Latest / Contributing to Your Life / Estate Planning: The Conversation Too Many Families Avoid | Ep. 09

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Estate Planning: The Conversation Too Many Families Avoid | Ep. 09 · Contributing to Your Life

• 0:00
  SPEAKER_01: Death is inevitable.
• 0:01
  SPEAKER_01: It is the one thing certain in life.
• 0:04
  SPEAKER_01: So you might as well plan for it.
• 0:06
  SPEAKER_01: If you were to pass away, how would your business continue to operate legally without you there?
• 0:12
  SPEAKER_04: If you died tomorrow, the government already has a plan for your money, but it might not be what you think.
• 0:17
  SPEAKER_04: And you could be giving an extra headache to the ones you leave behind.
• 0:20
  SPEAKER_01: Sometimes clients come in and say, I don't want a will.
• 0:22
  SPEAKER_01: Whoever's left, it's up to them to figure it out.
• 0:24
  SPEAKER_01: But I just want to let you know that if you don't want an estate plan, the government's going to give you one.
• 0:28
  SPEAKER_02: By the end of this episode, you know exactly where a basic will stops and estate planning starts.
• 0:33
  SPEAKER_02: You'll know about what often gets overlooked and why it matters.
• 0:36
  SPEAKER_02: And you'll know how blended families protect what they've built without the will turning into a court case.
• 0:42
  SPEAKER_01: Your will isn't for you.
• 0:44
  SPEAKER_01: Your will is for the people that you leave behind.
• 0:46
  SPEAKER_01: The way that I try and get clients back on track is that's fine if that's your perception of things, like you don't care what happens, but think about the people that you leave behind.
• 0:56
  SPEAKER_04: Tyrone Dutt is an estate planning solicitor who spends his career inside these exact scenarios.
• 1:01
  SPEAKER_01: Sometimes people think estate planning is rigid, like Moses and the Ten Commandments.
• 1:04
  SPEAKER_01: You chisel them in, you put them in your drawer and you forget about them.
• 1:06
  SPEAKER_01: Estate planning should be living and breathing.
• 1:08
  SPEAKER_04: Today we're covering what actually happens if you die without a will, how getting married can change your will, and the one document that protects you while you're still alive, not just after you're gone.
• 1:16
  SPEAKER_04: Firstly, I need to update my will to make it a bit more exciting.
• 1:22
  SPEAKER_00: Before we get into the episode, please be aware that the discussions in this podcast are for informational purposes only and should not be considered financial or legal advice.
• 1:31
  SPEAKER_00: It does not take into consideration your personal circumstances.
• 1:34
  SPEAKER_00: Consult a qualified professional first before making any investment decisions.
• 1:39
  SPEAKER_02: Welcome back to another episode of Contributing to Your Life.
• 1:42
  SPEAKER_02: There's one thing in life, Frank, that is certain.
• 1:46
  SPEAKER_02: Yeah, what's that, Aaron?
• 1:47
  SPEAKER_02: It's definitely not interest rates, that's for sure.
• 1:51
  SPEAKER_02: Definitely not the budget.
• 1:53
  SPEAKER_02: There's a lot of uncertain things, as we know in life, but the one thing you, me, things are going to happen, which is death.
• 2:00
  SPEAKER_02: You know, we're all going to die at some point, as sad as it is.
• 2:03
  SPEAKER_02: So we thought today we want to talk exactly about that.
• 2:07
  SPEAKER_02: How do we protect, you know, our family members?
• 2:10
  SPEAKER_02: How do we protect, you know, people we love?
• 2:12
  SPEAKER_02: So today we've got a specialist, as they say.
• 2:16
  SPEAKER_02: Tyrone.
• 2:17
  SPEAKER_02: Tyrone, Dut, lawyer, solicitor.
• 2:21
  SPEAKER_02: We are excited to have you here today to talk all things estate planning.
• 2:25
  SPEAKER_02: Thanks for coming.
• 2:26
  SPEAKER_01: Thanks for having me.
• 2:26
  SPEAKER_01: What an intro.
• 2:29
  SPEAKER_04: Yeah, so Tyrone, why don't you start by telling us a little bit about what is estate planning?
• 2:33
  SPEAKER_04: I know people probably heard this term, but they probably don't actually know what that means.
• 2:37
  SPEAKER_01: Yeah, sure.
• 2:38
  SPEAKER_01: Um, look, estate planning is one of those things that get interchanged with, you know, having a will, succession planning, etc.
• 2:45
  SPEAKER_01: It's really simple.
• 2:46
  SPEAKER_01: Estate planning is a plan there for you to have for the transfer of your wealth and assets, right?
• 2:53
  SPEAKER_01: It's a plan to make sure that those that you leave behind are taken care of and protected, but even things such as like your businesses and things like that, that they can continue to run properly.
• 3:03
  SPEAKER_01: So an example is, you know, if you were to pass away, um, how would your business continue to operate legally without you there?
• 3:12
  SPEAKER_01: Um it's pretty much as simple as it is.
• 3:16
  SPEAKER_04: Right.
• 3:16
  SPEAKER_04: And and look, I mean, you know, we hear the term death, right?
• 3:19
  SPEAKER_04: And to a lot of people, very uncomfortable topic, like, you know, I want to live forever.
• 3:23
  SPEAKER_04: Right.
• 3:23
  SPEAKER_04: And it can be quite a bit of a morbid topic, right?
• 3:26
  SPEAKER_04: So I imagine that that's not always a comfortable conversation for you to get into with somebody.
• 3:31
  SPEAKER_01: Well, no, it's it's it's not.
• 3:33
  SPEAKER_01: And you know, like I joke with a lot of people, and I try to like I think estate planning is quite a morbid topic because no one really wants to talk about their mortality, but um, I try to keep it a little bit light in the sense that like you were saying in the intro, like death is inevitable, it is well the one thing certain in life, um, other than taxes.
• 3:53
  SPEAKER_01: Um, so you might as well plan for it.
• 3:57
  SPEAKER_01: You know that it's on the horizon at some stage, we don't know when it will happen for us, and that's when estate planning comes in to provide that risk mitigation and that certainty um for something that we don't actually know when will happen.
• 4:11
  SPEAKER_01: But to your point, yes, it is a bit of a morbid topic.
• 4:14
  SPEAKER_01: I try to like to keep things a little bit light, um, you know, depending on the client, like I generally like to say to them that every day you wake up, you're one day closer to being to dying.
• 4:27
  SPEAKER_01: Um, it is it is it is a scary thing, but if you think about it and it is true, and once you understand that and realize that it actually provides you an empowerment, right?
• 4:39
  SPEAKER_01: Um, if you bury your head in the sand about it, it it's not gonna change things.
• 4:44
  SPEAKER_01: But what I like to do is try to empower clients to say, this event is occurring, we don't know when it will occur, so let's prepare you as much as possible.
• 4:54
  SPEAKER_02: Yeah, and I think for you know, Frank and I being in the mortgage space, you know, there's always clients wanting to build their wealth.
• 5:00
  SPEAKER_02: There's always clients that want to add one more property.
• 5:03
  SPEAKER_02: Uh, but I would say maybe 80 to 90 percent of those clients uh have not planned for what happens in the case of this event.
• 5:11
  SPEAKER_02: I don't know if there's a percentage right now in Australia of how many people actually have a will uh or how many people have estate planning.
• 5:18
  SPEAKER_02: And what would you say is the biggest thing you see people, you know, stopping them from getting a will or getting estate planning?
• 5:24
  SPEAKER_01: Yeah, sure.
• 5:25
  SPEAKER_01: Um so there is a percentage.
• 5:26
  SPEAKER_01: Um it's just shy of 50%.
• 5:29
  SPEAKER_01: Um so currently in Australia, about$86.5 billion worth of estates get transferred in Australia alone each year, um, just under half of that without a will, right?
• 5:42
  SPEAKER_01: Um so the main thing that I think stops people from sitting down and thinking about that is the stigma of death, right?
• 5:51
  SPEAKER_01: Growing up, a lot of us had that stigma that we don't talk about death, we don't talk about money, things like that, right?
• 5:58
  SPEAKER_01: And whether it be culturable, sorry, cultural things where you know they don't particularly like to talk about death because they feel like it might be a hex on them or anything like that.
• 6:06
  SPEAKER_01: But I think it really comes down to an educational thing as well, because you you talk about your clients and your clients, you you try to generate wealth for them, right?
• 6:17
  SPEAKER_01: And the service that I provide is trying to protect that, um, not only for themselves, but the generations after them.
• 6:25
  SPEAKER_01: And if you think of Australia um on a global scale, we're actually quite a young country, right?
• 6:30
  SPEAKER_01: And so the transition of wealth between generations is quite in its infancy stage.
• 6:37
  SPEAKER_01: If you think about Europe and UK and Russia, we've got long lines of legacies of families, but in Australia, we've only got really a short line.
• 6:46
  SPEAKER_01: And so there hasn't been that discussion or that education between generations about succession planning and estate planning.
• 6:55
  SPEAKER_01: Because if you think about, take one generation before the booms, the silent generation, the generation that came out post-war, they didn't really have a lot to gift, right?
• 7:05
  SPEAKER_01: Um, and then we think about the boomer generation and the influx of the migrants that came into Australia, they started with nothing, right?
• 7:14
  SPEAKER_01: And they built their wealth over a lifetime.
• 7:16
  SPEAKER_01: And because their education process hasn't been really about talking about estate planning, they haven't really inherited anything.
• 7:23
  SPEAKER_01: When they talk about the next generation, whether it be Gen X, millennials, Gen Y, there isn't that discussion.
• 7:30
  SPEAKER_01: And so it's not so much that they're scared about talking about it, they actually just don't know.
• 7:36
  SPEAKER_01: Because they've they never received anything, their parents never really had a succession plan or an estate plan.
• 7:41
  SPEAKER_01: And so when they talk to their children, it's a lot of our clients, it's an education thing, it's an eye-opening thing.
• 7:47
  SPEAKER_04: Yeah, so is it the case that like when it comes to estate planning, is it just about having that will in place?
• 7:54
  SPEAKER_04: Um, because you know, a lot of people might think, include myself, it's quite simple.
• 7:58
  SPEAKER_04: Like, you know, when when I'm gone, I want my assets and things to be distributed a particular way.
• 8:04
  SPEAKER_04: Is it as simple as that or is there more to it?
• 8:05
  SPEAKER_04: How far does it go?
• 8:06
  SPEAKER_01: Um, so estate planning can be as simple and as complex as you um wish it to be.
• 8:13
  SPEAKER_01: Um, to that question, your will is just really one piece of the puzzle when it comes to succession planning and estate planning.
• 8:20
  SPEAKER_01: Estate planning is the plan in place to ensure that there's a smooth transition of your wealth when you're no longer here, right?
• 8:27
  SPEAKER_01: It comes down really to two things protection and control.
• 8:31
  SPEAKER_01: So I can sit with one client in the morning and they can say to me, I don't really value protection or control.
• 8:39
  SPEAKER_01: And their estate plan will be very different to the client I may see in the afternoon that says, I do value protection and control.
• 8:46
  SPEAKER_01: I want to make sure that I protect these assets, I want to make sure that I have um control over this wealth because I've generated it and I've generated it for a specific purpose.
• 8:56
  SPEAKER_01: It's not just for my children, it's for my grandchildren, my great-grandchildren.
• 9:01
  SPEAKER_01: And that's the client that I think I can provide most value to because they're on they're continuing the journey that you guys have you've you guys have started for them, right?
• 9:12
  SPEAKER_01: They're creating what's called intergenerational wealth.
• 9:14
  SPEAKER_01: Yeah.
• 9:15
  SPEAKER_01: So to you to your um to answer your question, is it as simple as um sitting down and drafting a will?
• 9:22
  SPEAKER_01: Um, it can be, but it really just depends on what you value in that.
• 9:27
  SPEAKER_02: Yeah, I think there's a lot of complexities.
• 9:29
  SPEAKER_02: I know we can go down a rabbit hole with different scenarios.
• 9:31
  SPEAKER_02: What happens, you know, if the person that I put down their will is no longer here, there's there's you know a lot of things that we can come up with.
• 9:37
  SPEAKER_02: I think fundamentally to help our listeners understand what happens if you don't have a will.
• 9:43
  SPEAKER_02: So what's the what happens if, for example, let's use the example I myself, I have a property, I pass away, I don't have a will in place, say I've got no family, uh, no kids.
• 9:54
  SPEAKER_02: What happens in that process?
• 9:56
  SPEAKER_02: Because I think that'll help listeners understand, okay, that's what happens to my property.
• 10:00
  SPEAKER_02: It goes to this or this or this.
• 10:01
  SPEAKER_02: I think some people don't even know what actually happens.
• 10:03
  SPEAKER_02: Yeah, think about it.
• 10:04
  SPEAKER_01: Yeah, sure.
• 10:05
  SPEAKER_01: I love this question.
• 10:06
  SPEAKER_01: Um, because sometimes clients come in and say, I don't want to will, I don't I don't need an estate plan when I pass away.
• 10:15
  SPEAKER_01: Whoever's left, it's up to them to figure it out, right?
• 10:18
  SPEAKER_01: Um, and whether that attitude is right or wrong is not for me to judge.
• 10:24
  SPEAKER_01: Um, but essentially, I like to inform them is that's great.
• 10:28
  SPEAKER_01: I understand that um that's your wish, but I just want to let you know that if you don't want an estate plan, the government's gonna give you one.
• 10:36
  SPEAKER_01: And they give it in um, depending on which state you are, via the succession act of that state or the equivalent.
• 10:44
  SPEAKER_01: So in New South Wales, New South Wales, Queensland, Victoria all have different or all states have different succession legislation.
• 10:51
  SPEAKER_01: Um, the East and Seaboard are pretty similar.
• 10:53
  SPEAKER_01: Queensland, New South Wales, Victoria.
• 10:55
  SPEAKER_01: And essentially it goes along these lines.
• 10:58
  SPEAKER_01: You pass away without a will, you pass away what we call intestate, right?
• 11:01
  SPEAKER_01: Without a testamentary instrument.
• 11:03
  SPEAKER_01: You don't have a will, everything goes to your spouse.
• 11:05
  SPEAKER_01: You don't have a spouse, everything goes to your children, no children, goes to your parents, no parents, brothers and sisters, no brothers and sisters, um, aunties and uncles slash cousins, no aunties and uncles slash cousins goes to the government, right?
• 11:17
  SPEAKER_02: So no second cousins.
• 11:18
  SPEAKER_01: No, no, but in saying that, right, and this is where it comes comes down to, and you guys are gonna say you're a broken record today, it comes down to protection and control.
• 11:27
  SPEAKER_01: How much do you want to protect and how much do you want to control?
• 11:30
  SPEAKER_01: Right?
• 11:31
  SPEAKER_01: Because if someone says, Well, I'm happy for that to happen and let caution to the win, great.
• 11:37
  SPEAKER_01: But your will isn't for you, your will is for the people that you leave behind, yeah, right?
• 11:44
  SPEAKER_01: And so the way that I try and get clients back on track is that's fine if that's your perception of things, like you don't care what happens, but think about the people that you leave behind.
• 11:54
  SPEAKER_01: And it can be complex when we have competing interests, such as, you know, maybe have a blended family.
• 12:03
  SPEAKER_01: So, you know, do you leave everything to your spouse?
• 12:05
  SPEAKER_01: What happens when your spouse dies?
• 12:07
  SPEAKER_01: Does everything like and they have children of their own?
• 12:10
  SPEAKER_01: How does their estate get split up?
• 12:12
  SPEAKER_01: How do you take care of your surviving children, etc.?
• 12:15
  SPEAKER_01: But um, to your point about second cousins, the bar to make a family provision application is quite low in New South Wales, particularly if you are related to the person that's passed away.
• 12:28
  SPEAKER_01: So if there is no will, um, everything's going to spouse or children, for instance.
• 12:34
  SPEAKER_01: If someone comes out of the woodwork and says, you know, Uncle Aaron promised me that when he passed away, you know, he would give me$100,000 or something like that, and hear the text messages, etc., to it, that obviously complicates things because what you thought would be a smooth transition to that wealth has now become a complex one.
• 12:53
  SPEAKER_04: Now, even if someone has their will, like I'm hearing that there's certain life events that are going to nullify that will.
• 13:00
  SPEAKER_04: Like, for instance, if someone gets divorced or actually get remarried, you mentioned blended families, right?
• 13:05
  SPEAKER_04: Yes.
• 13:05
  SPEAKER_04: So is there anything else that can uh affect the validity of a will?
• 13:09
  SPEAKER_01: Marriage and divorce are um usually factors that come into play that invalidate um um a will.
• 13:16
  SPEAKER_01: In respect of other things, there are certain acts um that can invalidate a will, like for instance, you know, if um if there's a murder, so if someone um you probably see it on a lot of TV shows, you know, um someone murders a spouse to get like you know, insurance pays out and things like that.
• 13:34
  SPEAKER_01: In Australia, that invalidates your you as a beneficiary to a will, things like that.
• 13:39
  SPEAKER_01: But um marriage is probably one of the big things.
• 13:41
  SPEAKER_01: Um, a lot of people may have a will before they get married.
• 13:46
  SPEAKER_01: If their spouse isn't a major beneficiary in that will that they drafted um prior to being married, that will become will become nullified.
• 13:55
  SPEAKER_01: Divorce proceedings um don't automatically um invalidate a will, but um they obviously come into play, particularly if you have property settlements and things like that in that respect.
• 14:08
  SPEAKER_01: It's important to note that if you just separate from your spouse and not formally get divorced or have a separation proceedings or a property settlement, they can still make a claim on your estate, and then it doesn't matter how long you've been separated for.
• 14:24
  SPEAKER_01: So there have been cases where, you know, we've had clients that have separated from their spouse for 25 years, right?
• 14:31
  SPEAKER_01: Um, and didn't want to get a divorce for whatever reason.
• 14:33
  SPEAKER_01: Maybe it's religious reasons, maybe it's cultural reasons, and just didn't want to get a divorce, but we're very clearly separated from their partner, separate lives, separate families, and things like that.
• 14:43
  SPEAKER_01: And we've had partners come and claim on the estates and be successful in that claim.
• 14:49
  SPEAKER_04: Interesting, you should mention that.
• 14:50
  SPEAKER_04: I I did have a client that had separated from their partner from 20 years, and um, as part of his retirement plan, he wanted a bridging loan to to move actually back with his uh ex-partner down in Tassie.
• 15:03
  SPEAKER_04: Anyway, yeah, long story short, when I was doing that bridging loan, because they never formally got divorced either.
• 15:07
  SPEAKER_04: Yeah, right.
• 15:08
  SPEAKER_04: So she was still on title.
• 15:09
  SPEAKER_04: Yeah.
• 15:10
  SPEAKER_04: So he had to track her down to sign documents for me to do a loan 20 years after they've been separated.
• 15:15
  SPEAKER_01: Yeah, that's right.
• 15:16
  SPEAKER_01: And and that's where, you know, I say like when you pass away, about 20 pieces of legislation intersect with each other, right?
• 15:24
  SPEAKER_01: You've got issues with business, you've got issues with property, you've got um, you've got family law issues, you've got succession planning issues, right?
• 15:31
  SPEAKER_01: You've got tax issues.
• 15:32
  SPEAKER_01: And so unfortunately, not all of them talk to each other, and sometimes they contradict each other, right?
• 15:38
  SPEAKER_01: Superannuation is a great example of it, right?
• 15:40
  SPEAKER_01: It it it just comes into a big mess.
• 15:43
  SPEAKER_01: And so an estate plan just helps navigate that mess.
• 15:48
  SPEAKER_02: And so, in simple terms, you don't have a will, you pass away, you've got no spouses, kids, it goes to the government essentially, right?
• 15:55
  SPEAKER_02: And so, what does the government say do with that asset?
• 15:58
  SPEAKER_02: What happens at that stage?
• 16:00
  SPEAKER_01: So um they'll essentially just claim it, um, sell it and take the revenue.
• 16:05
  SPEAKER_01: Sure.
• 16:05
  SPEAKER_02: And there's a period there where people can come in and attest and say, I I know this person, things like that.
• 16:11
  SPEAKER_01: Yeah, yeah.
• 16:11
  SPEAKER_01: There's um with any um with any estate, there has to be um a court sign-off, right?
• 16:19
  SPEAKER_01: That court sign-off is the process called probate.
• 16:22
  SPEAKER_01: When you die without a will, um, you apply for something called letters of administration.
• 16:28
  SPEAKER_01: Um, that's essentially a grant for someone to administer an estate.
• 16:32
  SPEAKER_01: They put their hand up and they say the deceased passed away passed away without a will.
• 16:37
  SPEAKER_01: But um, I want to administer the estate because there's no designated executor.
• 16:42
  SPEAKER_01: So I'm gonna administer the estate, and this is and you tell the court this is how I'm going to administer the estate.
• 16:48
  SPEAKER_01: If no one comes forward for that, generally it will just be absorbed by the government.
• 16:54
  SPEAKER_02: Yeah, yeah, and I think that's really good to understand because you know, I think a lot of people just think, you know, I ought to pass down easily.
• 17:01
  SPEAKER_02: Uh, but I think that's what I want to unpack today as well, is the difference between, I guess, doing a will and like estate planning, right?
• 17:09
  SPEAKER_02: Because I think I remember my parents doing a will, it was like really basic uh back in the day, 15 years ago.
• 17:16
  SPEAKER_02: What's the difference between just that and actual estate planning and what you do?
• 17:21
  SPEAKER_01: With a simple will, right?
• 17:23
  SPEAKER_01: Um, I'll I'll help clients and listeners right now that if you want to draft a will, you can draft a will by yourself, right?
• 17:31
  SPEAKER_01: And I tell clients this all the time.
• 17:33
  SPEAKER_01: The value that I provide isn't the document, right?
• 17:36
  SPEAKER_01: So if you want to draft a will, I'll give you the formula right now.
• 17:39
  SPEAKER_01: You need to um have it in writing, preferably in writing.
• 17:43
  SPEAKER_01: Um, you have to be of sound mind, um, and you have to sign it in the presence of two people over the age of 18.
• 17:50
  SPEAKER_01: That's it, right?
• 17:51
  SPEAKER_01: And so the will that you were talking about with your parents, we've seen it, and it's probably like a three-page will, and it says something along the lines of this like I, Mrs.
• 18:01
  SPEAKER_01: Smith, when I pass away, would like to gift my entire estate to my husband, Mr.
• 18:06
  SPEAKER_01: Smith.
• 18:07
  SPEAKER_01: And if my husband, Mr.
• 18:08
  SPEAKER_01: Smith, does not survive me, I want it split equally between my children.
• 18:11
  SPEAKER_01: Full stop.
• 18:13
  SPEAKER_01: Everyone signs it.
• 18:14
  SPEAKER_01: Um, sorry, the testator signs it, it gets witnessed, that's it.
• 18:18
  SPEAKER_01: And like Mr.
• 18:20
  SPEAKER_01: Smith probably has the exact same will, right?
• 18:24
  SPEAKER_01: Where I come into play is all the factors that go around that.
• 18:28
  SPEAKER_01: So what happens if um one of the children have passed away already, right?
• 18:34
  SPEAKER_01: Does it go on to their children or does it get split amongst the surviving children?
• 18:40
  SPEAKER_01: Right?
• 18:41
  SPEAKER_01: So does it go down to the um the testator's um grandchildren, or does it get split evenly between um the surviving children um of the testator?
• 18:51
  SPEAKER_01: What happens if throughout the lifetime the testator has or the client has helped one of their children buy a house, right?
• 19:00
  SPEAKER_01: So say they gave them 200 grand, 300 grand to put a deposit down for a house, right?
• 19:06
  SPEAKER_01: Not sure how that helps these days, but um say they gave them a sum of money, right?
• 19:12
  SPEAKER_01: Um, was it a gift?
• 19:13
  SPEAKER_01: Was it meant to come off their inheritance?
• 19:16
  SPEAKER_01: Um, is there now an imbalance?
• 19:18
  SPEAKER_01: Because if you've got three siblings and one of the siblings has received um some income um or a gift from the um the deceased, should that come off the will?
• 19:29
  SPEAKER_01: Should it not come off the will, etc.?
• 19:32
  SPEAKER_01: Right?
• 19:32
  SPEAKER_01: If you've got assets and you're hoping um and you want your spouse to enjoy those assets, but you want to make sure that your spouse gifts those assets down to your children and not to a future partner or anything like that.
• 19:46
  SPEAKER_01: You want to make sure those assets don't get caught up in poor financial decisions, bankruptcy proceedings, liquidation proceedings, if there's an additional partner, divorce proceedings, things like that.
• 19:57
  SPEAKER_01: Those simple types of wills don't accommodate for those kinds of scenarios.
• 20:01
  SPEAKER_01: And it goes back to um what I was saying before.
• 20:04
  SPEAKER_01: I told you I was gonna be a broken record today, protection and control.
• 20:08
  SPEAKER_01: How much do you want to protect?
• 20:09
  SPEAKER_01: How much do you want to control of your assets and your wealth?
• 20:14
  SPEAKER_01: Because they've worked really hard to generate that wealth, right?
• 20:17
  SPEAKER_01: And you guys know it more than most because you've been on the journey with them, right?
• 20:21
  SPEAKER_01: You've helped them generate that wealth, and you want to make sure, like all your hard work as professional advisors, as well as the clients, you want to make sure that that just doesn't get squandered, right?
• 20:35
  SPEAKER_01: Because there was poor planning, right?
• 20:38
  SPEAKER_01: Um, average contested legal fees for a contested state in New South Wales, 200 grand in legals each side, right?
• 20:46
  SPEAKER_01: So think about if you have a million dollar estate, right?
• 20:50
  SPEAKER_01: And all of a sudden there's a contest for that, and 200 grand just gets wiped off, just like that.
• 20:56
  SPEAKER_01: And the time frame for that, I imagine, is long too.
• 20:58
  SPEAKER_01: That's right, right?
• 20:59
  SPEAKER_01: So it leads into the next thing that I was gonna say.
• 21:01
  SPEAKER_01: It's not just so much an um a financial toll, it's an emotional toll as well.
• 21:07
  SPEAKER_01: Because, like I was saying, your will is not for the pe it's not for you, it's for the people that you leave behind.
• 21:13
  SPEAKER_01: And so if there is no will and that drags out a process, think about the people that you've left behind.
• 21:18
  SPEAKER_01: They're grieving, right?
• 21:21
  SPEAKER_01: They've just lost their husband, their brother, their sister, whatever, their spouse, whatever else it may be, right?
• 21:27
  SPEAKER_01: They're not really concentrating on the fight, right?
• 21:30
  SPEAKER_01: They want a smooth transition of okay, I want to be able to grieve here because my loved ones passed away, right?
• 21:37
  SPEAKER_01: They don't want to get straight into the fight.
• 21:41
  SPEAKER_01: Um, well, they don't want to fight at all, right?
• 21:44
  SPEAKER_01: And so the difference between that, the simple will, and the estate plan is I stress test all of those scenarios, right?
• 21:54
  SPEAKER_01: And I ask the questions of if you passed away and everything goes to your spouse, what happened?
• 22:00
  SPEAKER_01: If your spouse gets a new partner, what happens if that spouse um what happens if your spouse and their new partner get a divorce?
• 22:07
  SPEAKER_01: Do you want your assets caught up in that divorce proceedings?
• 22:10
  SPEAKER_01: When you gift your assets to your children, do you want their spouses or their future partners to have an entitlement to that?
• 22:18
  SPEAKER_01: If there's right, if you have a child that maybe doesn't have um great financial skills, right?
• 22:25
  SPEAKER_01: Making poor financial um decisions, maybe a spendthrift.
• 22:29
  SPEAKER_01: Do you want to make sure that they can still have the same um proportion of your estate, but protect it?
• 22:35
  SPEAKER_01: Right?
• 22:36
  SPEAKER_01: Um, and that's where I come into play with those kinds of decisions.
• 22:40
  SPEAKER_01: And they're really basic decisions that um that we go through, and but it can get extended all the way out into things like planning for your superannuation, right?
• 22:50
  SPEAKER_01: If you gift it to a certain, if you gift your superannuation to a certain party, maybe it'll be taxed, right?
• 22:55
  SPEAKER_01: Do we want to balance that out in the estate?
• 22:57
  SPEAKER_01: Do we want to give all the superannuation out to one party that is tax advantageous and then um potentially give a larger portion of the estate um to the other parties to balance that out, right?
• 23:09
  SPEAKER_01: To minimize tax.
• 23:10
  SPEAKER_01: So, you know, asset protection, tax minimization, keeping assets within bloodlines, things like that.
• 23:16
  SPEAKER_01: That's the value that I provide to clients, and that's the value that estate planning can provide to clients.
• 23:22
  SPEAKER_04: So it sounds like you can put as many potential scenarios as you can think of into this estate plan, right?
• 23:28
  SPEAKER_04: So I imagine in your time, um, you must have come across some very extreme, or let's call it interesting um potential scenarios.
• 23:36
  SPEAKER_04: Like can you does it do any come to mind that you want to share?
• 23:39
  SPEAKER_01: Yeah, sure.
• 23:40
  SPEAKER_01: So um like estate planning should be tailored because everyone's life is different, right?
• 23:46
  SPEAKER_01: Um, and so in respect of interesting scenarios, there are many.
• 23:50
  SPEAKER_01: Um one of them comes to mind is that um we had a client that had a very, very, very strong and specific instructions for the burial of their body.
• 24:02
  SPEAKER_01: Their instructions, um, I'm trying to keep the client's um identity um um confidential, but essentially um their instructions were this that when they um passed away, they wanted their body cremated.
• 24:16
  SPEAKER_01: They wanted the ashes of um their body to be delivered to a fireworks factory, and they wanted um the fireworks factory, and it was a very specific fireworks factory, and they wanted that fireworks factory to um um use those ashes um in fireworks for a 10-minute display.
• 24:35
  SPEAKER_01: Um they then um planned out that they wanted um, let's call it a reception, um, a reception at a certain um restaurant in um in Sydney um that was close to the water.
• 24:49
  SPEAKER_01: And they meticulously planned out um the menu, um, they meticulously planned out who was to attend.
• 24:56
  SPEAKER_01: Um, so they had a guest list, and um, they said that they wanted the the guests to arrive at a certain time and um and they left money aside in their estate to fund all of this, um, and they wanted that um party to occur and essentially for a fireworks display to be for 10 minutes um using her ashes.
• 25:17
  SPEAKER_01: While we're replaying Katy Perry fireworks cannot confirm what the mic um and so like to that, right, like to us that may seem odd, right?
• 25:29
  SPEAKER_01: But to that client, it was like they understood they they saw the humor in it, right?
• 25:34
  SPEAKER_01: But they were like, this is important to me, right?
• 25:36
  SPEAKER_01: This is the way that I want to go.
• 25:37
  SPEAKER_01: And you know, there was a lot of jokes like going out with a bang and things like that, right?
• 25:41
  SPEAKER_01: But um that was important to them.
• 25:44
  SPEAKER_01: It was important that like this is what I want, and I want there to be a celebration of my life, right?
• 25:51
  SPEAKER_01: I don't want people to like be sad.
• 25:54
  SPEAKER_01: Like obviously you're sad when someone passes away, but that was their way of saying, like, I'm this is how I'm giving back to my family, right?
• 26:01
  SPEAKER_01: I don't want people, you know, like looking over my grave and you know having sadness.
• 26:07
  SPEAKER_01: I want people to think about like when grandma passed away, right?
• 26:12
  SPEAKER_01: That's how I remember.
• 26:13
  SPEAKER_01: I remember that fireworks show.
• 26:15
  SPEAKER_04: Yeah, you know, that's a beautiful story, right?
• 26:17
  SPEAKER_01: And so um I help facilitate that, right?
• 26:22
  SPEAKER_01: And that's that's the stuff that I love.
• 26:23
  SPEAKER_01: That's the stuff that I love because I provide the empowerment for the client to say, okay, we've got a plan, we've got a strategy, right?
• 26:31
  SPEAKER_01: But also estate planning is part art, part science, right?
• 26:34
  SPEAKER_01: And the science part is figuring out all the technicality of it, but the art part of being, okay, there's a human part to this, right?
• 26:43
  SPEAKER_01: It's not just legality, there's a human part to estate planning.
• 26:47
  SPEAKER_01: And that's what I loved.
• 26:49
  SPEAKER_01: And she would have the client would have been satisfied regardless if I put that in a will or not, right?
• 26:54
  SPEAKER_01: Because we protected her estate and her family was definitely covered after that.
• 26:58
  SPEAKER_01: But the fact that I could facilitate that for her, like she still refers to me clients now because of that, right?
• 27:06
  SPEAKER_01: Because I was able to facilitate that, that facilitate that part of it.
• 27:10
  SPEAKER_01: And we go back to the question that you were asking me before about, you know, it is a pretty morbid thing.
• 27:14
  SPEAKER_01: And it is a pretty morbid thing talking about your death.
• 27:17
  SPEAKER_01: But if you allow it to be tailored and you allow clients to plan for things and and go out on their own terms, because sometimes people think estate planning is rigid, right?
• 27:28
  SPEAKER_01: Like it's like Moses and the Ten Commandments.
• 27:30
  SPEAKER_01: You chisel them in, you put them in your drawer and you forget about them, right?
• 27:33
  SPEAKER_01: But estate planning should be living and breathing.
• 27:35
  SPEAKER_01: And so I think the real and like that always that client will always stay with me.
• 27:41
  SPEAKER_01: Um, not because of like what we have to draft in the will, because of what it achieved for her.
• 27:48
  SPEAKER_01: Totally, totally.
• 27:49
  SPEAKER_02: And I I think, you know, firstly, I need to update my will to make it a bit more exciting.
• 27:55
  SPEAKER_02: But I think you've talked about a lot of things there that are really interesting, and I think it gives certainty to clients.
• 28:00
  SPEAKER_02: It's very specific on you know what these estate planning is.
• 28:04
  SPEAKER_02: Tyrone, you've done a talk before for us, and it really helped us understand.
• 28:09
  SPEAKER_02: You know, you had this physical model today.
• 28:12
  SPEAKER_02: We've got a whiteboard, yes, you know, about what is estate planning.
• 28:15
  SPEAKER_01: Yeah.
• 28:16
  SPEAKER_02: And you know, what are the fundamentals?
• 28:18
  SPEAKER_02: You talked about the technicality, the art, the science, you know.
• 28:21
  SPEAKER_02: Can we talk, you know, what you talked in that talk and explain it to the to the listeners?
• 28:25
  SPEAKER_02: Because I think it really helped me personally understand exactly what are the fundamentals.
• 28:29
  SPEAKER_01: Yeah, sure.
• 28:30
  SPEAKER_01: So I don't actually have my toys with me today, but um, yeah, look, I and any client that like I've helped along the way, they'll know that like I love drawing diagrams, like it's the best way to explain things.
• 28:41
  SPEAKER_01: So um some always think it's a little bit juvenile, but I think it's like the just the best way to explain things.
• 28:47
  SPEAKER_01: And so um I always talk about estate planning, is um it um it's just one piece of the puzzle, um, your will's just one piece of the puzzle, right?
• 28:57
  SPEAKER_01: And so essentially what we what we want to build at the end of it is we want to build something that is um steady and reliable, and what's more steady and reliable than the house, right?
• 29:07
  SPEAKER_01: And so um if we were building the house, um we need some strong foundation, right?
• 29:13
  SPEAKER_01: And then so your will will always be the strong foundation um for any estate plan.
• 29:19
  SPEAKER_01: It is the hero when it comes to estate planning, but it's one piece of the puzzle, right?
• 29:24
  SPEAKER_01: The next pieces that come after it, and um sorry, I'm gonna backtrack there a little bit.
• 29:31
  SPEAKER_01: Your will provide a playbook for what happens when you pass away, right?
• 29:37
  SPEAKER_01: It tells it tells everyone that when I die, this is what I want to happen, right?
• 29:46
  SPEAKER_01: So it's the playbook in that respect, and then if your will is the playbook, the executor's the coach.
• 29:52
  SPEAKER_01: The executor gets appointed and says, I want you to follow this playbook, right?
• 29:58
  SPEAKER_01: I want these assets to go here, I want these assets to be protected in this structure, etc.
• 30:04
  SPEAKER_01: Right?
• 30:04
  SPEAKER_01: So your will is definitely the foundation, but two documents or documents that usually are skipped in estate planning is your capacity documents.
• 30:17
  SPEAKER_01: Um now we were talking about wills.
• 30:19
  SPEAKER_01: Wills deal with a scenario when um you've passed away and are no longer alive.
• 30:25
  SPEAKER_01: Um your capacity documents deal with scenarios where you're alive but unable to make decisions for yourself.
• 30:32
  SPEAKER_01: And for any clients that I've helped, um, they've probably gotten this whack at the end of a meeting for me.
• 30:39
  SPEAKER_01: But your capacity documents, in my opinion, are the most important part of documents in your estate plan.
• 30:45
  SPEAKER_01: Because when when we talk about wills, we're planning for people that we leave behind.
• 30:48
  SPEAKER_01: Your capacity documents, you're planning for yourself.
• 30:51
  SPEAKER_01: You're appointing someone to make a decision for you when you can't, but you're still alive to see the ramifications of that decision.
• 30:58
  SPEAKER_01: And the reason why that's really important is because when people think about incapacity, they think that they're unconscious.
• 31:05
  SPEAKER_01: But incapacity happens on a large scale where you can be conscious, understand what's going on, but just don't have the capacity to make a decision for yourself.
• 31:17
  SPEAKER_01: So think of scenarios like you know, you've got amnesia, maybe you have dementia, maybe you have motor neuron disease, or something along the lines of where you're conscious, but you just don't have the mental capacity to make um decisions for yourself.
• 31:30
  SPEAKER_04: And who that person is can change throughout your life as well, right?
• 31:33
  SPEAKER_04: Because I guess I always think like my emergency contact, highly likely they're going to be in the same emergency as me.
• 31:38
  SPEAKER_04: Correct.
• 31:39
  SPEAKER_04: Correct.
• 31:40
  SPEAKER_01: And so, and that's where smart strategic estate planning comes along.
• 31:43
  SPEAKER_01: That um so there's two points to that.
• 31:47
  SPEAKER_01: Estate planning is living and breathing, so it should be something that reflects your current wishes.
• 31:51
  SPEAKER_01: So what's right for today may not be right six months, ten months, ten years from now.
• 31:57
  SPEAKER_01: With smart strategic estate planning, you should have what we call substitutes or backups.
• 32:01
  SPEAKER_01: So when we're talking about capacity documents, if um you say, you know, if I if I lose capacity, I would like um this person to make financial decisions for me, I would like this person to make medical decisions for me.
• 32:15
  SPEAKER_01: And that person generally is probably someone quite close to you and maybe in the same scenario as you and may lose capacity or may have passed away at the same time as you, then you can leave a substitute.
• 32:28
  SPEAKER_01: So you could say it's this person, and if this person's unable to act, then I want it to be this person, right?
• 32:32
  SPEAKER_01: Because the funny thing about um it's not funny, but it's ironic.
• 32:38
  SPEAKER_01: The thing about an incapacity is that once you lose it, you no longer have the capacity to make the appointment for someone to make a decision for you, right?
• 32:47
  SPEAKER_01: So um it's one of those things where you know you fail to plan, you plan to fail.
• 32:53
  SPEAKER_01: Um, so making that decision now is really important whilst you have the capacity.
• 32:58
  SPEAKER_01: So um your incapacity documents form part of your house, right?
• 33:04
  SPEAKER_01: The next part um of your succession planning or your state planning should definitely be um superannuation.
• 33:11
  SPEAKER_01: Other than your house, it's usually your largest asset.
• 33:14
  SPEAKER_01: The trouble with um superannuation is that it doesn't automatically follow your will.
• 33:21
  SPEAKER_01: Because if you think about it, you technically don't own your superannuation yet.
• 33:25
  SPEAKER_01: You only really are a beneficiary to it.
• 33:28
  SPEAKER_01: A lot of people may have um self-managed super funds and it may feel like it's theirs, right?
• 33:34
  SPEAKER_01: But if you have a look, there's a trusteed, right?
• 33:37
  SPEAKER_01: And the trust is really taking care of the superannuation, the superannuation trustee, which is a corporate trustee, which they probably are directors of themselves.
• 33:46
  SPEAKER_01: So it feels like it's theirs, right?
• 33:48
  SPEAKER_01: But technically it's in a structure that they don't own yet.
• 33:51
  SPEAKER_01: So you need to make sure that there are directions for your superannuation when you pass away as well.
• 33:59
  SPEAKER_01: And that's usually in like via a death benefit nomination, right?
• 34:04
  SPEAKER_01: And depending on who that goes to will depend on um whether it gets taxed, um, whether it is um, yeah, so whether it gets taxed or also whether it gets protected in a certain structure or not.
• 34:18
  SPEAKER_01: So um your superannuation is definitely some planning that um that we have to do as well.
• 34:23
  SPEAKER_01: So what's a house without a roof?
• 34:25
  SPEAKER_01: Um insurances, making sure that we've got proper life insurances, properly um making sure that we have insurances in respect of specific events and things like that, that can really help, particularly with the incapacity side of things, right?
• 34:40
  SPEAKER_01: So we've lost capacity, um, you know, um, who's gonna continue to service the mortgage, who's gonna continue um to um maybe control businesses and things like that, who can who legally can sign off on things, things like that.
• 34:56
  SPEAKER_01: Um, but your insurances, um, whether it be income insurance, whether it be you know trauma insurance, um, life insurance, it helps with um managing debts um in in scenarios, right?
• 35:10
  SPEAKER_01: And the last part um definitely is um business succession planning or structured estate planning.
• 35:18
  SPEAKER_01: Um, so if you've got companies, if you've got um businesses, if you've got trusts, things like that, your will does not govern what happens with them.
• 35:29
  SPEAKER_01: Every one of those vehicles, so whether it be companies, whether it be trusts, um, whether it be joint ventures, etc., they need its own succession plan, right?
• 35:40
  SPEAKER_01: So um structure estate planning is um really important as well.
• 35:45
  SPEAKER_01: And so as you can see with that final line, we've got like a nice little house there.
• 35:49
  SPEAKER_01: Um and pretty strong house, if you don't mind me saying, but it just goes to show that you know when people talk about estate planning, um, they just think about a will straight away, right?
• 36:02
  SPEAKER_01: And yes, it's really important to have a will, but it's just really one piece of the structure that keeps everything that you've worked for really, really um safe, but also um making sure that there's a plan to keep the transition smooth as well.
• 36:21
  SPEAKER_01: Because we we ran through some scenarios earlier about how that can um how that can go horribly wrong.
• 36:26
  SPEAKER_01: And that's really the that's really where most of the anguish comes when it comes to death, right?
• 36:34
  SPEAKER_01: It's not so much about if you have a look at the courts and you have a look at um the um in New South Wales they call it the Guardianship Tribunal.
• 36:43
  SPEAKER_01: If you have a look at that, it's really full of emotional um disputes, right?
• 36:50
  SPEAKER_01: They got more than me, or they've got more control than me.
• 36:56
  SPEAKER_01: Right?
• 36:57
  SPEAKER_01: An estate plan allows to allows you to kill that ambiguity because when there is a claim on our estate, or maybe there is, you know, proceedings in the guardianship tribunal about who should have um who should be able to make decisions for someone that's lost capacity and things like that.
• 37:18
  SPEAKER_01: The only real person that can answer that is either the person that's died or the person that's lost capacity, and neither of those people can actually provide proper instructions to the court, right?
• 37:29
  SPEAKER_01: So making sure that you have that estate plan allows, whether it be a judge, whether it be a tribunal member, they can pick up and they go, okay, well, like there's a clear plan here.
• 37:39
  SPEAKER_01: You tell me what's wrong with it.
• 37:41
  SPEAKER_04: Okay, um, I've got a bit of a technical question.
• 37:43
  SPEAKER_04: Yes.
• 37:44
  SPEAKER_04: Right.
• 37:44
  SPEAKER_04: So say someone has their will in place, but then I noticed um, you know, when I've worked on my own superfruit, for example, you might have like a death nomination that you fill out in your online forms and that that goes through.
• 37:57
  SPEAKER_04: Does one supersede the other, or how do you manage that?
• 38:00
  SPEAKER_01: Sure.
• 38:00
  SPEAKER_01: So um your soup for your superannuation, your binding death benefit nomination is king.
• 38:05
  SPEAKER_01: Um, your will can leave wishes that may become what we call persuasive in that scenario, but ultimately your superannuation is owned in a structure completely separate to you.
• 38:16
  SPEAKER_01: Your will can only really govern what happens to you in your in your personal name.
• 38:22
  SPEAKER_01: And if your superannuation isn't in your personal name yet, your binding death benefit nomination um will usually supersede all of that.
• 38:30
  SPEAKER_01: Whether your binding death benefit nomination is valid or not, that is a different story.
• 38:35
  SPEAKER_01: And whether that is current is also a different story.
• 38:39
  SPEAKER_01: But to answer your question, it you're soup for your superannuation, it's your binding, it's your death benefit nomination.
• 38:47
  SPEAKER_01: Um, I would encourage clients um to have what's known as a binding death benefit nomination and preferably a non-lapsing binding death benefit nomination.
• 38:56
  SPEAKER_01: Um, these are all technical terms that um I won't bore with everyone today, but it's part of the estate planning that we do.
• 39:03
  SPEAKER_02: The government has tried to make some changes, Tyrone, to testamentary trust.
• 39:08
  SPEAKER_02: Yes.
• 39:09
  SPEAKER_02: I think we hear a lot about that term, testamentary trusts.
• 39:13
  SPEAKER_02: Uh you've seen it a lot.
• 39:15
  SPEAKER_02: I imagine you've set up a couple in your time.
• 39:18
  SPEAKER_02: Can you explain to the listeners, you know, when they should set this up, why, uh, and why it makes sense.
• 39:24
  SPEAKER_02: And this probably ties in going from your simple will to that estate planning.
• 39:29
  SPEAKER_01: Yeah, sure.
• 39:30
  SPEAKER_01: So um testamentary trusts are a structure that we use with um with some clients to help achieve um some of those goals that we were talking about, some of those values we were talking about earlier.
• 39:44
  SPEAKER_01: So protecting assets, minimizing tax, keeping assets within bloodlines.
• 39:48
  SPEAKER_01: A testamentary trust, essentially what it is, is a trust that gets created on your death.
• 39:55
  SPEAKER_01: And the assets, instead of going to a specific beneficiary, goes um into a testamentary trust for a class of beneficiaries.
• 40:04
  SPEAKER_01: Sorry.
• 40:05
  SPEAKER_02: How are you able to draw some humans up here?
• 40:10
  SPEAKER_02: And then show us the testamentary trust and how that works.
• 40:14
  SPEAKER_01: Yeah, sure.
• 40:14
  SPEAKER_01: So I like to draw like the the standard way of drawing a testament trust is a triangle.
• 40:20
  SPEAKER_01: I I generally like to draw a testamentary trust like this, and it's essentially like a cup, or what someone once told me is just it looks like a water tank.
• 40:29
  SPEAKER_01: Sput, you know, same concept, right?
• 40:32
  SPEAKER_01: When you pass away, instead of it going to um, I'm not good at drawing people, instead of it going to a specific um individual, what happens is the asset goes into the trust, right?
• 40:44
  SPEAKER_01: And so that may be um, you know, maybe it's a property, maybe it's cash.
• 40:50
  SPEAKER_04: So it could be 100% of your stake it goes into the business, things like that, yeah.
• 40:54
  SPEAKER_01: Shares, whatever else it may be, right?
• 40:57
  SPEAKER_01: Um, maybe I don't know, it can't be crypto because it's unregulated, but um any asset in your name personally can be put into the trust.
• 41:06
  SPEAKER_01: What that does is it allows the trustee to protect the assets um in the cup because what I tell clients is the trustee puts their hand over the cup and says um these assets are protected for the beneficiaries.
• 41:31
  SPEAKER_01: Don't come for me if my spelling's off.
• 41:33
  SPEAKER_01: By the way, so the trustee technically owns the assets um in a non-beneficial way, they own it for the benefit of the beneficiaries, right?
• 41:44
  SPEAKER_01: What that does is it allows um there's to be asset protection um over the assets.
• 41:52
  SPEAKER_01: So if the specific individual um was pursued via divorce or anything like that, um, because it's actually technically owned in the trust, those assets um usually aren't formed part of the asset pool um in divorce proceedings.
• 42:06
  SPEAKER_01: Same thing with bankruptcy proceedings, etc.
• 42:09
  SPEAKER_01: What it also allows there to be is some tax streaming options.
• 42:13
  SPEAKER_01: And so I generally tell clients that every beneficiary that we have to the trust um gets their own little tap um to it.
• 42:21
  SPEAKER_01: So say we have um three children, they become the three beneficiaries of the trust, they all get their own tap to the trust, and so the trustee can then make a distribution out of the trust for any income that goes into the trust.
• 42:47
  SPEAKER_01: So we've got a property there, maybe the property's um generating wealth, right?
• 42:51
  SPEAKER_01: The trustee can then have what we call discretion in respect of where that income goes.
• 42:58
  SPEAKER_01: So they can say, well, it all goes to child one this year, it all goes to child two this year, it all goes to child three, or it gets evenly split between all three.
• 43:07
  SPEAKER_01: What those options allow you to do is to take into consideration those three beneficiaries' um personal circumstances.
• 43:18
  SPEAKER_01: So maybe child number one or beneficiary number one is going through a divorce, right?
• 43:24
  SPEAKER_01: And any income that they receive gets automatically put into the asset pool, right?
• 43:30
  SPEAKER_01: So maybe the trustee says, well, beneficiary number one's going through a really hard time right now.
• 43:35
  SPEAKER_01: We're just gonna distribute out to two and three, and we're just gonna put one on hold for now, right?
• 43:42
  SPEAKER_01: Maybe um beneficiary number two doesn't manage money all that well, right?
• 43:47
  SPEAKER_01: So we want to make sure that we uh we have a controlled feed into beneficiary number two, right?
• 43:54
  SPEAKER_01: It provides options, right?
• 43:56
  SPEAKER_01: You can um just split it evenly between all three for the rest of your life or the rest of the life of the trust.
• 44:03
  SPEAKER_01: That's also okay, but it provides an option if those assets were gifted into these three individuals personally, there is no option.
• 44:13
  SPEAKER_01: They have to take the asset in their name, they have to take the revenue from those assets in their name, and anything that occurs from that, which makes it vulnerable, they just have to wear, right?
• 44:25
  SPEAKER_01: So testamentary trusts provide asset protection, um, tax streaming options, and the last thing is it keeps assets within bloodlines.
• 44:34
  SPEAKER_01: So if one of the trustees um sorry, if one of the beneficiaries was to pass away, so say it's um trustee number uh beneficiary number one, but they have left two children of their own, their children replace them at their tap, right?
• 44:54
  SPEAKER_01: So it keeps those assets within bloodline.
• 44:56
  SPEAKER_01: So we went back to the scenario that we were talking about how you know if someone wants to make sure that they give something to their children, but they want to make sure that it lives beyond their children, goes to their grandchildren, etc.
• 45:08
  SPEAKER_01: Testamentary trusts are a really great way of doing that.
• 45:10
  SPEAKER_02: So is this on the assumption that that mum or dad has passed away?
• 45:14
  SPEAKER_02: Yes, right, yeah.
• 45:15
  SPEAKER_01: So the trust only gets created um once um someone has passed away.
• 45:21
  SPEAKER_01: Yeah.
• 45:22
  SPEAKER_01: And that's why they call it a testamentary trust.
• 45:24
  SPEAKER_01: Um, for um those who have had a will or um have a look on the front page of a will.
• 45:29
  SPEAKER_01: Um, it's called the last will and testament.
• 45:31
  SPEAKER_01: So that's the reason why um it's called a testamentary trust because it's trust created via testament.
• 45:37
  SPEAKER_01: Um you touched on taxation, right?
• 45:41
  SPEAKER_01: Um from the from the onset, I probably want to say that the government have made um some inroads in respect of exempting discretionary trusts from discretionary testamentary trusts from the taxation.
• 45:56
  SPEAKER_01: It's still a little unclear in respect of um the exemption that they've provided, and that's really being argued at the moment.
• 46:04
  SPEAKER_01: Um, I think the wording that they used was um trust created for genuine testamentary intentions.
• 46:12
  SPEAKER_01: Um, I don't actually know what that means, and I don't think anyone does.
• 46:15
  SPEAKER_01: No one does.
• 46:15
  SPEAKER_01: Um so um it's important to note that like this 30% tax that they've brought in for trust, at the moment, it appears that this testamentary discretionary trusts are exempt from it.
• 46:28
  SPEAKER_04: All right.
• 46:28
  SPEAKER_04: Um, well, look, we've learned a lot about estate planning today, um, testamentary trusts and and uh you know what what's possible.
• 46:35
  SPEAKER_04: Um, very interesting stories as well.
• 46:37
  SPEAKER_04: Um, so thank you for coming in and and shedding some light on what estate planning is, Tyrone.
• 46:42
  SPEAKER_04: Thanks so much for having me.
• 46:44
  SPEAKER_04: Yeah.