Episode 3: Trusts & Super

Episode 3 Trusts & Super Executor's Role and Responsibilities • Max explains that an executor is someone appointed in a will to carry out the deceased's wishes, starting with organizing the funeral. • The executor's job includes ascertaining the deceased's assets, which can be a quick or lengthy process depending on the records left behind. • Max advises clients to prepare an executor's dossier, a document listing all assets, account numbers, and passwords, to help the executor manage the estate efficiently. • Once the assets are ascertained, the executor must obtain a grant of probate from the court, which allows them to administer the estate. • The executor's final task is to distribute the estate assets to the beneficiaries listed in the will, after paying off any liabilities such as taxes and debts. Understanding Beneficiaries • Tony asks Max to define a beneficiary, and Max explains that a beneficiary in a will is a person or entity that receives a benefit under the will, either money or an asset. • In the context of trusts, a beneficiary is one of many people the trustee can consider for distributing income or capital. • Max emphasizes the difference between a beneficiary in a will and a beneficiary in a discretionary trust, noting that a will beneficiary has a fixed interest, while a trust beneficiary may receive nothing. • Tony inquires if a beneficiary can also be the executor of a will, and Max confirms that the main beneficiary is often the best person to be the executor because they have a vested interest in ensuring the estate is administered properly. Superannuation and Estate Planning • Tony brings up the confusion around superannuation and its distribution, even if a beneficiary is specified. • Max clarifies that superannuation is not part of a person's estate and is treated like an interest in a trust, with the super fund's trustee having discretion over who receives the death benefits. • He explains that under legislation, superannuation can only be paid to a spouse, children, dependents, or the estate, and not to anyone else. • To ensure the superannuation goes to the intended beneficiary, Max recommends making a binding death benefit nomination, which acts like a will for superannuation. • If there are no spouses, children, or dependents, the estate or legal personal representative can be named in the nomination. Trusts and Their Role in Estate Management • Tony asks how trusts apply to estate management, and Max explains the two main types of trusts: inter vivos discretionary trusts and testamentary trusts. • An inter vivos discretionary trust is set up while the person is alive, and the main consideration is succession to control, as whoever controls the trust decides who gets the assets. • A testamentary trust is created through a will and comes into existence upon the person's death, providing asset protection for beneficiaries. • Max emphasizes the importance of appointing someone to take over control of the trust after the person's death to ensure the trust's assets are distributed according to the person's wishes. • He notes that a trust is a separate legal entity from the personal estate and will not automatically pass to the beneficiaries listed in the will. Final Thoughts and Legal Advice • Max reiterates that a trust is a separate legal entity that continues to exist after the person's death, and it's crucial to appoint someone to manage it according to the person's wishes. • He clarifies that only personal assets, such as bank accounts and real estate in the deceased's name, are governed by the will, not the trust's assets.