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By Kristy Hatcher, Solicitor: Wills and Estates, Owen Hodge Lawyers
New parents-to-be have a great deal to prepare for with the arrival of a new baby – especially if it is your first child, the list can seem daunting. However, one item that is often overlooked is the need for a change in your previous estate plan or the creation of a new plan, taking into account the needs of your new child. If you already have a plan in place for your current children, it is important to remember to update the plan to include the new arrival.
Firstly, you must have an understanding of the requirements of making a Will. The following prerequisites must be met:
- At least 18 years of age
- Of sound mind
- The acting of your own free will
- Your document should be typed (though handwritten Wills are acceptable)
- Name an Executor/Executrix – person responsible for carrying out your last wishes
- Name each beneficiary for each item you are bequeathing
It is equally important to keep in mind your assets that do not pass by Will, but instead pass by electing a specific beneficiary. These assets include:
- Assets held jointly with another person (such as a home)
- Superannuation benefits
- Life Insurance policies
- Assets contained in a Trust
If these assets are not being bequeathed specifically to a named spouse, then it is important that you name other beneficiaries. If you are planning on leaving these assets to your children, you need to indicate the names of the children who will be the beneficiaries and the percentage of distribution to each child. If assets are contained in a Trust, it is important that you understand the terms of the Trust and the manner in which you are allowed to disburse its contents upon your death.
Despite the fact that your child or children are minors, the monies will still invest immediately upon your passing. As such, it might not be the wisest decision to leave your assets directly to your minor children. Instead, you might want to consider creating the following documents;
- Guardianship Papers; or
- A Trust with a named Trustee to distribute the assets to your child’s Guardian as needed.
A guardian is someone who will take care of your children and their needs in the event that you, and your spouse, are deceased. When choosing a guardian, the following concerns should be addressed;
- The guardian will be responsible for all of the daily and long term care of your children
- All lifestyle decisions will be made for your child by the guardian you select
- The guardian will ensure that your child is housed, clothed, fed and educated
- The guardian will be responsible for the financial needs of your child
Because guardianship is a huge responsibility, it is important you discuss the issue with the individuals you are considering. Be sure to ascertain if they are willing to be responsible for each of the above-listed needs of your child.
Keep in mind that circumstances can change for people and therefore someone who agrees to be your child’s guardian could possibly change their mind. It is important that you periodically ask your guardian if they are still willing to take on the responsibility. It is also a good idea to name an alternate guardian in the event that the initial guardian you chose abdicates their responsibilities.
If you elect to leave your estate assets in a Trust for the benefit of your children, the named Trustee will be the person to distribute the assets to the children’s guardians until they are of legal age. However, you can specify in the Trust, the age and amount of distribution you would like the children to receive directly after they turn 18 years of age.
If you have a child with special needs, it is extremely important that you consider both their immediate financial and emotional needs, as well as their long term needs. Some children with disabilities will need similar care to their typical siblings, but some will need more intensive care, including some form of institutional or group care once they become reasonably independent adults. It is important to consider the cost of this kind of long term ongoing care for a child with special needs and create the best possible financial plan possible for them.
While it is difficult to consider who will care for your children in the event that you and your spouse are not able to, it is important that all parents, take the time to do so. It is always best if you are the one to make decisions regarding who will raise and care for your children, both financially and emotionally, in the event that you are unable to do so.
About Kristy Hatcher
Kristy Hatcher is an experienced solicitor who joined Owen Hodge Lawyers in 2016. She has over 17 years legal experience spanning a broad range of areas including Family Law, Criminal Law, Civil and Commercial Litigation, Wills and Estates, Mortgages, Leases and Business transactions.
In 2006, Kristy’s volunteer work at the Macarthur Legal Centre was recognised with a nomination for an Award from the Law & Justice Foundation of New South Wales.