(and other flawed estate planning assumptions)
It’s a common assumption fraught with danger: Many people appoint one of their children to be the executor of their will – expecting (or hoping) that everything will be resolved after they’re gone.
“It’s a very common way to think,” said Marie Brownell, National Manager of Estate Planning at Equity Trustees. “But there are two scenarios in particular where this assumption is very much fraught with danger.
“The first is where the kids don’t get along. It’s surprising how many people somehow imagine that when they die, their kids will suddenly find common ground and be able to resolve their parents’ estate amicably. It’s a nice idea, but I’ve worked on many estate administration matters and the more common scenario is that the death of a parent heightens tensions between siblings.
“It becomes especially problematic when one of the children is the executor of the estate. This can be a final straw in some families – tensions which may have been held in check while the parent is still alive, are unleashed. It can be very difficult for that child to perform the role of executor effectively in those circumstances,” Ms Brownell explained.
She said that people who know their offspring have tense relationships often appoint independent executors to keep the peace.
“When people think it through, they often want to avoid putting another family member or family friend in the middle of their children – which is probably very wise.”
Ms Brownell said the other scenario that can be difficult in managing an estate after a parent has passed away is when the arrangements in the Will are complex – or where the proper estate planning has not occurred.
“Managing an estate administration as an executor is a big responsibility. There are tax obligations which impact the estate and beneficiaries depending on their circumstances – and also a number of legal requirements in winding up certain assets. The estate administration can be further complicated with litigious claims against the estate and complex asset structures
“In these cases, leaving it all to the kids to sort out after you’re gone can add a big workload to whichever child is appointed as executor.”
Ms Brownell advised people to think carefully about their family dynamics, as well as their assets when reviewing their estate plans.
“It can be difficult to think about some of these aspects, which is why consulting a professional can be very useful. Not just in assisting you to have the right estate planning documentation to achieve what you want in terms of distributing your assets after you’re gone, but also in getting advice on the available alternatives to keep the peace and reduce any burden that may come with that process when the time comes,” she concluded.
Read more about estate planning, executor appointments, estate administration and Equity Trustees.
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Equity Trustees was established in 1888 for the purpose of providing independent and impartial Trustee and Executor services to help families throughout Australia protect their wealth. Estate planning services are provided by EQT Legal Services Pty Ltd (ABN 32 611 391 149), administration services are provided by Equity Trustees Limited (ABN 46 004 031 298) AFSL 240975 and Equity Trustees Wealth Services Limited (ABN 33 006 132 332) AFSL 234528 are part of the EQT Holdings Limited (ABN 22 607 797 615) group of companies, listed on the Australian Securities Exchange (ASX:EQT).
This communication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice which takes into account an individual’s specific objectives, financial situation and needs.