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.
- 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”.
- 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.
5 December 2016