There is no getting around that succession law and estate planning is complex. Very complex.
It’s now a discrete area of legal specialty, whereas in years past it was an area full of generalists and lawyers who did a bit of everything, including the odd Will on the side. It’s also a rapidly evolving area, ever-changing and particularly topical as we’re at the start of the largest generational wealth transfer in the history of the planet. A suggested $4.3 trillion (yes trillion with a T) in Australia alone is forecast to change hands from the existing baby boomer generation.
And with family, business and asset structures now increasingly complex, it’s no surprise estate planning and estate litigation are front of mind and front page, growing in both number of cases and size of the prize. Over the past 15 years we’ve seen an exponential rise in challenges here in WA, both at the wealthy end of the scale—where the fight can be over many tens and even hundreds of millions of dollars—right down to the smallest estates in the hundreds of thousands.
The most common estate planning traps we see time and time again
Wills past their expiry date
This mistake tops our list when it comes to what ends in dispute. To quote the legendary Ferris Bueller (Paramount Pictures, 1986) “life moves pretty fast, and if you don’t stop and look around once in a while you could miss it.” Life does move fast and outmoded and outdated estate planning can be so ineffective as to be almost irrelevant and not reflective of the actual landscape or wishes. Generally, we recommend reviewing estate planning every three years or so to ensure it still fits the bill and reflects current situations, but should be looked at even sooner if there are large changes in a person’s situation such as new partners or children, a change in health and of course a change in relationship status such as divorce or marriage or moving in with a partner. Leaving a Will or estate plan in set-and-forget mode means kids are forgotten, financial positions have changed, relationships have or are likely to change, risks have changed and business interests and asset positions can also be markedly different.
Equal is not necessarily fair
Wills ripe for challenge are those that don’t consider the competing needs of different beneficiaries and instead treat them all equally. For instance, a self-supporting adult child, on a good wicket with resources behind them and a rosy future ahead is not on the same playing field as a child who is dependent on their parents, with a history of failed education, who has no visible path to success or standing on their own feet. They are not on the same playing field and they are not even playing the same game.
Treating them equally is a natural human instinct but doing so leaves the estate very open for a challenge. There are any number of creative and super-smart strategies to create equality without leaving the door open for challenge, and smart conversations to be had to ensure happy families despite different outcomes for beneficiaries.
Not getting started on legacies early
Successful estate planning, like any planning, should not left to the eleventh hour. Human nature often interferes here, telling us it can wait, I am healthy, I am young, I have plenty of time up my sleeve and so on. But the best succession plans often include the gradual transfer of relevant assets, businesses and control well before death, and open the door to meaningful, powerful conversations within families that can set them up for group success. We often architect and steer these conversations, and they are rewarding to see succeed.
Broken promises and dashed expectations
Some of the most heartbreaking scenarios we help clients through include the “one day all this will be yours” farm scenario or the “it’s equal – you get the house in the city and your sister gets the share portfolio, both are the same” but then on the Will being read they are far from the same. Another is the promise of one or more beneficiaries taking over the business, that never actually happens or doesn’t happen soon enough. These sorts of situations are terrifyingly common, ripe for challenge, and have devastating and multigenerational consequences. If we could eradicate these today, we would. They rip families apart with scars that never heal.
The “capacity or no capacity”? question mark
Wills made by the elderly late in life and close to death are common. But frequently the elderly have real loss of mental capacity, which can manifest in suspicious or irrational Wills that radically favour one beneficiary over others and do not make sense to the family. This happens all the time and leaves the door wide open for challenge. With longer life spans, the increase in Alzheimer’s and dementia diagnoses, without well-considered estate planning the likelihood of things going awry for all parties is high. Loss of capacity is impossible to avoid as we age, but with the right focus, even clients with a degree of incapacity are likely still able to get their estate planning done. More hoops have to be jumped through, more caution taken and protective measures put in place to resist challenge if it occurs.
Excluding beneficiaries for capricious or unjustifiable reasons
Unlike some European countries that have forced heirship provisions, we have complete testamentary freedom. We have the right to leave our assets to anyone as we please. But making flippant decisions in estate planning rarely gives either good outcomes or resists challenges from aggrieved beneficiaries.
Having the right considerations, the right conversations, the right strategies and the right documentation within an estate plan is critical when it comes to how you allocate your estate. Being mean-spirited and capricious (traits we do see creep into some estate planning especially by the very elderly who may be suffering the personality changes associated with mild dementia) will lead to your estate suffering, not necessarily the person you were seeking to disinherit or make suffer. We caution clients as much as we can about deliberately causing disharmony via their estate planning, but sometimes, very rarely, it is justified. Where a person is to be legitimately disinherited (such as for disentitling conduct) we can help with the right, specialist materials to assist in resisting what is likely a certain challenge.
Not updating Wills following a divorce or marriage
Both of these events automatically revoke a Will. With no Will you are at the mercy of the law of intestacy, which is a strict formula imposed by law dividing assets among family members regardless of need or age or strength of relationship – this often results in everyone being disappointed. Don’t fall into this camp – such an easy one to avoid. We draft many Wills in contemplation of divorce or in contemplation of marriage, which means if the marriage or divorce occurs in the future, the Will is still valid. Care and diligent drafting is required here though.
Not considering the whole story and forgetting about your Super
There is a big difference between estate assets and non-estate assets. We are surprised by how many incredibly financially sophisticated clients don’t really understand the difference, believing that their Family Trusts and Super will just be gathered up in their Will along with everything else. Super, like a Family Trust, sits outside the Will and must be dealt with by a specific pathway. Non-estate assets include not just superannuation and Family Trusts but jointly owned assets, the main one usually being the family home. If the correct pathways are not worked out for these assets they can, and very often do, land in the wrong way with the wrong people, ultimately resulting in unexpected, unplanned and wildly inequitable division of the assets and consequent hugely increased likelihood of a challenge.
ChatGPT or the great God of Google can do it all for you
The $50 DIY online or newsagent Will approach is a dangerous path to travel and is one of the key reasons our WA Courts are so clogged up with estate disputes. These Wills are so common now that the recently retired Master Sanderson of the WA Supreme Court has a long list of cases he has tried over the years that revolve around the curse of the home-made Will. Home-made Wills are so often not just ill-considered but badly worded, completely ambiguous and manifestly inadequate. Very rarely do they deal with super properly and often contain a clause which says “I give my superannuation and life insurance to …” without understanding that clause does not work. The legal (and emotional) costs of fixing these Wills up and dealing with the fallout after death are usually orders of magnitude more than the costs of having the very best estate planning lawyers write them in the first place. Home-made Wills are one of the greatest false economies of all time.
Handshake arrangements or verbal assurances and promises
Promises are often made in families, but rarely are they properly documented. Handshake deals are great when everyone is 100% aligned and happy. They are less satisfactory when families come to divide assets after one of the key people to the verbal arrangement is no longer alive to verify its existence. Without proper documentation of promises or arrangements, they simply don’t happen. Disappointment follows, then broken hearts and litigation. Some of the verbal deals made within families revolve around millions of dollars of assets, and if they were strangers doing the same deal it would be laughable to even think about such an arrangement without putting the right documentation in place. Families often don’t think that way, but they should.
Ready to get your estate planning right?
If any of the traps above sound all too familiar, now’s the time to take stock. Estate planning doesn’t need to be overwhelming, but it does need to be done properly. The cost of getting it wrong is almost always greater than the cost of getting it right.
We work with West Australians every day to craft thoughtful, practical plans that genuinely reflect their wishes, protect their families, and stand the test of time. If it’s been a while since your last review, or if you’ve never properly sat down to put a plan in place, we’re here to guide you through it.
Get in touch for a confidential, no-pressure chat about how we can help you take the next step.
