Future-proofing your wishes
Future-proofing your wishes
Being a business owner is demanding on time and energy – especially with the increasing requirements to be compliant and ensure you do all the reporting to meet your legal obligations. The task list of things to do and the deadlines can seem daunting, and sometimes it can mean important, but just not so urgent, considerations are put on the back burner.
There are some tasks you really do need to add to your to-do list on an annual basis. These include a review of your wills, trust structures, enduring powers of attorney and succession planning. Any changes in your family make-up, location, business status or health issues – both mental and physical – can have a big impact on these areas.
Here are some tips on what to look out for when you are doing a review.
Firstly, check that your will is still in line with your wishes and if your circumstances have changed it is likely to require an update. Relationships can change – a child’s marriage may have ended. The business circumstances can change - you may wish for it to continue running after your death or you may wish for it now to be wound up. However, you also want to reduce the chance of contestability of your will – and remember the bottom line is the law can supersede your wishes. It’s good practice to eliminate as many potential legal challenges as you can, which means complying with each Act that relates to wills. This would mean finding out the best way to allow for unequal division of your estate amongst your children.
In a similar vein, family trusts have historically been regarded as a means of addressing issues such as blended families, tax planning and the protection of assets for coming generations. However, the relationship between trust law and relationship property law is complex and evolving quickly. Trusts can no longer be regarded as offering the protection they once did, and alternative structures or additional measures need to be considered. This leads us on to relationship property agreements. While they can feel like a tricky concept to raise, a well-drafted agreement can provide the most effective means of protecting inherited property or business assets from relationship property claims.
Another issue you need to consider with family trusts is to make provision for the possibility that a trustee may become mentally incapacitated, through dementia for example, and have to be removed from that role. It’s not pleasant but thinking about this as a precaution can save a lot of heartache down the track. There have been some sad cases around this that have ended up in court. If you already have a trust, give some thought to the trustees. Are they elderly or is there any question about their mental capacity? If so, it is best to act quickly.
It’s also important you don’t assume that just because you’ve signed an enduring power of attorney you’re covered for all areas. You need to check with your lawyer exactly what areas it does and doesn’t cover.
If you have a succession plan, then make sure it’s a living document. The kinds of family and circumstance changes mentioned already will have an impact on that plan – and, unsurprisingly, sometimes people change their minds and neglect to have the real discussions about this.
So while you may not even need to make any changes, setting an annual deadline to review and have discussions with those involved will give you peace of mind. It means the whole family gets used to talking and asking questions about wills, trusts, succession and powers of attorney. This will help ensure your legal structures and documents remain relevant to your business and life.
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Disclaimer: This article should not be used as a substitute for professional legal advice tailored to your specific circumstances and should not be relied upon for that purpose.