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The Seven Sins Of Estate Planning

A comprehensive, well thought out estate plan is the only way of ensuring someone's wishes are carried out after their death - but many get it wrong.

Anna Hacker, a specialist at Equity Trustees, has come up with her seven sins of estate planning which can derail the efforts taken to ensure wishes are fulfilled in the event of death or incapacity.

WRATH

Hell hath no fury like a woman scorned but when it comes to estate planning, men who are scorned in a will can cause problems, too. Divorce and separation, not to mention blended families, make for a complicated estate. Although marriage revokes all previous wills, divorce does not always. Marriage breakdown and remarriage should be triggers to review arrangements. It is increasingly common for wills to be challenged in court whether by an ex-partner or another family member.

GREED

While do-it-yourself will kits and cheap estate planning services can seem quick and easy, the reality is they are extremely basic and often do not cover every eventuality, Ms Hacker says. Just because a document is in the format of a will, it doesn't mean it covers everything required especially if the person completing the DIY will form doesn't understand how to structure financial affairs or sort out ownership of assets. "Estate planning is about advice, the will is just the end product of that," she says. "Very simple mistakes can make a will meaningless."

SLOTH

For many, developing an estate plan is something to do another time. They may think they are too young or that they don't have enough assets to justify making a will. "The fact is that anyone who has children, is a member of a superannuation fund or who owns their own home should have an estate plan," Ms Hacker says. "Choosing to do nothing is something that their families may end up regretting in the future."

PRIDE

One of the most valuable aspects of an estate plan is the capacity to establish a Power of Attorney but it is easily overlooked or ignored. It can be hard for people to accept that they may not have the mental capacity in the future to manage their affairs. With an ageing population, the number of people with issues such as dementia will only increase. Statistics suggest there will be around 400,000 people in Australia with dementia by 2020 and 900,000 by 2050.

LUST

There have been cases in recent years where children from extra-marital relationships have successfully made a claim on an estate. While it may not be an issue that most need to consider for themselves, there are still lessons to be learnt. Keep in mind that it doesn't need to be family members who can make and win a claim on an estate, Ms Hacker says. There are examples of neighbours doing what most people would consider to be neighbourly acts such as assisting with grocery shopping or simply visiting elderly neighbours being awarded a share in an estate, she says.

ENVY

It may seem like a cliche from an Agatha Christie novel but it is a sad fact that reading out a will can bring out the worst in people. Previously close-knit families end up in bitter dispute over the contents of a will. People should never assume that it couldn't happen in their family, Ms Hacker says. Unless this is explained clearly, preferably not just in the estate plan but before they die, it can cause significant resentment.

GLUTTONY

More a sin of omission, perhaps, but people shouldn't forget philanthropy when establishing an estate plan. "Many like the idea of leaving something to charity in their will as a bequest or even setting up a foundation to continue their philanthropic activities after their death," Ms Hacker says. "It's something that is easy to forget."

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