Review your affairs

Don’t put off having your estate plan checked and reviewed regularly, particularly if there is a change in personal or financial circumstances.

Consider the case of Barry, aged 44.  The facts are:

  • Sole proprietor of a travel agency in a medium-sized South Australian country town.
  • Happily married to Sandra, who is a part time aged care worker.
  • Has three children aged 4, 7 and 12.
  • Was in good health.
  • Owned a home in a joint tenancy worth approximately $600,000.It was mortgaged to BankSA – balance of outstanding loan $350,000.
  • Barry did not have any superannuation.As a self-employed business proprietor supporting a wife and three children, he never quite had enough money to put any aside for superannuation.
  • Life insurance – too expensive.
  • Barry had household contents, a fishing boat and a small amount of savings.

 
A short time ago, his father died, leaving him an inheritance of $300,000, which was expected to be paid within the next few months. Barry was intending to organise a will, but never found the time to do so.
 
Barry:

  • was extremely hardworking / dedicated to his clients
  • coached his son’s football team
  • he was a member of the local service club
  • was devoted to his wife and three children

Barry tragically died in a car accident.  He died without a will – “intestate”.

Result:

  • Barry’s estate was distributed in accordance with the “Rules of Intestacy”.
  • The house was in a joint tenancy, therefore automatically vests with Sandra.
  • Barry’s estate is comprised of a boat and savings, worth about $50,000, and an inheritance from his father, worth about $300,000.
  • Gross value of estate assets: $350,000.
  • is responsible for servicing the mortgage.
  • Under Rules of Intestacy, Sandra gets first $100,000 plus one half of the balance, i.e. $100,000 plus one half x $250,000 = $225,000.
  • $125,000 is held by Public Trustee for the infant children until they attain the age of 18 years.
  • $125,000 paid to Public Trustee could otherwise have been used to completely pay off the mortgage (of $350,000) if Barry had left a simple will leaving everything to Sandra, with substitution for children
    in equal shares if Sandra died before him.

Charles Beresford

5 December 2016