skip to log on skip to main content

Family ties and planning your estate

 

September 2015

 

Lauren had no intention of passing her wealth to her estranged brother.
But without the right estate planning advice, there was always a chance it could happen.

 

 

 

 

 

Professional estate planning advice can help you ensure the people and causes you would most like to support are recognised in your will.

Making a plan to formalise the distribution of your assets is a smart strategy for most people. But you might be surprised to learn that almost half of Australians (around 45%)1 don’t have a valid will.

Apart from creating unnecessary financial hardship and emotional stress for families, dying without a will (or ‘dying intestate’) means that your estate will be distributed in accordance with the relevant state legislation rather than your wishes. This can result in your wealth being distributed to relatives you are not close to, or even the state government, rather than the people or causes you would rather support.

What happens if you die without a will?

When a person dies ‘intestate’:2

  • the Supreme Court in the state or territory in which they died can appoint someone to administer the deceased estate.
  • the assets of the deceased person are distributed according to the succession laws of that state or territory, which generally means the estate passes to the deceased person’s next of kin.

The following case study is an example how a lack of planning can see assets falling into the wrong hands.

You might be surprised to learn that almost half of Australians (around 45%) don’t have a valid will.

Lauren and Michael

Lauren started what became a highly successful recruitment business while she was in her mid-20s. By 35, she held positions on a number of company boards and had accumulated a significant portfolio of assets – owning her own waterfront home, two commercial properties and a handful of residential apartments.

When Lauren’s best friend Tammy asked her to be the executor of her estate, Lauren realised she’d never written a will of her own. It forced her to think about what would happen to her assets if she passed away.

Lauren was currently single and didn’t have any children. Her parents had passed away when she was a teenager, and the only sibling she had was her brother, Michael, who she’d had no contact with since he was convicted for fraud 10 years earlier.

Lauren was happy to leave her family heirlooms to her brother, but she did not want him to inherit the bulk of her assets. Instead she intended to donate large sums of money to a number of charitable organisations she supported. Unfortunately she didn’t get a chance to specify these intentions in her will. 

 

What happened?

Lauren was struck by a car while cycling early one morning. Because she hadn’t made a will, the laws of intestacy meant her entire wealth was passed onto Michael, who qualified as her next of kin.

Michael had never been responsible with money, and he was now in possession of an estate worth $5 million. He immediately moved into Lauren’s home and sold most of her other property assets – spending the proceeds on holidays, cars and gambling. He also made some high-risk investments that resulted in significant losses.

Over the next five years Michael spent the majority of Lauren’s estate without donating any of it to the charities Lauren had been hoping to support.

Estate planning is an essential part of protecting your wealth and maximising its impact on the next generation.

What could have been done differently?

An estate planning lawyer could have helped Lauren construct a comprehensive estate plan that outlined what would happen to all of Lauren’s asset if she passed away. She could have given her trusted friend Tammy power of attorney to make decisions on her behalf if she ever lost the capacity to do so herself.

Because Lauren was passionate about supporting charities, part of her estate plan could have included the formation of a Private Ancillary Fund (PAF). A PAF is designed to support long-term giving by growing the estate’s assets in a tax-exempt environment, while donating a designated portion of the assets to charity each year in perpetuity.  

 

Getting your affairs in order

Estate planning is an essential part of protecting your wealth and maximising its impact on the next generation. With specialist advice from an estate planning lawyer, you can ensure your assets will be used to support the people and causes you care about most.

 

To discuss what this insight could mean for you, talk to your ANZ Private Banker directly, or contact us below.

Experienced advice and personal strategies

Contact us

You might also like

Helping your children buy a home

PLANNING

December 2016

Find out more

Focused on building wealth? Don’t forget the risks

PLANNING

December 2017

Read more

Six guiding points to pass on a business

PLANNING

March 2017

Read more

Contact us

Request a call back

Provide your details and we'll call when it suits you

Request a call back

   

Email us

Send us an email directly

contact_anzprivate@anz.com

Call us

Speak to the ANZ Private team directly

1800 316 926

We're available weekdays 9:00am to 6:00pm AEST

Find an ANZ Private office

Our locations across Australia

Find an office

1. NSW Trustee and Guardian, The Superannuation Complaints Tribunal Annual Report 2013/14

2. Source: Australian Taxation Office - www.ato.gov.au/Individuals/Deceased-estates/Being-an-executor/The-deceased-estate/

ANZ Private Bankers are representatives of Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ), the holder of Australian Financial Services Licence number 234527. This document ("document") is distributed to you by ANZ and may not be reproduced, distributed or published by any recipient for any purpose.

The information provided is general in nature only and does not take into account your personal objectives, financial situation or needs. Please consider its appropriateness to you before making any investment decisions. It should not be relied upon as a substitute for professional advice. For any product referred to above, ANZ recommends that you read any relevant offer document or product disclosure statement and consider if the product is appropriate for you. For products issued by ANZ, these documents are available at www.anz.com. This document is current as at the date of this publication but is subject to change. The document is provided and issued by ANZ unless another author is specified in the document, in which case it is provided and issued by that author. The views expressed are those of the authors only and do not necessarily reflect the opinions or views of ANZ, its employees or directors. Whilst care has been taken in preparing this document, ANZ and its related entities do not warrant or represent that the document is accurate or complete. To the extent permitted by law, ANZ and its related entities do not accept any responsibility or liability from the use of the information. Past performance is not indicative of future performance and any case study shown is for illustrative purposes only. Neither are a prediction of the actual outcome which will be achieved. Some of this information may have tax implications. We recommend that you seek specialist tax advice on how it may impact your tax obligations, liabilities or entitlements.