estate planning issues

  • Explain the estate planning issues and strategies that could be used when a beneficiary has special needs;
  • Identify the major issues that may arise if someone disclaims an inheritance;
  • Describe issues that may arise when dealing with jurisdictions other than Australia; and
  • Explain how assets can be protected under bankruptcy laws and the claw back provisions.

Beneficiaries with particular needs

 Beneficiary with an intellectual disability

It is important to carefully consider the future needs of a beneficiary with a physical or intellectual disability who is dependent on the will-maker, whether the beneficiary is a child or an adult.  The following factors should be considered:

  • The psychological and physical needs of the beneficiary and the degree of dependency;
  • Cost of providing ongoing care for that beneficiary compared to other dependants or estate beneficiaries;
  • Life expectancy of beneficiary;
  • Any young children who will also need to be adequately provided for;
  • Any relatives or other persons who may be able to act as the trustee of a special disability trust;
  • Eligibility for social security payments; and
  • Whether the beneficiary has the ability to live in the family home and thus be granted a life tenancy.

The estate planning options available for these beneficiaries include:

  • Giving assets directly to the beneficiary although this can be most inappropriate and unenforceable for persons without legal capacity;
  • Assets may be left on trust for the benefit of the beneficiary. The income from the assets may be used to pay for the beneficiary’s development and to ensure a steady income stream is achieved.  The asset can, if appropriate, then be given to the beneficiary or another beneficiary at some point in the future which can be stipulated as the vesting day of the trust.  A trustee of this trust should be appointed who may be the same person who acts as the guardian of the beneficiary.
  • Assets may be given to or left on trust to a service organization on the condition that the service organization provides long-term support for the disabled beneficiary.

Elderly dependent parents

Under the Family Law provisions it is possible for an elderly dependant parent to bring a claim against a deceased estate.  This may occur if the person has been dependant on the deceased, has lived in the same household as the deceased and still needs assistance.

The estate planning options available for these beneficiaries include:

  • Direct gifts;
  • Setting up a testamentary trust to cater for the event that one or both of the parents subsequently require the care and facilities available in a nursing home environment; or
  • A life interest in real estate could be provided to parents who are unlikely to need nursing home accommodation but otherwise require somewhere to live.

Careful consideration should be given to the actual terms of any such life tenancy and to the nomination of the remainder beneficiary of the real estate.

If the life tenant subsequently developed a need for nursing home accommodation, provisions should be made for the house to be sold and the proceeds held in trust and applied for the purpose of meeting nursing home accommodation and related expenses.

Careful consideration should be given to the social security aspects of these types of transactions as they may reduce or terminate social security entitlements.

Young children

Guardians for children should be appointed under a will.  However, the person(s) nominated still need to make an application to the Family Court to legally be appointed as guardian.  The guardian will have the responsibility of the caregiver to the child.  Guardianship may be challenged where another applicant believes they are in a better position to provide the necessary care.

In many cases, a carefully prepared guardianship clause in a will may carry a lot of weight with the court.  This may help the executor uphold the wishes of the will-maker contained in the will.

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