The Warlows Legal guide to protecting your assets for life.
Most of us remember to lock up or otherwise secure our homes, cars and other possessions on a daily basis. However, protecting your assets in the long term and ensuring they are distributed in accordance with your wishes after you pass on is not so simple. We explore three steps you can take to protect your assets during – and after – your lifetime.
STEP 1: INSURE YOUR ASSETS
We’re not just talking about home and contents or car insurance here. You may not realise it, but your income is your most powerful financial asset.
For people at every stage of life, income protection insurance will cover you if you can’t work for a period of time. Although it’s easy enough to say that it won’t happen to you, but the reality is that before you turn 65, there’s a one in three chance you’ll need to be off work because of an illness or injury.
The next level of cover is total and permanent disability (TPD) insurance, which will provide a lump sum payout should you incur a permanent disability that prevents you from ever working again.
Finally, life insurance also provides a lump sum payout in the event of your death to your family. You attain a level of cover that is sufficient to pay off all your debts and provide another income at least until your children (if any) are independent.
If you haven’t already, we recommend getting financial advice from a trusted professional about what level of cover might be most appropriate for you.
STEP 2: HAVE A VALID WILL
As we touched upon in our last blog article, having a will – and a valid one at that, is essential to ensure your assets are distributed according to your wishes after you die.
Should you die without a valid will, your estate may be divided according to a Government formula which may not necessarily reflect your wishes and which may cause undue hardship, cost and delay for your family.
Circumstances where it is especially important to consider your estate planning include:
- A recent marriage or divorce;
- Where there are stepchildren involved;
- Same-sex unions (which do not have the same effect under the Succession Act 2006 (NSW) (“the Act”)); and
- If you want to include or exclude specific people.
- Your will is one of the most important legal documents you will ever sign, so we recommend that you seek professional advice.
STEP 3: PREPARE YOURSELF AGAINST CLAIMS
This step is really an extension of step 2 above. Should your wishes or circumstances be in any way out of the ordinary, estate planning is important to ensure that claims are not made against your estate after your death. There are two types of claims that can be made: family provision and notional estate claims.
Family Provision Claims
These sorts of claims most frequently arise when someone is purposely left out of another’s will, or in intestacy cases (where someone dies without a valid will). The law recognises sometimes a person would ordinarily be a beneficiary under a will may either not be provided for or alternatively are inadequately provided for.
A Family Provision Order can therefore be made if the Court is satisfied that the person seeking the order is an ‘eligible person’ pursuant to the Act (and has not received provision for the proper maintenance, education or advancement in life by the will of the deceased, or in the event that there is no will, by the operation of the rules of intestacy in relation to the Estate.
Notional Estate Claims
These sorts of claims are part of family provision claims and are designed to prevent people avoiding family provision rules by moving assets outside their actual estate. In essence, the notional estate principle is to extend a deceased person’s personal estate beyond those assets which are held solely in their own name at the date of their death, and so includes personal assets held by trusts or superannuation funds, and even items gifted by the deceased during their lifetime.
The concept of a person’s notional estate becomes very significant in the area of family provision claims. If an eligible claimant believes they have not been adequately provided for, their claim is no longer limited to the deceased’s personal estate – it also takes into account the deceased’s notional estate and assets gifted during the deceased’s lifetime can even be clawed back.
Talk to Warlows Legal about planning your will and protecting your assets.
Estate planning and wealth transfer are areas in which Warlows Legal possesses a vast range of experience. Both individuals and business owners stand to benefit from estate plans as they ensure that all personal objectives are achieved in the administration of assets. Our lawyers are determined to help you achieve these objectives by providing advice on wills, trusts, joint ownership, life insurance, inter-vivos gifts and alter-ego trusts.
Where particular and specialised support is needed in the event of disability or incapacity, Warlows Legal is proud to be your trusted legal advisor. Similarly, in the event of contested matters, you can rely on our litigation team to resolve disputes and provide qualified representation.