All good questions, which raise some important issues.

A TRUST

First, it is important to understand that a trust is regarded in law as a separate legal entity from you. A trust does not invalidate your will. The will only deals with your personal assets, not those held in the trust. It is very important that you write a new will when creating a trust.

When you transfer your assets into a trust this creates a debt - the trust owes you the value of the assets transferred. If you want to gain the full benefit of having a trust, it is important to begin a gifting programme. Generally people forgive the debt that the trust owes them at the rate of $27,000 each year. This is the maximum that can be gifted in any one year without paying gift duty. Your new will should forgive any remaining debt that the trust may owe to you at the time of your death. There is no gift duty when you forgive debt in your Will.

It is helpful for the surviving trustees of your family trust that some direction is given to them. For this reason you can leave a note of wishes or directions you would like the remaining trustees to follow on your death. Such wishes or directions are not binding but do give the trustees the benefit of your intentions. Such a document can be quite specific or it can be in general terms. A trust can last for a very long time - often up to 80 years. The assets do not have to be sold or disposed of immediately after your death. The provisions for disposal of trust assets can be similar to that of a will. The trust assets are not subject to a claim by persons set out below. This gives you a greater freedom of disposal.

A WILL

The issue of making a foolproof will is very important. It can be a very destructive process when family members challenge a will. Family members’ interests are pitted one against the other and the fall out can last through successive generations. Many people wrongly assume they can make a will in whatever way they like. This is a mistaken belief as the Court has jurisdiction to modify wills under the Family Protection Act 1955.

What can a will maker do to avoid a challenge to their will and the family pain that inevitably accompanies such challenge?
The Court will apply the following test when critically examining a will. Has the will maker breached his/her moral duty to the claimant as judged by the standards of a wise and just will maker? If so what is appropriate to remedy that breach? Anyone making a claim must prove that the deceased breached his/her moral duty to them as claimant. They must also prove they have “need”. “Need” has been the subject of ongoing debate in the Courts and is constantly reviewed in the light of social change in the community.

Who can be a claimant?
The law provides for husbands, wives, de facto partners, children, grandchildren and step children who were being maintained by the deceased or entitled to be maintained by the deceased before his or her death to make a claim. Generally speaking a spouse/de facto partner has a stronger potential claim than a child who in turn has a stronger claim than a grandchild.

In having had more than one marriage or relationship, you should have entered into an agreement with each partner, either at the start of the relationship or certainly at the end, to record who owns what assets. If you have completed such agreements then your former partners will not be able to bring a successful claim against your estate. You will therefore need to ensure you make a will that provides for your current partner, your own children and also the children of your current partner (if you are currently supporting them or you ought to be supporting them.)

If you do not make a will there is a much larger risk of a claim against your estate as in that circumstance the law will provide who will receive and how much. This may be a result which may be quite different from what you would expect.

In addition if you have not made a will and have lived with your current partner for more than 3 years then they will be entitled to bring a claim against your estate under the Property (Relationships) Act 1976. They can seek a ½ share of all relationship property.

Whilst not used as frequently, there is also the possibility that someone could claim against your estate if you have promised them something but have not provided this in your will. You need to make good your promises by making a will that covers any promises made.

As every situation is different, this information is of a general nature only. It is important that you see your lawyer to discuss what is needed to best cater for your particular circumstances.