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Strategy 1: the nuclear family

Setting the scene:

  • Phil and Claire are married.
  • Their children Haley, Alex and Luke are all minors.
  • Phil and Claire assets are all jointly held and include a house, bank accounts and motor vehicles – total value $500,000.
  • Phil has $150,000 in a public offer superannuation fund. He has $50,000 life cover through the fund.

Issues for Phil and Claire to consider:

Issue Options Instruction
Personal representatives Who to nominate for the important role of executor and trustee in the event they both die. Consider alternativesAre executors/trustees to be paid?

Nominate each other at first instance then Jay and Mitchell jointly as alternatives

No payment

Guardian for children

Consider nominating in the will a guardian for the children

Consider including wishes regarding upbringing, schooling etc

Consider including powers regarding accommodation for guardians, purchase of motor vehicle etc

Will guardians be paid?

Appoint Jay and Gloria as guardians

Clients don’t want to include wishes, powers or payment

Nominating beneficiaries Outright gift or via testamentary trust? To each other outright
What if the other predeceases?

Need for education trust? The children currently have different education needs. For example, Haley has almost completed school; Alex is a couple of years behind her; and Luke a couple of more years behind. Should the wills set up an education fund to pay school expenses to treat beneficiaries more fairly and avoid one person’s inheritance (eg Luke’s) being eaten up by school/university fees?

Elect not to set up education trust

Gift-over to children? Yes, to children equally
Outright or testamentary trust? Outright
At what age? At age 21
What if a child predeceases or dies before age 21? Consider need to provide for grandchildren

If deceased child is survived by a child (or children), that child (or those children equally) to receive, at 21 years, the inheritance the deceased child would have received had they survived and attained 21 years

If deceased child is not survived by a child or children, the inheritance the deceased child would have received to pass to Phil and Claire’s remaining children

What if they all die? If the family all die together (or no child survives and attains 21 years) who do they want to benefit from their estate? Half to Phil’s siblings, half to Claire’s siblings
Other issues for discussion Should Phil make a binding nomination/direction for his superannuation fund? Discuss with client
Is there a need to include superannuation proceeds trust and equalisation clause in will? Clients don’t want super trust/equalisation clauses
 

Is Phil’s insurance cover adequate? Does he need income protection cover and should this be held personally or in the superannuation fund?

Should Claire take out insurance cover?

Discuss with client

 

Phil's stratregy might look like

Phil dies and … Personal representative Custodial guardian Distribution of estate
Claire survives Claire n/a Claire
Claire predeceases and one or more of Haley, Alex and Luke survive and attain 21 years Jay and Mitchell Jay and Gloria 1/3 to Haley if she survives and attains 21 years. If not, then: 1/3 to Alex if she survives and attains 21 years. If not, then: 1/3 to Luke if he survives and attains 21 years. If not, then:
If Haley leaves a child or children who survive and attain 21 years, to that child or children equally Otherwise, add to Alex and Luke’s shares If Alex leaves a child or children who survive and attain 21 years, to that child or children equally Otherwise, add to Haley and Luke’s shares If Luke leaves a child or children who survive and attain 21 years, to that child or children equally Otherwise, add to Haley and Alex’s shares
Claire predeceases and no child or grandchild of Phil’s survives and attains 21 years Jay and Mitchell Jay and Gloria ½ to Phil’s siblings ½ to Claire’s siblings

 

Note: “survives” means survives willmaker by 30 days; “predeceases” means fails to survive willmaker by 30 days.