trust, after you die.

Special Disability Trust v’s Discretionary Maintenance Trust

Q: Our son has severe Autism. He is 9 years old.

We are concerned about his future. What happens financially and supportively when we are gone? It literally haunts me! It is such a heartbreaking thought that I’m sad to say I’ve tried to block it from my thoughts. Hoping it goes away. Obviously, that’s not going to happen! I have heard that setting up finances for a child with a disability is very different. Do you have any advice on this?

A: One of the most emotional meetings I have ever had as a lawyer practising in this area of law since 1988 is an 80-year-old father worried about who will change the nappy of his 62-year-old son. This is after the father dies.

He cried. I cried.

Even with money and government support, our vulnerable children are just that, vulnerable.

There are two types of trusts in your Will to protect vulnerable beneficiaries:
  1. Vulnerable Children Testamentary Trust
  2. Special Disability Trust

Your Legal Consolidated 3-Generation Testamentary Trust Wills contain both.

Vulnerable Children Testamentary Trusts: Vulnerable Children Testamentary Trusts, are potentially not means-tested for Centrelink. This is because they are discretionary in nature. They can have unlimited wealth in them.

Special Disability Trust: Another type of trust we also put in your Will is a “Special Disability Trust’. We are not an advocate of these. Sure, Centrelink means testing is guaranteed. But, the amount is limited. And what the money can be spent on is restricted to mostly care and accommodation. And these may be exactly what the government is already providing.

Further, for Special Disability Trusts the child must have a ‘severe’ disability. What you may understand as a ‘severe’ disability may not come within the definition. And this is a big risk given that you will not find that out until after you are dead.

While we put in your Will both the Vulnerable Children Testamentary Trusts and Special Disability Trusts another challenge is who is the trustee of these trusts? You need people you can trust after you are dead.

Discretionary Maintenance Trusts in Wills: purposes of spending

Each individual circumstance varies depending on the level of disability and the child’s particular needs and capacities. Your child needs to be properly cared for. You need to ensure their general health and wellbeing. Without a crystal ball, this is impossible. Therefore, the Maintenance Trust that we put in your 3-Generaiton Testamentary Trust has flexibility. The Backup Executors have the power to protect the challenged child for:

  • Physical needs
  • Accommodation
  • Support mechanisms
  • Social support and interaction
  • Hobbies and interest support
  • Health considerations

Free Legal advice building Wills on our website for vulnerable beneficiaries

As a father who has lost a child, I know that this is a very emotional and difficult discussion for you. I have been practising as a lawyer in tax and Estate Planning since the 1980s. I or the law are very willing to speak with you on this. So please don’t hesitate to telephone to talk about what is the best decision for your vulnerable child. We can help you answer the online questions.

However, start building the 3-Generation Testamentary Trust Wills first. As the question and answers contain many hints. They may answer many of your current questions. And they may open up new questions.


 


 


 



Legal Consolidated Barristers & Solicitors Australia Brett Davies

Adj Professor, Dr Brett Davies, CTA, AIAMA, BJuris, LLB, Dip Ed, BArts(Hons), LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
National Australian law firm

National:   1800 141 612
Mobile:      0477 796 959
Email:       [email protected]


30/05/2018

Protecting vulnerable children in Wills Training Course by Adj Professor, Dr Brett Davies

Welcome to Legal Consolidated’s Protecting vulnerable children in Wills training course.  I am an adjunct Professor, holding seven university degrees including a doctorate in Estate & Succession Planning. Since 1988, I have specialised, as a lawyer in Estate Planning, Superannuation and taxation. The Vulnerable children in Wills Training Course shows […]