ESTATE PLANNING FOLLOWING A RELATIONSHIP BREAKDOWN

Thank you to Nelson Wockner for allowing me to share this article.  Added to the complexities of the emotional, legal and financial issues associated with the end of a relationship the following article covers some very important information that may be overlooked by some people.

When a personal relationship breaks down, your life changes.  A relationship breakdown means that you have to redesign your future plans.  Whilst an unwanted experience, it is the perfect time to make the changes to protect your future.

Estate planning is far more than a Will and may also include:

  • reviewing your jointly owned properties
  • reviewing your superannuation funds and death benefit nominations
  • reviewing your life and risk insurance policies
  • reviewing your circumstances to decide whether your Will should include Testamentary Trusts
  • reviewing your parents’ Wills & discussing whether a testamentary trust is needed to protect your inheritance
  • reviewing any powers of attorney & your arrangements where you are unable to manage your own affairs
  • understanding the reasons for asset protection & benefits of owning property in family discretionary trusts
  1.  Jointly Owned Property

Where you own a property with your former spouse or partner, you must verify whether the ownership is recorded  as ‘joint tenants’ or ‘tenants in common’.

Where owned as ‘Joint Tenants’, you must change the ownership to ‘Tenants in Common’.  A lawyer can do this for you – it’s a quick and inexpensive process – and no transfer duty is payable.

This process should be actioned immediately to ensure that your interests are protected from the moment of separation until the implementation of the final property settlement, which would most likely involve the property being transferred solely to one person – or the property being sold.

When someone dies owning a property as ‘joint tenants’, the surviving co-owner receives the deceased person’s share of the property.  The deceased’s interest in the property doesn’t form part of their estate and their Will does not apply to that property.

  1.  Superannuation Binding Death Benefit Nominations

Review your superannuation arrangements with your Financial Advisor and/or the trustee of your superannuation fund.

Where you had nominated your former partner to benefit from your Binding Death Benefit Nomination, notify the Trustee of your superannuation fund as to whom the death benefit will be paid following your death.

If you don’t maintain a current authority, the Trustee will make the decision – which may not be what you want.

  1.  Life & Risk Insurance Policies

Whilst an Enduring Power of Attorney and a Will are essential, your Attorney and your Executor will need sufficient cash to provide the support and care needed by you and your children and any other people who may depend upon you for financial support – potentially for many years.

Unless you have substantial reserves of cash and assets, you may need various risk insurance policies to provide a source of finance.

  1.  Companies & Trusts

You will need to engage your lawyer to review the shareholding and officeholders of private companies that you have an interest in.  You will have to do the same process regarding family discretionary trusts that you have an interest in.  These reviews will be undertaken by your family lawyer, and the necessary action taken as part of any property settlement.

Your accountant and financial planner will also need to participate in this process – or at the very least be informed as to what changes have been made to your financial planning arrangements.

5.  Your Will & Testamentary Trusts 

When you separate from your spouse or partner, you must review your Will.

A simple Will may be sufficient to provide the immediate assurance you need.  Later, you can implement a more sophisticated estate plan to better protect your family.

As your Will does not deal with all of your assets and financial affairs, the first thing to do is to identify what assets are owned by you and will be distributed by your Will.

You also need to review who should be the guardian of any of your children where your former spouse is unable or predeceases you.

6.  Parents Wills containing a Testamentary Trust

You may substantially improve your future financial security by ensuring that your parents create Wills containing a testamentary trust.

The benefit to you is that your parents’ assets can be protected from most claims made by any current or future spouse, or anyone else who seeks to take money from you.

Regardless of your matrimonial circumstances, where your parents are alive and mentally alert, it is crucial that you discuss with them the benefits, and you can take a pro-active role in ensuring that advice from an estate planning lawyer is obtained.

7.  Power of Attorney

Where you have an Enduring Power of Attorney nominating your former partner as your Attorney, you will need to revoke that document.  It is recommended that you obtain all signed original copies of the document.

You may wish to appoint a highly trusted and responsible person as your Attorney, as you may appreciate the comfort and security of knowing that if some unexpected event were to happen, you had made prior arrangements to ensure that you and your family were well looked after.

Where you lose the ability to make decisions for yourself, a trusted friend or family member is unable to make those decisions unless you have previously authorised them – using an Enduring Power of Attorney.

There are many issues to consider in appointing an Attorney, and you can appoint more than one Attorney for different tasks.

Appointing 2 separate trusted persons to act jointly may provide some additional protection.

As with an Enduring Power of Attorney, where you had previously signed a General Power of Attorney in favour of your former partner, you will need to revoke that document in writing.  Again, it is also recommended that you obtain all signed original copies of the document.

8.  Asset Protection – owning assets in your name

One of the more essential strategies used by professional people and business owners is that they do not own assets in their own name. 

Why?  Because if someone sues them personally & obtains a judgement against them, only assets owned by them can be taken from them – exceptions apply.

When someone contacts a lawyer about suing someone, if there are good prospects of success, the lawyer investigates what assets are owned by the “Defendant”.  If a lawyer spends time and money suing someone, they want to know that there are assets available.

A strategy successfully used by many Australians is to create a Family Discretionary Trust to hold assets, often using a company to act as the Trustee of the Trust.  The effect is that whilst you control the company and the Trust; it is the Trustee that owns the assets – rather than you.

There are other issues to be considered, and your lawyer and accountant will advise on the various issues that apply to your circumstances.

 

 

Disclaimer: The above is to be considered as general education. This is not advice and it is not to be acted upon without advice from a qualified professional who understands your personal circumstances.     Copyright © 2017 Wockner Lawyers. All Rights Reserved.

Show Me The Money! The Only Way To Mediate Property Settlement.

When couples separate, there are financial issues which need to be discussed and resolved. Usually issues regarding payment of expenses, income and property. Some are urgent and need immediate attention and others are longer term decisions about how to separate the financial arrangements on a permanent and final basis. Making these decisions can be emotionally draining and complex. This is where the mediation process can prove extremely helpful and mutually beneficial. Negotiating property and financial matters can be stressful and overwhelming especially where there are short term financial pressures to pay bills and conflict about how to fairly distribute any assets. It can even be distressing if the other person has been in control of the finances and you feel in the dark.

Here are some things to think about to prepare yourself for the mediation process regarding money.

  1. Make a list of all your bills that are coming up.
  2. Even if you can’t prepare a cashflow of your family and personal expenses and when they fall due just make a list of all the expenses you know about on an annual, monthly and weekly basis. Mediation can address the urgent issues first so that everyone has peace of mind to focus on the long term division of the property.
  3. Identifying what is included in the property pool.

Property of a relationship will include:

All assets (things you own) held by you and your former partner in joint or separate names such as:

  • Family home, holiday home or rental properties
  • Investments like shares and companies
  • Cars and boats
  • Furniture and household effects from stereos to cups and saucers that you want to keep
  • Personal items like jewellery and musical instruments that you want to keep.

All assets in your own or your former partner’s control such as:

  • any business, company or trust
  • superannuation
  • a share in an extended family business or investment property.

All debts in joint or separate names such as:

  • mortgage debts
  • credit cards
  • hire purchase agreements.

It needs to include everything including any property held in your own name prior to entering into the relationship, or property you have acquired since separation.

Negotiating the division of the pool by way of a property agreement.

The best way to divide your assets is through a mutually negotiated property agreement in mediation. This allows you to be part of the decision making process and helps to minimise the cost of lawyers and avoid a negative outcome through court. It will be much quicker and less emotional for you and your children, helping you to move on quickly with less to deal with.

Think about your main concerns and wishes about your property division, consider who has contributed what to your property and life together and your personal future financial needs right now and tomorrow for you and any children. Your mediator will ask you questions about your financial circumstances and financial needs. You will need to prepare for the joint session of mediation to resolve your property agreement. You may wish to break it into separate parts or deal with everything on the one day. How that is done will be designed by you with the mediator. The preparation will involve further gathering of information, exchanging documentations and starting to weigh up your options before the joint session.

Formalising the agreement to achieve a property settlement.

Once you have agreed on how the expenses are to be paid and a property settlement it is still the law to have the financial agreement legally formalised. It is not generally possible to change your mind and seek a different property agreement once it is done and dusted. Once you are satisfied with the outcome, you can sign the financial agreement as a Deed or file the documents with the Court if you are signing Consent Orders. This is the milestone to moving forward.

Reaching a mutually agreeable property settlement should be your main aim when you attend mediation. Approaching your mediation with an open mind and an attitude of willingness to reach an agreement will assist the process of settlement to progress with as little angst or as few roadblocks as possible. No one wants the issues of a financial arrangement to be more difficult or emotional than it already is, so with preparation, co-operation and some thought concerning your part in the process it will go a long way towards reaching the agreement which is mutually beneficial and helpful in moving forward without Court.

Is it time to get creative about how you mediate your money disputes?
Contact SHAW Mediation and let’s talk about how we can help you.

Shaw Mediation Services

Level 36 Riparian Plaza
71 Eagle Street
Brisbane QLD 4000
Phone: 1300 768 496
mediate@shawmediation.com.au

Level 30/91 King William Street
Adelaide SA 5000
Phone: 1300 768 496
mediate@shawmediation.com.au

Level 26, 44 Market St
Sydney NSW 2000
Phone: 1300 768 496
mediate@shawmediation.com.au