Wills and Estates for Beginners

Law Society of Tasmania

Wills & Estates 101 for Support Staff Presented by

Mel Kerrison & Matthew Pawson 21 February 2024

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Wills & Estates 101 for Support Staff

Relationship between Will drafting and effective estate administration Addressing potential challenges to Wills at the drafting stage Application of trust law to Will drafting and estate administration Tax issues arising in estate administration Residency issues and location of assets (interstate and overseas) Administering estates with missing executors and beneficiaries Other important issues Key takeaways 2

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Wills & Estate 101 for Support Staff

Relationship between Will drafting and effective estate admin.

Estate planning is an under-rated area of the law

Anecdotally, the fastest growing area of litigation law in Australia LPBT Annual Report

Not all precedents are created equal

Applies equally to preparing wills (estate planning) and administering them

Relationship between the good, the bad and the ugly

The estate planning matrix

X Axis: Practitioner Perspective Y Axis: Precedent Quality 3

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Creative Solutions to Complex Estate Planning Problems

The Estate Planning Precedent and Perspective Matrix Precedent Quality Comprehensive

Quadrant 2 Wasted Opportunity Zone

Quadrant 4 Optimal Outcome Zone

Quadrant 1 Danger (Negligence) Zone

Quadrant 3 Pure Frustration Zone

Basic Practitioner Perspective

Incidental

Fundamental 4

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Creative Solutions to Complex Estate Planning Issues

Relationship between Will drafting and effective estate admin.

The estate planning matrix X Axis: Practitioner Perspective Y Axis: Precedent Quality *Z Axis: Practitioner Experience

Complexity is everywhere How does complexity arise

In estate planning, more is always more Clarity of purpose Certainty of intention

Make the precedent fit the instructions, not the instructions fit the precedent 5

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Creative Solutions to Complex Estate Planning Problems

A few thoughts from Fischer v Howe Background of the case What can we learn?

As well as considering the needs and outcomes that the client wants, we also need to consider Consider using an informal Will

Why the clock?

Estate of H My own personal Fischer v Howe 6

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Creative Solutions to Complex Estate Planning Problems

Drafting issues complexity is everywhere!

Three case studies that demonstrate potential problems giving rise to complexity in both Will drafting and Estate Administration Estate of S Failure to think through the practicalities of post-death arrangements Failure to leave sufficient directions Failure to understand estate planning tools and how they (should) work

Estate of V Simply making errors in the drafting Cross-jurisdictional issues

Estate of C Do your due diligence drill down deep!

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Creative Solutions to Complex Estate t Planning Problems

Estate of S

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Creative Solutions to Complex Estate Planning Problems

Estate of V

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Creative Solutions to Complex Estate Planning Problems

Estate of V The two provisions of the Will in question were as follows: THIRD: All the rest, residue and remainder of my estate, whether real, personal or mixed property, of whatsoever kind or wheresoever located, of which I may own or possess, or which at the time of my death I shall be in any manner entitled shares to my brother, A, my sister, A, and my sister W, or, if any of them shall fail to survive me, then all to the survivor(s) amongst them.

FOURTH: In the event my brother, A, or my sister W, shall fail to survive me, I give devise and bequeath his or her share of the estate to his or her respective issue by representation; if my sister, A, shall fail to survive me, I give, devise and bequeath her share of the estate in equal shares to my brother A, and my sister, W. 10

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Creative Solutions to Complex Estate t Planning Problems

Estate of C

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Creative Solutions to Complex Estate Planning Problems

Application of trust law to Will drafting and estate admin.

Wills are trusts Compare Trusts Settlor Trustee Beneficiaries

Wills Willmaker Executor Beneficiaries

Read the Deed!

Powers in the Will

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Creative Solutions to Complex Estate Planning Problems

Application of trust law to Will drafting and estate admin.

Examples of good vs bad vs ugly drafting issues Streaming power In specie distributions Retention of capital for minors Transferring powers of appointment of inter vivos trusts Life estate issues burden of costs and maintenance Many other issues

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Creative Solutions to Complex Estate Planning Problems

Tax issues arising in estate administration Executors are trustees for all purposes of the ITAA36/97 Subject to assessment under Div 6 Bamford applies (streaming of capital gains and franked dividends) ATO View 3 stages of estate administration

Executor must lodge tax return?

Date of death return 30 June in year of death In first 3 years if estate income exceeds tax-free threshold After 3 years, every year in all circumstances Where does the tax liability fall?

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Creative Solutions to Complex Estate Planning Problems

Tax issues arising in estate administration Whitings Case Beneficiaries are not entitled to income or capital (gifts) from an estate until they When does a beneficiary become presently entitled?

No beneficiary can become presently entitled until the residuary estate is determined

When is the residuary estate determined?

Assets called in and liabilities paid Written resolution?

What about interim distributions?

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Creative Solutions to Complex Estate Planning Problems

Tax issues arising in estate administration Using Deeds of Family Arrangement Used to solve or prevent TFM Claims Only permissible consideration is the waiver of other rights under the Will If external consideration is introduced, then s128 concessions are lost

Practical application Honoured in the breach?

A note about Superannuation Prima facie, superannuation does not form part of the Estate Conflicting duty of Executor to call in the Super to the estate

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Creative Solutions to Complex Estate Planning Problems

Residency Issues and Location of Assets Residency Residency of Beneficiaries Residency of Executor

Multi-jurisdiction issues Why is this important?

Drafting issues Two options

Examples The 3 Wills of Client Z Australia, Hong Kong, USA Estate of B Australia, Fiji Estate of Pamela* - Australia, UK, South Africa (and beneficiary in UAE) 17

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Creative Solutions to Complex Estate Planning Problems

Estate of X Jarndyce v Jarndyce Estate of J Two executors, also the two beneficiaries, at war over everything!

Estate of H Brother and Sister as Executors (as attorney for mother [dementia])

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Creative Solutions to Complex Estate Planning Problems

Administering Estates with missing executors and beneficiaries Common sense must prevail Get creative Inherent jurisdiction of the Court Estate of W

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Creative Solutions to Complex Estate Planning Problems

Other Issues Where do we start?

A bunch of small/single point issue to consider

Who is your client?

Understand who you are acting for the Executors Who can you give information to?

In what circumstances?

Which Act applies?

Pre/Post 2008 Why does it matter?

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Creative Solutions to Complex Estate Planning Problems

Other Issues Outsourcing Recognising when you need to get expert help in: Accountants Financial/Investment Advisers Valuers Stockbrokers

Dealing with Estate Assets Selling real property make sure you have the title before you go to market

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Creative Solutions to Complex Estate Planning Problems

In Will drafting, more is always more, when the Willmaker is dead Make the precedent fit the instructions, not the other way round Make sure that you are not the cause of the complexity

Be flexible keep the options open for the Executors and Beneficiaries Watch out for the tax traps!

Enjoy the work it can be very rewarding 22

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Creative Solutions to Complex Estate Planning Problems

Questions?

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Creative Solutions to Complex Estate Planning Problems

Thank you

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