When it comes to Wills and estate planning, there are benefits in putting a testamentary trust in place

The days of the basic three-page Will are gone, replaced with a modern estate planning Will offering beneficiaries the opportunity to hold assets in a Testamentary Trust (which can be managed by them), to ensure asset protection for your beneficiaries from creditors, relationship breakdowns and unnecessary taxes for generations to come.

Central to the modern-day Will is the variety of different Testamentary Trusts you can set up in your Will to deal with the individual needs of each of your family members, as well as increasingly complex family issues.

WHAT IS A TESTAMENTARY TRUST?
A Testamentary Trust is a discretionary trust established in your Will that only comes into effect upon your death. As the Will maker you decide on the rules and terms of the Testamentary Trust and these are included in your Will. After your death your Will becomes the Trust Deed.

The trust can hold estate assets such as investments, real estate, and cash, for the benefit of beneficiaries during their lifetime, or for a specified period. You may set up any number of trusts within the one Testamentary Trust Will, and each trust may vary in size, can be created using specified assets, a portion of your assets, or the whole of your assets, and have different conditions placed upon them.

A trust can:
• be flexible or non-flexible;
• be controlled by the beneficiary or by someone else;
• restrict the ability of any of the beneficiaries to control the activities and investments of the trust or give them complete control;
• continue for a period of up to 80 years if so required or be wound up at any earlier date if the trustee so decides;
• set out the terms; and
• separate the rules and establish more than one testamentary discretionary trust.

The client decides whether they wish to sacrifice the independence of the beneficiary to ensure that the inherited assets are protected and used sensibly for the benefit of the primary beneficiary and their family.

Testamentary Trusts were once viewed as the domain of the extremely wealthy but with the build-up of superannuation assets and the boom in house prices, many more people need to consider these types of Wills.

WHAT ARE THE KEY BENEFITS OF A TESTAMENTARY TRUST?
Testamentary Trust wills are designed to protect inherited assets while providing significant tax benefits through income splitting, and paying income to minors, and can help with the growth of inherited assets to a degree not possible with an ordinary Will.

Testamentary Trusts provide:
• Significant income tax-splitting opportunities.
• An extremely tax-effective future asset-building entity that can be used to maximise the future growth and value of inheritances.
• Flexibility and choice for your beneficiaries - it is possible for each beneficiary to retain control of the inheritance received via a testamentary trust.
• Protection of the inheritance assets against creditors.
• Protection of your assets to ensure that only your descendants receive your assets.
• Protection for your beneficiaries who are unable to manage their own assets, are in a high-risk occupation; or intellectually challenged or a risk of bankruptcy.

WHAT ARE THE TAX IMPLICATIONS FOR MINORS AS BENEFICIARIES?
If minors under the age of 18 receive income outside of a Testamentary Trust, they are taxed at penalty rates of;
• 66% on income between $417.00 and $1,307 and
• 45% thereafter

If minors receive income from a Family Trust, they are taxed at penalty rates.

If minors earn income from a Testamentary Trust established in a Will, they are taxed at the normal adult tax rates.

THREE GENERATION TESTAMENTARY TRUST
The most common Testamentary Trust these days is the three-generational Testamentary Trust.

The flexibility of a three-generational Testamentary Trust means it can cater to the individual needs of each of your beneficiaries and provide not only for your children, but also your grandchildren and great-grandchildren.

HOW ARE TESTAMENTARY TRUSTS STRUCTURED?
A Testamentary Trust has three essential elements: the trust assets, the trustee, and the beneficiary. In some cases, an appointor is also nominated.

The trustee has legal control of the trust and its assets and manages them in accordance with the Will. The trustee also has the authority to determine how trust income (such as rental income from an investment property) is invested, and which (if any) of the nominated beneficiaries receive income and capital distributions each financial year. The trustee (or multiple trustees) is often the deceased’s surviving partner or adult children. It can also be a trustee company.

The beneficiary (sometimes referred to as a ‘class of beneficiaries’) is often one or more family members including, a spouse or partner, children, grandchildren – even extended family members. A trust beneficiary can also be a company or the trustee of another trust – although this may result in taxation disadvantages. The trustee may also be a beneficiary, but not the sole beneficiary unless there is more than one trustee.

The appointor has ultimate control over the trustee, with the authority to appoint and remove the trustee from the trust at any time.

Testamentary Trusts, while largely promoted as a tax saving mechanism have many other advantages. Their inherent flexibility makes them worthy for consideration in your overall estate planning strategies.

Scammell & Co have experienced Wills and Estate Planning lawyers who can tailor your Testamentary Trust Will to achieve particular objectives for both your estate and your beneficiaries.

For further information on our Estate Planning services, please follow the link here

*This information is current at the time of publication. For accurate legal advice, please contact Scammell & Co on 08 8440 270.

How to leave a charitable gift in your Will

For many of us, contributing to a charity of choice provides a meaningful and compassionate way to make a difference to a cause that is close to our heart. One way to do this is to make a bequest in our Will, for a portion of our estate assets to be given to one or more charities after we die.

The main types of gifts you can leave in your Will include:

If you wish to bequeath a gift to a charity, leaving instructions behind in a Will is the only way to ensure that your wishes are followed through with. This can be done either by creating a new Will if you don’t have one; revoking an existing Will and writing a new one; or adding a codicil to your existing Will.

A codicil is simply an additional section attached to your existing Will. Often this is all that is required if you are making minor changes. If you are making significant changes, you will likely need to write a new Will. To update your Will with a codicil you must:

A Scammell & Co Wills and Estates lawyer has the expertise to ensure your Will is a recognised legal document, and that your intentions are clear and will be carried out as you wish. Moreover, they can draft specific instructions on how your charitable gift is to be used if, for example, you wish to support one specific aspect of a charity’s work.

For further information about Wills and Estate Planning please follow the link here

*This information is current at the time of publication. For accurate legal advice, please contact Scammell & Co on 08 8440 270.

When drafting your Will, remember to give consideration to your digital assets

Digital assets are an established and growing part of modern life. Therefore, it is important to consider what happens to your digital footprint upon death or incapacity – especially if they hold monetary or sentimental value.

Examples of digital assets include:

Complications may arise for Executors and beneficiaries in the administration of a deceased person’s estate, with respect to accessing, selling, or transferring digital assets. Moreover, if left unattended, digital assets could be lost in cyberspace, or left vulnerable to threats such as identity theft or hacking.

In Australia, there is currently no statutory scheme that provides a legal representative such as an Attorney (upon incapacity), or Executor (upon death), with the right to access and deal with digital assets. In this regard, the rights of fiduciaries over digital assets requires legislative reforms.  In the meantime, the right to deal with such assets may be determined by the service agreement between the user and provider. For instance, an Executor may need to provide a copy of the death certificate (or other such evidence) to gain access to a deceased person’s online account. In other instances, a digital asset (for example, loyalty reward points) may be forfeited upon the death of the holder.

Given their intangible nature (that is, assets that lack physical form), it is prudent from an estate planning perspective to prepare a list of all your digital assets along with instructions on how to access them (preferably storing usernames and passwords separately), and what you want done with them – and keep this list with your Will in a safe and secure location. Your nominated Executor can then deal with your digital assets after your death, just as they would any physical assets.

A Scammell & Co estate planning lawyer can provide advice and draft a Will that ensures your assets, both physical and digital, are dealt with as you wish. That way, there is no ambiguity as to your wishes, and it reduces the risk of your digital assets being lost, overlooked, or remain inaccessible after your death.

For further information about preparing a Will and general Estate Planning advice click HERE

*This information is current at the time of publication. For accurate legal advice, please contact Scammell & Co on 08 8440 270.

Handwritten Wills are acceptable but may cause unnecessary problems

A Will is a document that sets out how your property is to be distributed when you die. A handwritten Will is adequate for this purpose, however, it is open to interpretation and potential challenges if it is illegible or there are messy edits.

For a Will to be valid it must meet additional criteria in accordance with the Wills Act 1936 (SA). If your Will is deemed invalid, your estate will be distributed in accordance with the rules of intestacy. This may conflict with your wishes.

A valid Will is one that is:

An executor or trustee named in your Will may be a witness, however a beneficiary should not witness the Will.

Alterations should not be made after the Will has been signed, but if necessary, any changes must be initialed by the testator and both witnesses in each other’s presence.

If a Will fails to meet the above requirements, an application can be made to the court to consider its validity. This process may be expensive with no guarantee of success. However, if the court is satisfied that the document expresses the testamentary intentions of the deceased, it can be admitted to probate.

A Scammell & Co lawyer can draft a valid Will on your behalf and advise on the most appropriate Will structure which considers your asset pool and the interests of beneficiaries (including any tax implications).

For further information on our Wills and Estate Planning services follow the l

*This information is current at the time of publication. For accurate legal advice, please contact Scammell & Co on 08 8440 270.

SA's inheritance laws are under review. Here are the key considerations.

Sweeping reforms to South Australia’s succession laws are soon to be debated in parliament. If the Succession Bill 2021 (the Bill) is passed, it will consolidate and amend existing laws relating to Wills, probate and administration, the administration of deceased estates, intestacy, and family provision.

Of all the proposed changes, perhaps the most contentious relate to family provision. The new inheritance laws are designed to prioritise the wishes of the testator (the person making the Will).

The existing Inheritance (Family Provision) Act 1972 (SA) (Act) is intended to strike a balance between the wishes of the testator to have their property distributed as they wish after they die, and the idea that people also have a responsibility to provide for certain people after their death. However, with the rise in “frivolous”, “greedy” or “opportunistic” claims currently clogging up the courts there is a growing appetite for reform. There is no perfect solution.

Those that have the most to lose by the proposed changes include former spouses and domestic partners, siblings, grandchildren, and stepchildren of the deceased. Under existing laws these persons can make a claim if they can demonstrate that they had been left without adequate provision for their proper maintenance, education, or advancement in life.

The Bill would severely limit claims to those who can satisfy the court that they qualify to make a claim. For example, if the relative can prove that they cared for, or contributed to the maintenance of, the deceased person, immediately before their death; or that they were wholly or partly maintained by the deceased person immediately before their death.

Whilst the proposed changes are well-intentioned, the Bill has raised concerns that the reforms go too far, with the view that the current Act and the legal system as it is, serves the community well in that regard.  The proposed changes would reduce the rights of certain relatives, as well as limit the ability for the courts to step in if the deceased had failed to properly provide for a relative with a valid need, such as a minor or a vulnerable person.

Unfortunately, it is very common for a particular person (child, relative, carer, housekeeper, and others) to deliberately ingratiate themselves with an ageing or disabled person. They do so with the intention of inheriting some (or all) of the estate. This often is a fraud perpetrated upon other family members who have a proper claim on the estate. Under the proposed laws which give priority to the deceased’s wishes, such fraud will be successful most of the time. There are separate laws regarding undue influence, but they are ineffectual in this context.

What remains central to ensuring someone’s wishes are carefully thought through, is to have a Will in place (over half of South Australians do not), and to have it drafted by a knowledgeable and experienced legal practitioner who can ensure it is legally valid and viable.

For further information about Scammell & Co's Wills and Estates services please follow the link here

*This information is current at the time of publication. For accurate legal advice, please contact Scammell & Co on 08 8440 270.

Common questions about Wills and other estate planning documents answered

Wills are legal documents that name the people you want to receive property, possessions and assets that you own at the date of your death – these people are known as your beneficiaries. Wills are the only way you can ensure your assets are distributed in the way you intended after you pass away. Therefore, Wills are essential if you are concerned about who will receive your assets and it is particularly important if you have a family, or other dependants.

What are valid Wills?

Wills are only valid and accepted by the court if they are in writing and signed and dated (preferably every page) by the testator (the person making the Will) in the presence of two independent witnesses (aged 18 years or over). The witnesses must also be named on the Will and co-sign and date the Will in the presence of each other and the testator. To avoid a conflict of interest, a witness should not be a beneficiary to the Will. Only then is a Will put into full effect by a grant of probate. If a Will is not drafted and duly executed properly it may be set aside and your property distributed according to the rules of intestacy (the condition of your estate if you do not have a valid Will), which may conflict with your wishes.

Another important consideration for anyone wanting a Will is that it should be drafted and signed by someone of sound mind, memory and understanding – without any undue influence from other people.

Once a Wills is complete it should not be added to, deleted from, pinned, stapled or even have a paper clip attached. It is highly recommended that an experienced Wills and Estate Planning lawyer be consulted if an intended change is to be made to a Will because even the simplest change must be correctly done or it may have adverse results – potentially invalidating the Will.

Should I update my existing Will?

A Will should reflect your current wishes and circumstances. As a guide you should review your Will every few years. Changes to your circumstances can include events such as marriage, separation or divorce; you may have become a parent or grandparent; bought or sold assets; your financial situation may have changed significantly; you may have retired; or either a beneficiary or your appointed Executor may have died.

What is Probate & how does it work?

Probate is the legal process to validate the Wills of deceased persons to fulfil their wishes that are to be carried out by the Executor named in the Will. If awarded, a Grant of Probate is the court’s official recognition of the validity of a Will and who the Executor of Will is.

Probate may be required when a person has passed away and leaves behind certain kinds of assets. For example, if there is a large sum of money in a bank account and the deceased was the sole account holder, a Grant of Probate may be requested by the financial institution in order for the Executor to access the account.

What are the duties of the Executor?

An Executor is someone nominated in a person’s Will whose responsibility it is to administer the deceased’s estate. Many testators elect a friend or close relative to be the Executor of their Will. This nomination is typically regarded as a mark of respect and reflects a high degree of trust which the testator has in their abilities. However, the Executor’s duties are onerous and can be very time-consuming and often requires professional advice and assistance. If you have been appointed an Executor, you should seek-out the efficient services of a lawyer experienced in the administration of deceased estates.

What is a Power of Attorney?

A Power of Attorney is an important document that allows you to appoint one or more people to make decisions concerning your legal and financial matters while you are alive. A Power of Attorney ceases upon your death, at which time your Will comes into effect.

There are two types of Power of Attorney to consider:

A General Power of Attorney is an authority given to someone to deal with your financial and legal affairs on your behalf from the time you execute the document. For example, it allows you to appoint someone to sell your house while you may be overseas, invest your money or operate your bank accounts.

An Enduring Power of Attorney operates when you become legally incapacitated. For example, if you have lost mental capacity due to a stroke, dementia or brain injury. Both can be combined into a General and Enduring Power of Attorney should you wish to appoint someone now to act on your behalf and continue to act should you lose mental capacity.

While a Power of Attorney deals with your financial and legal issues, it does not cover personal aspects of your life such as health care, accommodation or lifestyle issues. These are covered by an Advance Care Directive.

What is an Advance Care Directive?

Advance Care Directives have replaced Enduring Powers of Guardianship, Medical Powers of Attorney and Anticipatory Directions. While your Enduring Power of Guardianship may still be valid, an Advance Care Directive allows you to set out in detail your wishes regarding future healthcare and lifestyle decisions, such as preferred living arrangements. It also enables you to set out legally binding refusals of healthcare.

An Advance Care Directive enables you to appoint someone (often your loved one) as your Substitute Decision Maker to make these decisions on your behalf when you are unable to make them yourself. Therefore, being able to make legally binding decisions now regarding your healthcare enables you to provide instructions for your loved ones to follow in what often is a traumatic and emotional time for them.

You may for example, include in your Advance Care Directive, to not be kept alive on life support or to be resuscitated in certain circumstances. Should this occur, these directions are then followed through by your Substitute Decision Maker, giving both yourself and them peace of mind.  It may also reduce the possibility of conflict between family members as you have appointed a particular person to carry out your wishes.

Scammell & Co is one of South Australia’s leading providers of Wills & Estates services. We have established an enviable reputation for quality and thoroughness. No matter how simple or complex your estate planning needs are, our lawyers have the expertise to provide customised Wills and Estate Planning documents. Call our team today on (08) 8447 4466 or contact us via the enquiry form to discuss how we can assist you.

*This information is current at the time of publication. For accurate legal advice, please contact Scammell & Co on 08 8440 270.