Some years ago a middle-aged Queensland couple decided to gift their holiday apartment to their son as a wedding present. This apartment had been in the family for twenty or so years, and although it wasn’t an overly expensive property in comparison to other Sunshine Coast properties, it was precious to the family as it held a lifetime of memories. This was an extremely generous gift by the parents to their child and their hope was that he and his new bride would also create wonderful memories for their future children.

Whilst travelling to their honeymoon destination the young groom and his bride were involved in an horrific motor vehicle accident resulting in their tragic death. As you could imagine this was absolutely devastating to all of their family and friends, but what was to follow has simply left the Groom’s family speechless.

In Queensland, if you and your spouse/partner are killed at the same time then it is deemed that ‘the oldest dies first’ (in regards to estate planning matters)In this particular situation the groom was older than his new bride so what do you think happened to their newly acquired holiday apartment?

The property was initially gifted to the son remember (in other words, he owned it in his own name), he was older than his wife and so ‘he died first’, therefore the property passed to his next of kin (his wife), but she too had passed away, therefore the property was passed to her next of kin (her parents).

Within the space of a few short weeks the holiday apartment was in the hands of the in-laws, and they kept the property, thank you very much!

How do you think the Groom’s family felt about this situation? How would you feel? It stinks doesn’t it, but they are the rules of the game. The parents had the right intentions, but they didn’t know the rules, or consider all of the possible outcomes before they made their decision.

So often in my line of work as an Estate planner I come across similar stories to this one and it saddens me that so many hard-working Australians have had their lives shattered because they were not aware of the rules.

So where do you sit in all of this? Perhaps you are the typical Aussie working hard to pay off your mortgage and give your kids an education. Maybe you are doing it a little tougher and are struggling to find enough at the end of the week to pay the rent and put food on the table. On the other hand you may be reasonably comfortable – an unencumbered home, a rental property or two, a healthy superannuation balance and/or a thriving small business, in fact things may look pretty rosy on your horizon.

Despite where we all fit into this game we call life, the one thing that each and every one of us has in common is that we are all going to die, and no matter how big or how small our ‘nest egg’, at some stage it is going to end up in the hands of someone else. Who that someone else is depends on a given set of rules. It may be your spouse or your ex-spouse; it may be your child, your child’s spouse or your child’s ex-spouse; perhaps the entire value of your estate will be gobbled up in legal fees once all of the ‘vultures’ and their legal representatives have feasted on your generosity (or naivety). (For those of you who are struggling financially, you may in fact be worth more than you think. Have a look at your most recent superannuation statement – is there a life insurance component attached to it? How much is it? More importantly, who, ultimately, is going to receive that money if you pass away? Are you sure about that?)

There are a number of steps involved to ensure that your money/assets only end up with those whom you choose. The most important step in the whole process is to SEEK ADVICE from professionals – Estate Planning Lawyers, Financial Planners, Accountants – make sure you have a strong team on your side, & that each member of this team is communicating with each other to ensure that they are all ‘on the same page’, in other words, working together in your best interest.

Your ‘team’ should be able to guide you through the steps but here is a little kick start to set you on your way:

Step 1 – Identify what YOU own.

The most common mistake many people make when they are facing their own mortality and trying to determine ‘who is going to get what’, is identifying exactly what assets they actually own. It would not be an exaggeration to say that when we are discussing assets and liabilities with new clients more than 90% of them will include things like their superannuation or family trust-owned assets as assets that they own.

So let’s get a few things straight up front:

  • If you have a superannuation fund YOU DO NOT OWN IT. A superannuation fund is set up as a trust. You may control the assets of the fund if you are the trustee, and/or you may have been nominated as a beneficiary by a member of a fund, but you will never be the owner of the assets in that fund because the assets are owned by the trust (please note that this also includes Life Insurance held within superannuation). What this means is that you cannot leave the assets (i.e. the fund balance & insurance proceeds) to anyone via your will.
  • If you hold an asset inside a family trust or company YOU DO NOT OWN IT. When you die that asset will remain inside that entity and you will not be able to pass the asset onto your loved ones via your will. You can certainly pass on control of the trust if you are the Appointor (the controller of the trust) but this would normally be addressed in the trust deed or via a power of appointment, and you can certainly ‘will’ the shares in the company if they are owned in your name, but the asset remains within that entity.
  • If your family home is held as ‘Joint Tenants’ with your spouse/partner YOU DO NOT OWN IT. It is owned jointly and will pass automatically to the other joint tenant when you pass away. You and your spouse/partner will however need to decide who the home is going to be left to should you both pass away.
  • We all work too hard for our assets – let’s make sure that they don’t end up in the wrong hands. If you would like any further information, please don’t hesitate to connect with me or contact me directly. My details are on my profile.