1 00:00:07,080 --> 00:00:10,080 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:10,160 --> 00:00:18,080 Speaker 1: James Kirkby. Welcome aboard everybody. There is a subject I 3 00:00:18,120 --> 00:00:19,919 Speaker 1: have wanted to do on the show for a long 4 00:00:19,960 --> 00:00:24,400 Speaker 1: time and it's about wills and estate planning and inheritance. 5 00:00:24,600 --> 00:00:27,400 Speaker 1: Now stay with me here. It's only human if you 6 00:00:27,440 --> 00:00:30,160 Speaker 1: were to say not today, no thank you, because that's 7 00:00:30,160 --> 00:00:33,040 Speaker 1: a problem that all investors have. They don't want to 8 00:00:33,080 --> 00:00:36,239 Speaker 1: deal with this until they have to. But one of 9 00:00:36,240 --> 00:00:39,160 Speaker 1: the things we see again and again is it's so 10 00:00:39,200 --> 00:00:42,440 Speaker 1: important actually to be across this. Now. I've been trying 11 00:00:42,440 --> 00:00:44,800 Speaker 1: to find a way to get this issue on the 12 00:00:44,800 --> 00:00:47,800 Speaker 1: show in a way that you'd find interesting, and fortunately 13 00:00:47,840 --> 00:00:51,879 Speaker 1: I've come upon somebody and something Inherits Australia is an 14 00:00:51,880 --> 00:00:57,440 Speaker 1: operation which involves a man called Chris Hill, and he 15 00:00:57,640 --> 00:01:01,840 Speaker 1: has done a marvelous exercise by keeping tabs on the 16 00:01:01,840 --> 00:01:06,319 Speaker 1: most interesting cases in the land basically and what we 17 00:01:06,440 --> 00:01:11,319 Speaker 1: learn from them. And most recently he watched the Mushroom 18 00:01:11,560 --> 00:01:15,600 Speaker 1: murders trial Aaron Patterson, of course, who's now been convicted 19 00:01:15,640 --> 00:01:18,360 Speaker 1: of three murders, one of the biggest cases of the year. 20 00:01:19,319 --> 00:01:21,959 Speaker 1: And what's fascinating of course is that Aaron Patterson's quite 21 00:01:21,959 --> 00:01:26,000 Speaker 1: wealthy and she received most of that wealth through inheritance, 22 00:01:26,040 --> 00:01:28,680 Speaker 1: and there's also going to be consequences now that she's 23 00:01:28,680 --> 00:01:32,199 Speaker 1: been found guilty for that wealth. So is the ideal 24 00:01:32,200 --> 00:01:34,480 Speaker 1: man to have on the show this week, that's for sure. 25 00:01:34,840 --> 00:01:37,319 Speaker 1: Chris Hill of inherit Australia, How are you? Thanks for 26 00:01:37,360 --> 00:01:37,680 Speaker 1: coming on? 27 00:01:38,319 --> 00:01:40,680 Speaker 2: Very good, Thank you, James, and good morning or good 28 00:01:40,680 --> 00:01:41,880 Speaker 2: afternoon to our listeners. 29 00:01:42,080 --> 00:01:44,040 Speaker 1: Great to have you on, Chris. And first of all, 30 00:01:44,080 --> 00:01:47,960 Speaker 1: you know, hats off from making the most averted dimension 31 00:01:48,160 --> 00:01:52,720 Speaker 1: of investment interesting on this issue as well, very few 32 00:01:52,800 --> 00:01:57,280 Speaker 1: things are more interesting than the Mushroom murders trial, which 33 00:01:57,320 --> 00:02:01,800 Speaker 1: has been a gigantic story here all around the world. Now, 34 00:02:01,800 --> 00:02:03,200 Speaker 1: one of the things I just wanted to ask you, 35 00:02:03,680 --> 00:02:08,359 Speaker 1: Aaron Partison, it turns out, first of all, is quite 36 00:02:08,400 --> 00:02:13,440 Speaker 1: a wealthy woman, largely due to inheritances. Could you explain 37 00:02:13,960 --> 00:02:16,440 Speaker 1: what is it she inherited and what was her situation 38 00:02:16,720 --> 00:02:19,119 Speaker 1: VISI vie in inheritance and wills. 39 00:02:19,840 --> 00:02:22,720 Speaker 2: Yeah, and this all came out in the testimony that 40 00:02:22,760 --> 00:02:24,840 Speaker 2: we heard, I think it was on the first of 41 00:02:24,880 --> 00:02:28,880 Speaker 2: May at court. She inherited about two million dollars from 42 00:02:28,880 --> 00:02:33,320 Speaker 2: her grandmother in two thousand and six. That was distributed 43 00:02:33,360 --> 00:02:35,480 Speaker 2: over an eight year period from I think two thousand 44 00:02:35,480 --> 00:02:39,000 Speaker 2: and seven, and then she also received an inheritance of 45 00:02:39,040 --> 00:02:42,560 Speaker 2: about nine hundred thousand dollars in a beach fund property 46 00:02:42,600 --> 00:02:45,480 Speaker 2: from her mother in twenty nineteen. 47 00:02:46,440 --> 00:02:47,919 Speaker 3: So I guess the. 48 00:02:47,919 --> 00:02:50,519 Speaker 2: Issue that's going to arise now that she has been 49 00:02:50,560 --> 00:02:54,440 Speaker 2: convicted is what's going to happen with those inheritances as well, 50 00:02:54,480 --> 00:02:56,440 Speaker 2: of course, as what is a sentence going to be. 51 00:02:57,040 --> 00:02:59,680 Speaker 1: So there's something in particular, isn't there that might necessarily 52 00:02:59,680 --> 00:03:02,440 Speaker 1: come up and the trial or actly this mightn't come 53 00:03:02,520 --> 00:03:05,840 Speaker 1: up in conventional general news coverage about this whole incident. 54 00:03:05,880 --> 00:03:09,560 Speaker 1: But if you're wealthy basically, and you have assets, and 55 00:03:09,840 --> 00:03:13,600 Speaker 1: you are convicted of murder, and in this case quite 56 00:03:13,600 --> 00:03:20,640 Speaker 1: extraordinary three murders, then the estates linked with the victims 57 00:03:20,720 --> 00:03:25,760 Speaker 1: of those murders they can claim against you, can they? 58 00:03:26,760 --> 00:03:29,480 Speaker 2: Yes, certainly so if we look at the victims of 59 00:03:29,520 --> 00:03:34,920 Speaker 2: those estates, which is the beneficiaries of the deceased persons, 60 00:03:35,760 --> 00:03:39,120 Speaker 2: they have a right to make a claim against Eron 61 00:03:39,360 --> 00:03:42,560 Speaker 2: in this case for what we call wrongful death under 62 00:03:42,600 --> 00:03:45,800 Speaker 2: the Wrongs Act in Victoria, Part three of the Wrongs Act. 63 00:03:46,400 --> 00:03:49,760 Speaker 2: So that's a compensation. That's a civil claim for compensation 64 00:03:49,960 --> 00:03:54,160 Speaker 2: for the loss of income, loss of medical expenses, and 65 00:03:54,240 --> 00:03:57,720 Speaker 2: other indirect losses as a result of it of losing 66 00:03:57,760 --> 00:04:01,760 Speaker 2: their father, their mother, their brother, whoever that beneficiary is. 67 00:04:02,280 --> 00:04:06,200 Speaker 1: And the three estates of the three murdered unfortunate murdered 68 00:04:06,560 --> 00:04:10,280 Speaker 1: people linked in the Air and Patterson case. Those the 69 00:04:10,320 --> 00:04:14,160 Speaker 1: states can claim against Aaron Patterson's own assets, can. 70 00:04:14,040 --> 00:04:17,400 Speaker 2: They Yes, So it's a claim against her personally. It's 71 00:04:17,400 --> 00:04:22,080 Speaker 2: a civil claim for compensation. And of course the issue 72 00:04:22,080 --> 00:04:25,279 Speaker 2: that arises is if there's a judgment, as there inevitably 73 00:04:25,320 --> 00:04:28,839 Speaker 2: will be in respect of each of those states, how 74 00:04:28,839 --> 00:04:31,839 Speaker 2: that judgment can be satisfied and what assets of errands 75 00:04:31,880 --> 00:04:32,560 Speaker 2: can be taken? 76 00:04:33,080 --> 00:04:34,600 Speaker 1: And do you think they will do this? 77 00:04:35,320 --> 00:04:38,680 Speaker 2: I think it's inevitable, right, It's a significant cases you've 78 00:04:38,680 --> 00:04:46,159 Speaker 2: identified the wrongs that claims are easily broad because it's indisputable. 79 00:04:46,600 --> 00:04:49,279 Speaker 2: Or you have to do is show that you are 80 00:04:49,520 --> 00:04:54,760 Speaker 2: a victim of a person who commits a wrongdoing, and 81 00:04:54,800 --> 00:04:58,880 Speaker 2: in this case, a convicted killer is a wrongdoer for 82 00:04:58,960 --> 00:05:00,720 Speaker 2: the purposes of Yet. 83 00:05:01,240 --> 00:05:04,839 Speaker 1: I don't follow criminal cases very often, but I would 84 00:05:04,839 --> 00:05:10,200 Speaker 1: imagine in most cases the perpetrator, the murderer doesn't have 85 00:05:10,320 --> 00:05:13,320 Speaker 1: much money in many cases, but in this case it's 86 00:05:13,480 --> 00:05:16,920 Speaker 1: mostly unusual, isn't it? She is wealthy by most standards? 87 00:05:17,080 --> 00:05:20,559 Speaker 1: But also intriguing here, Chris, is the fact that her wealth, 88 00:05:20,600 --> 00:05:23,240 Speaker 1: in turn is due to wills and inheritance, isn't it? 89 00:05:24,040 --> 00:05:24,839 Speaker 3: Yes, that's right. 90 00:05:24,920 --> 00:05:30,080 Speaker 2: It's inherited wealth that she's received directly or indirectly. And 91 00:05:30,120 --> 00:05:33,159 Speaker 2: I guess the question that arises is to what extent 92 00:05:33,200 --> 00:05:39,000 Speaker 2: could any court judgment seize those inherited assets? And that 93 00:05:39,040 --> 00:05:43,359 Speaker 2: comes down to in many cases, whether she has a 94 00:05:43,440 --> 00:05:47,880 Speaker 2: fully vested, beneficial and legal interest in those state assets 95 00:05:47,960 --> 00:05:50,200 Speaker 2: or whether they're held in still held on a trust. 96 00:05:50,760 --> 00:05:54,400 Speaker 2: The two thousand and seven estate for the grandmother, my 97 00:05:54,480 --> 00:05:57,720 Speaker 2: understanding was that it was paid out over eight years. Yes, 98 00:05:57,800 --> 00:06:01,440 Speaker 2: so of course that's already expired. Now what she's done 99 00:06:01,440 --> 00:06:04,440 Speaker 2: with that wealth? And I suspect that she's fed a 100 00:06:04,440 --> 00:06:06,960 Speaker 2: lot of it on legal fees? But what if it's 101 00:06:07,040 --> 00:06:09,600 Speaker 2: left of that wealth? I believe there were some loans 102 00:06:09,680 --> 00:06:13,200 Speaker 2: as well that she made to help fund properties. Those 103 00:06:13,240 --> 00:06:18,080 Speaker 2: loans would constitute assets, so to that extent, those assets 104 00:06:18,080 --> 00:06:20,799 Speaker 2: could be seized as a result of a court order 105 00:06:21,120 --> 00:06:23,920 Speaker 2: for any one of these wrongful desk claims. 106 00:06:24,240 --> 00:06:27,400 Speaker 1: So could the properties that she owns end up being 107 00:06:27,440 --> 00:06:32,480 Speaker 1: sold to satisfy these claims. Yes, right, absolutely fascinating. I 108 00:06:32,480 --> 00:06:34,640 Speaker 1: didn't know any of this. One of the things it 109 00:06:34,720 --> 00:06:39,960 Speaker 1: highlights is there are many people, I'm sure where wills 110 00:06:39,960 --> 00:06:42,760 Speaker 1: and inheritance are so important, but in the case of 111 00:06:42,760 --> 00:06:46,520 Speaker 1: Aaron Patterson, it explains almost entirely her wealth, and it 112 00:06:46,640 --> 00:06:49,280 Speaker 1: also explains what's going to happen next in relation to 113 00:06:49,400 --> 00:06:51,720 Speaker 1: that wealth. It's one of the things I suppose that 114 00:06:51,760 --> 00:06:55,280 Speaker 1: the background being that Australia is a wealthy country and 115 00:06:55,320 --> 00:07:00,720 Speaker 1: we have this enormous wealth transfer going on between generations. 116 00:07:01,440 --> 00:07:04,520 Speaker 1: So you were telling me earlier about how the nature 117 00:07:05,040 --> 00:07:09,200 Speaker 1: of wills is changing, how people are being more careful 118 00:07:09,240 --> 00:07:11,600 Speaker 1: about what might go wrong in the future when they 119 00:07:11,680 --> 00:07:14,600 Speaker 1: leave it will. I heard that one time that when 120 00:07:14,600 --> 00:07:17,520 Speaker 1: you do will, most of the time what you hope 121 00:07:17,520 --> 00:07:22,200 Speaker 1: will happen may not actually occur unless you add. 122 00:07:22,000 --> 00:07:22,880 Speaker 3: All these extras. 123 00:07:23,080 --> 00:07:25,160 Speaker 1: What are people doing these days that they used to 124 00:07:25,200 --> 00:07:29,120 Speaker 1: do before to try and ensure that what they aim 125 00:07:29,200 --> 00:07:31,880 Speaker 1: for and the will actually occurs in the fullness of time. 126 00:07:32,720 --> 00:07:34,600 Speaker 2: That's a good question because I think there is a 127 00:07:34,640 --> 00:07:39,280 Speaker 2: growing trend in the community for people to put conditions 128 00:07:39,280 --> 00:07:42,160 Speaker 2: on their wills for a number of reasons. There's a 129 00:07:42,200 --> 00:07:46,320 Speaker 2: build up of wealth, particularly property wealth that's accumulated over 130 00:07:46,360 --> 00:07:48,520 Speaker 2: a period of time that's significant when it comes to 131 00:07:48,600 --> 00:07:51,440 Speaker 2: the value of an estate. We used to see, or 132 00:07:51,480 --> 00:07:55,960 Speaker 2: we still see, migrant workers in sy Carlton that didn't 133 00:07:55,960 --> 00:07:58,280 Speaker 2: have a lot of income in their life but had 134 00:07:58,360 --> 00:08:01,920 Speaker 2: very valuable assets. Their properties appreciated so much that means 135 00:08:01,960 --> 00:08:04,600 Speaker 2: that there are states a lot larger. We're also seeing 136 00:08:04,600 --> 00:08:09,080 Speaker 2: people now that have had more diverse relationships, blended families, 137 00:08:09,440 --> 00:08:15,280 Speaker 2: multiple partners, children from different partners, same sex, and binary 138 00:08:15,360 --> 00:08:18,560 Speaker 2: non binary. So we're seeing the complexity of the Australian 139 00:08:18,800 --> 00:08:22,760 Speaker 2: society change and I think more people are looking at well, 140 00:08:22,800 --> 00:08:25,040 Speaker 2: how do I make sure that my money gets into 141 00:08:25,080 --> 00:08:27,160 Speaker 2: the right hands at the right time and doesn't get 142 00:08:27,200 --> 00:08:31,920 Speaker 2: lost by any other person or any other claim. And 143 00:08:31,960 --> 00:08:36,280 Speaker 2: the trend is towards definitely using testamentary trusts, especially if 144 00:08:36,280 --> 00:08:39,640 Speaker 2: there's more significant wealth, and more even more so restrictive 145 00:08:39,679 --> 00:08:42,880 Speaker 2: trust or capital protective trusts where there's significant wealth. 146 00:08:43,480 --> 00:08:45,679 Speaker 1: So for someone who has no idea. What all these 147 00:08:45,679 --> 00:08:48,480 Speaker 1: things mean. There's a will under trust? Is that how 148 00:08:48,520 --> 00:08:48,920 Speaker 1: it works? 149 00:08:49,800 --> 00:08:50,000 Speaker 3: Yes? 150 00:08:50,080 --> 00:08:52,480 Speaker 2: So what we do in the case of a testamentary trust, 151 00:08:52,520 --> 00:08:56,800 Speaker 2: we create the ability for a beneficiary to receive their 152 00:08:56,840 --> 00:09:00,400 Speaker 2: share of the inheritance through a trust that's a connected 153 00:09:00,440 --> 00:09:03,200 Speaker 2: to the will. In a more simple will, we just 154 00:09:03,280 --> 00:09:06,480 Speaker 2: give them their inheritance. Right. So, if we circle back 155 00:09:06,520 --> 00:09:08,960 Speaker 2: to Aaron Patterson, if she had received that money, if 156 00:09:09,000 --> 00:09:11,320 Speaker 2: her mother had died today and just given it to her, 157 00:09:11,679 --> 00:09:13,960 Speaker 2: that would be lost to her through any of these 158 00:09:14,040 --> 00:09:17,840 Speaker 2: wrongful death claims. Or to bring it into context, if 159 00:09:17,880 --> 00:09:20,719 Speaker 2: I left my wealth, say to my son, and he 160 00:09:20,800 --> 00:09:23,640 Speaker 2: got sued or he had a relationship breakdown, that wealth 161 00:09:23,679 --> 00:09:26,959 Speaker 2: will get lost or get dissipated or caught up as 162 00:09:27,040 --> 00:09:29,800 Speaker 2: part of a claim by creditor or claim by an 163 00:09:29,840 --> 00:09:33,640 Speaker 2: ex spouse. The testamentary trust is designed to protect that 164 00:09:33,720 --> 00:09:36,079 Speaker 2: wealth and to ring bark it or quarantine it if 165 00:09:36,080 --> 00:09:37,480 Speaker 2: there's a relationship breakdown. 166 00:09:38,040 --> 00:09:40,280 Speaker 1: Okay, So the simple idea of just a will and 167 00:09:40,360 --> 00:09:42,480 Speaker 1: the amount of money you hand it over, that's sort 168 00:09:42,480 --> 00:09:47,719 Speaker 1: of fading into more complex structures that try to foresee 169 00:09:48,679 --> 00:09:51,480 Speaker 1: complications down the track. Okay, really interesting, we'd be back 170 00:09:51,480 --> 00:09:53,040 Speaker 1: in a moment. There's something else I really want to 171 00:09:53,080 --> 00:09:56,920 Speaker 1: talk to, Chrispose And yes, Aaron Patterson is a fascinating case. 172 00:09:57,400 --> 00:10:02,040 Speaker 1: And so is the case of the person who left 173 00:10:02,679 --> 00:10:05,720 Speaker 1: a will on an iPhone note that was worth ten 174 00:10:06,080 --> 00:10:11,920 Speaker 1: million dollars and what happened next. We'll be back in 175 00:10:11,960 --> 00:10:26,760 Speaker 1: a moment. Hello, and welcome back to The Australian's Money 176 00:10:26,760 --> 00:10:31,920 Speaker 1: Puzzled podcast. James Kirby here with Chris Hill of Inherit Australia. 177 00:10:31,920 --> 00:10:34,400 Speaker 1: And Chris is an expert in this area of wills 178 00:10:34,440 --> 00:10:38,600 Speaker 1: and inheritance and as I mentioned, and as you can 179 00:10:38,640 --> 00:10:41,559 Speaker 1: see from segment one, I wasn't kidding. He has managed 180 00:10:41,600 --> 00:10:45,280 Speaker 1: to make this area so interesting, which is an area 181 00:10:45,320 --> 00:10:48,520 Speaker 1: that is front and center really in weather accumulation, but 182 00:10:48,880 --> 00:10:51,240 Speaker 1: so many people avoid it for a variety of reasons, 183 00:10:51,240 --> 00:10:53,960 Speaker 1: mostly because it's complicated, it's dry, and people don't want 184 00:10:54,000 --> 00:10:55,680 Speaker 1: to think about the fact that they are going to 185 00:10:55,720 --> 00:10:59,280 Speaker 1: die someday and they should leave a will behind. Now 186 00:10:59,360 --> 00:11:01,800 Speaker 1: there was an extraordinary case, wasn't it, Chris Frecent Dave. 187 00:11:02,000 --> 00:11:06,640 Speaker 1: There was a person in New South Wales who left 188 00:11:07,040 --> 00:11:11,480 Speaker 1: a will at the last moment on an iPhone note. 189 00:11:11,600 --> 00:11:13,640 Speaker 1: This would be interesting anyway, the fact that there was 190 00:11:13,679 --> 00:11:16,680 Speaker 1: a ten million dollar will made it twice as interesting. 191 00:11:16,800 --> 00:11:20,679 Speaker 1: And then the will that was written of the iPhone notes, well, 192 00:11:20,720 --> 00:11:24,800 Speaker 1: it ended up in court and it was contested. Could 193 00:11:24,840 --> 00:11:25,680 Speaker 1: you tell us what happened? 194 00:11:26,840 --> 00:11:27,080 Speaker 3: Yeah? 195 00:11:27,200 --> 00:11:30,960 Speaker 2: In fact involved in a state worth thirteen million dollars, right, yeah. 196 00:11:31,000 --> 00:11:34,680 Speaker 2: So the significance of it is the fact that in 197 00:11:34,720 --> 00:11:38,000 Speaker 2: this case mister Pete Colin Peak left behind a state 198 00:11:39,000 --> 00:11:44,439 Speaker 2: and he after his death he had a document called 199 00:11:44,679 --> 00:11:47,320 Speaker 2: Last Will of Colin Peak that was found in the 200 00:11:47,480 --> 00:11:51,560 Speaker 2: notes app of his iPhone that purported to leave the 201 00:11:51,559 --> 00:11:55,360 Speaker 2: bulk of his fortune to a close friend and within 202 00:11:55,440 --> 00:11:58,640 Speaker 2: some lesser gifts to families. But there was a bit 203 00:11:58,679 --> 00:12:02,640 Speaker 2: of dispute that arose between Colin Peake and his brother, 204 00:12:03,520 --> 00:12:05,880 Speaker 2: who tried to argue that the note wasn't. 205 00:12:05,720 --> 00:12:06,960 Speaker 3: A testamentary instrument. 206 00:12:07,559 --> 00:12:11,160 Speaker 2: And this is probably a very recent case of a 207 00:12:11,200 --> 00:12:14,000 Speaker 2: line of cases that were seeing the Robert Holmes of 208 00:12:14,040 --> 00:12:17,240 Speaker 2: Court was one of those where people have not made 209 00:12:17,240 --> 00:12:21,079 Speaker 2: a will or attempted to write a scribbled note somewhere 210 00:12:21,400 --> 00:12:24,000 Speaker 2: as if it was a will, thinking that that's enough 211 00:12:24,160 --> 00:12:27,600 Speaker 2: to get over the line. But of course what happened 212 00:12:27,600 --> 00:12:31,720 Speaker 2: here was that the court decided that the note did 213 00:12:31,760 --> 00:12:36,040 Speaker 2: not constitute a testamentary instrument, wasn't valid to be an 214 00:12:36,080 --> 00:12:42,040 Speaker 2: informal will, and in those circumstances, he died in test state, 215 00:12:42,960 --> 00:12:45,720 Speaker 2: which means that he died without a will or a 216 00:12:45,760 --> 00:12:49,280 Speaker 2: valid will. And the Succession Act in New South Wales 217 00:12:49,400 --> 00:12:52,240 Speaker 2: dealt with how that estate should be divided, and it 218 00:12:52,320 --> 00:12:53,840 Speaker 2: left the estate to his brother. 219 00:12:54,600 --> 00:12:57,240 Speaker 1: So just to clarify that the man who died and 220 00:12:57,360 --> 00:13:01,000 Speaker 1: left this last minute with on his iPhone nose, the 221 00:13:01,040 --> 00:13:03,360 Speaker 1: person he tried to end the money out didn't get it, 222 00:13:03,880 --> 00:13:07,440 Speaker 1: and it was contested and the family actually got it. 223 00:13:08,000 --> 00:13:08,520 Speaker 3: That's right. 224 00:13:08,600 --> 00:13:11,880 Speaker 2: And because there was no children, no spouse, the intestacy, 225 00:13:12,080 --> 00:13:16,360 Speaker 2: the Succession Act left the entire estate to the brother. 226 00:13:16,679 --> 00:13:21,239 Speaker 1: I found amazing. Wasn't so much this dispute. The disputes 227 00:13:21,280 --> 00:13:25,360 Speaker 1: every day about money, and thirteen million is a lot 228 00:13:25,400 --> 00:13:26,200 Speaker 1: on a wis, so it was. 229 00:13:26,200 --> 00:13:27,000 Speaker 3: A big dispute. 230 00:13:27,240 --> 00:13:30,160 Speaker 1: But what I thought was extraordinary was the court didn't 231 00:13:30,200 --> 00:13:31,800 Speaker 1: have any problem with the fact that it was actually 232 00:13:31,800 --> 00:13:34,000 Speaker 1: written on an iPhone note. That wasn't any a thing, 233 00:13:34,200 --> 00:13:36,760 Speaker 1: was it. You can even a will on an iPhone 234 00:13:36,800 --> 00:13:39,120 Speaker 1: note if you wish, it would seem yeah. 235 00:13:39,200 --> 00:13:41,880 Speaker 2: And that's because in New South Wales and in every 236 00:13:41,960 --> 00:13:45,920 Speaker 2: state in Australia under the Irrelevant Succession Acts, there are 237 00:13:45,920 --> 00:13:49,000 Speaker 2: provisions for what we call an informal will, and that 238 00:13:49,040 --> 00:13:51,840 Speaker 2: can be a handwritten or typewritten note, or an email 239 00:13:51,960 --> 00:13:55,240 Speaker 2: or a text, a video recording, or even an audio 240 00:13:55,840 --> 00:13:59,080 Speaker 2: or a word document. The courts have considered different forms 241 00:13:59,600 --> 00:14:03,960 Speaker 2: of what we might call a potential testamentary note. Right, 242 00:14:04,360 --> 00:14:07,720 Speaker 2: this happened to be unusual because it was on an iPhone, 243 00:14:08,200 --> 00:14:12,600 Speaker 2: and so the courts have applied three key tests to 244 00:14:12,720 --> 00:14:15,240 Speaker 2: these sorts of issues. The first thing, is there a 245 00:14:15,280 --> 00:14:18,360 Speaker 2: document or a record? Well, of course there was, and 246 00:14:18,360 --> 00:14:21,520 Speaker 2: that can be in any different form. We've seen notes 247 00:14:21,600 --> 00:14:24,720 Speaker 2: on napkins. There have been cases where someone has attempted 248 00:14:24,760 --> 00:14:28,760 Speaker 2: to make a testamentary on a napkin. Yes, and this 249 00:14:28,840 --> 00:14:31,240 Speaker 2: has been sought to be admitted into evidence as an 250 00:14:31,240 --> 00:14:34,800 Speaker 2: informal will. So the court will look at the variety 251 00:14:34,880 --> 00:14:39,040 Speaker 2: of media on which a written record is made and 252 00:14:39,080 --> 00:14:43,160 Speaker 2: then they ask themselves, does the document or the note, 253 00:14:43,240 --> 00:14:45,360 Speaker 2: or whatever the form of media is, even if it's 254 00:14:45,360 --> 00:14:49,400 Speaker 2: an audio recording, purport to state the testamentary intentions of 255 00:14:49,440 --> 00:14:53,440 Speaker 2: the deceased person. And the third question is does the 256 00:14:53,480 --> 00:14:57,680 Speaker 2: decease intend this to be their last will? Right? This 257 00:14:57,760 --> 00:15:02,200 Speaker 2: is their conclusive The court looks at a whole range 258 00:15:02,240 --> 00:15:04,520 Speaker 2: of factors to decide that. 259 00:15:05,240 --> 00:15:08,280 Speaker 1: So very quickly the courts put to one side, follow 260 00:15:08,440 --> 00:15:12,520 Speaker 1: was written on and then discuss conventional issues like intention. 261 00:15:13,080 --> 00:15:15,240 Speaker 1: That all there were always the things around will. And 262 00:15:15,280 --> 00:15:17,240 Speaker 1: I suppose people are writing less, aren't they? I mean, 263 00:15:17,560 --> 00:15:20,600 Speaker 1: I write less than I ever did, and I could 264 00:15:20,600 --> 00:15:23,400 Speaker 1: imagine in ten years time never writing at all. Why 265 00:15:23,400 --> 00:15:25,360 Speaker 1: would I need to? Once upon a time you'd go 266 00:15:25,360 --> 00:15:27,680 Speaker 1: and interview somebody with your notebook. Now we'll just record 267 00:15:27,720 --> 00:15:29,640 Speaker 1: it on my phone, just tip a button and there 268 00:15:29,680 --> 00:15:32,360 Speaker 1: it is on a transcript, which is better than my writing. 269 00:15:32,920 --> 00:15:35,440 Speaker 1: So the point I'm making is wills as we know 270 00:15:35,560 --> 00:15:38,320 Speaker 1: them in this formal written document. It's probably going to 271 00:15:38,360 --> 00:15:42,640 Speaker 1: become quite common that people leave videos or whatever, and 272 00:15:42,680 --> 00:15:45,440 Speaker 1: they will stand up in court if the intention and 273 00:15:45,520 --> 00:15:48,160 Speaker 1: the other legal aspects are good enough. Is that fair 274 00:15:48,280 --> 00:15:48,600 Speaker 1: to say? 275 00:15:49,120 --> 00:15:52,000 Speaker 2: It's fair to say that the courts are more aligned 276 00:15:52,000 --> 00:15:53,800 Speaker 2: to contemporary modes of communication. 277 00:15:54,040 --> 00:15:55,600 Speaker 1: Yeah, But it's. 278 00:15:55,440 --> 00:15:57,560 Speaker 2: A balancing act because the Wills Act and each of 279 00:15:57,600 --> 00:16:00,960 Speaker 2: the states have a very rigid process for making a 280 00:16:01,000 --> 00:16:02,920 Speaker 2: will and executing a will for it to be binding 281 00:16:02,920 --> 00:16:05,240 Speaker 2: and valid, and so what they don't want to do 282 00:16:05,360 --> 00:16:09,360 Speaker 2: is upset that formal process because you introduced a lot 283 00:16:09,400 --> 00:16:13,560 Speaker 2: of risk of mischief being introduced, or fraud or abuse. 284 00:16:13,560 --> 00:16:16,040 Speaker 2: I mean, you could have a video recording of somebody 285 00:16:16,080 --> 00:16:18,120 Speaker 2: making a will, but someone standing behind them with a 286 00:16:18,120 --> 00:16:19,720 Speaker 2: gun outside of the view of the camera. 287 00:16:20,080 --> 00:16:21,320 Speaker 3: So there's lots of issues. 288 00:16:21,640 --> 00:16:25,440 Speaker 2: But you're right, the courts will entertain more common modes 289 00:16:25,440 --> 00:16:28,920 Speaker 2: of communication like video or audio. But I think that 290 00:16:29,600 --> 00:16:31,920 Speaker 2: certainly from our listener's point of view, having an audio 291 00:16:31,960 --> 00:16:34,600 Speaker 2: recording with a written document like a will is going 292 00:16:34,640 --> 00:16:38,239 Speaker 2: to be a lot more useful going forward, particularly when 293 00:16:38,440 --> 00:16:41,720 Speaker 2: you want to explain why a will is drafted in 294 00:16:41,760 --> 00:16:45,920 Speaker 2: a certain way, because we've seen recently cases where a 295 00:16:46,000 --> 00:16:50,480 Speaker 2: court will want to look beyond the execution of it 296 00:16:50,520 --> 00:16:53,720 Speaker 2: and ask did the will maker understand what they were signing? 297 00:16:53,760 --> 00:16:55,160 Speaker 2: And we saw that We've seen that in the New 298 00:16:55,160 --> 00:16:59,160 Speaker 2: South Wales case last year where the court asked, well, yes, 299 00:16:59,200 --> 00:17:01,640 Speaker 2: they signed it, they understand I all know what they 300 00:17:01,640 --> 00:17:09,080 Speaker 2: were signing. So communications like video audio will augment written documents. 301 00:17:09,720 --> 00:17:12,600 Speaker 2: But it's this fascinating trend that we're seeing. 302 00:17:12,920 --> 00:17:16,120 Speaker 1: Yeah, and the courts are actually, to my surprise, quite 303 00:17:16,200 --> 00:17:17,919 Speaker 1: up to date there and allowing for it. 304 00:17:18,200 --> 00:17:18,919 Speaker 3: Okay, terrific. 305 00:17:18,920 --> 00:17:21,199 Speaker 1: Look, we'll take short break and there's something that I 306 00:17:21,240 --> 00:17:25,040 Speaker 1: think everyone should know in the next segment. But simply 307 00:17:25,440 --> 00:17:27,480 Speaker 1: if you think you inherit the super and there's no 308 00:17:27,520 --> 00:17:30,399 Speaker 1: inheritance text in Australia actually most of the time for 309 00:17:30,480 --> 00:17:41,800 Speaker 1: most people going to pay seventeen percent, we'll explain why. 310 00:17:42,600 --> 00:17:45,960 Speaker 1: Hello and welcome back to The Australian's Money Puzzle podcast. 311 00:17:46,080 --> 00:17:51,280 Speaker 1: James Kirby talking to Chris Hill of Inherit Australia. Chris, 312 00:17:51,280 --> 00:17:55,359 Speaker 1: I have a question from Bruce. Came in just about 313 00:17:55,680 --> 00:17:57,760 Speaker 1: maybe the week before last and I said to myself, 314 00:17:57,760 --> 00:18:00,840 Speaker 1: I'll keep this one up my sleeve for when we 315 00:18:01,200 --> 00:18:03,280 Speaker 1: have you on the show. So this is from Bruce. 316 00:18:03,320 --> 00:18:06,639 Speaker 1: He says, can you provide some clarification on the tax 317 00:18:07,040 --> 00:18:09,880 Speaker 1: on inherited super. I used to be under the impression 318 00:18:09,920 --> 00:18:12,280 Speaker 1: that if super was left to your estate then it 319 00:18:12,320 --> 00:18:17,360 Speaker 1: would be passed on on text. However, recent podcast by 320 00:18:17,400 --> 00:18:20,119 Speaker 1: you led me to doubt this. I asked my accountant 321 00:18:20,160 --> 00:18:23,919 Speaker 1: and I ended up more confused than ever well, you 322 00:18:23,920 --> 00:18:26,800 Speaker 1: shouldn't be confused, Bruce. Now this is not advice, it's 323 00:18:26,840 --> 00:18:30,359 Speaker 1: always information only. But tell me if I'm wrong here, Chris. 324 00:18:30,800 --> 00:18:34,080 Speaker 1: There is no inheritance tax in Australia, Part A, Part B. 325 00:18:34,440 --> 00:18:37,680 Speaker 1: If you inherit super, there are super. 326 00:18:37,440 --> 00:18:39,520 Speaker 3: Taxes, yes, all right. 327 00:18:39,560 --> 00:18:42,040 Speaker 1: First of all, I want to ask you, is Super 328 00:18:42,080 --> 00:18:44,760 Speaker 1: becoming more important in your scene book? 329 00:18:44,840 --> 00:18:47,720 Speaker 2: Definitely? I mean we're seeing a build up in super. 330 00:18:48,040 --> 00:18:50,400 Speaker 2: We're seeing the government's interest in super with this three 331 00:18:50,440 --> 00:18:54,280 Speaker 2: million dollar division two nine six SEX, recognizing that that's 332 00:18:54,320 --> 00:18:59,200 Speaker 2: another opportunity to grab more federal revenue. But it's part 333 00:18:59,240 --> 00:19:02,240 Speaker 2: of the government's retirement incomes policy to encourage people to 334 00:19:02,640 --> 00:19:05,119 Speaker 2: save for retirement. Of course, we have an aging population, 335 00:19:05,320 --> 00:19:08,359 Speaker 2: so necessarily we have a buildup of money in the 336 00:19:08,400 --> 00:19:12,760 Speaker 2: superannuation environment and that's going to continue. So there's going 337 00:19:12,840 --> 00:19:15,679 Speaker 2: to be a lot of wealth transfer on death with 338 00:19:15,800 --> 00:19:18,919 Speaker 2: money coming out of super. And tax on Super is 339 00:19:19,280 --> 00:19:20,800 Speaker 2: in the spotlight for many people. 340 00:19:21,600 --> 00:19:23,760 Speaker 1: In fact, I'd go as far as to say that 341 00:19:23,840 --> 00:19:26,800 Speaker 1: it's for the vast majority of people most of the time, 342 00:19:26,880 --> 00:19:31,600 Speaker 1: because tax jew on Super is due on what they 343 00:19:31,760 --> 00:19:36,840 Speaker 1: call the taxable component. The taxable component is the bit basically, 344 00:19:36,920 --> 00:19:40,720 Speaker 1: where you've got a concession compulsory super, that's most people super, 345 00:19:40,760 --> 00:19:42,720 Speaker 1: isn't it. I mean, the vast majority of super that's 346 00:19:42,800 --> 00:19:46,520 Speaker 1: rolling in at twelve percent SGC is compulsory, so most 347 00:19:46,520 --> 00:19:49,320 Speaker 1: super will be due a seventeen percent tax. Why is 348 00:19:49,359 --> 00:19:52,439 Speaker 1: there a seventeen percent tax on inheritance super? 349 00:19:53,240 --> 00:19:56,720 Speaker 2: I think to just correct any sort of assumption around 350 00:19:56,760 --> 00:19:59,960 Speaker 2: that the tax applies depending on who is the recipient 351 00:20:00,200 --> 00:20:03,080 Speaker 2: YEP of the super benefit on death. If it's a 352 00:20:03,119 --> 00:20:06,639 Speaker 2: surviving spouse or partner, there is no seventeen percent tax. 353 00:20:06,920 --> 00:20:09,280 Speaker 1: Yeah, I should clarify that adult children, really, isn't it. 354 00:20:09,600 --> 00:20:13,119 Speaker 2: Yeah, we're really only considering probably the death of the 355 00:20:13,240 --> 00:20:15,320 Speaker 2: last person in the superannuation fund, or if it's a 356 00:20:15,320 --> 00:20:17,760 Speaker 2: single member fund, the death of the member and it's 357 00:20:17,800 --> 00:20:21,520 Speaker 2: either passing to the estate or the children of the 358 00:20:21,560 --> 00:20:27,040 Speaker 2: deceased member. In those cases, the tax impost arises in respective. 359 00:20:27,080 --> 00:20:30,200 Speaker 2: As you say, the taxable amount, which is basically any 360 00:20:30,240 --> 00:20:33,320 Speaker 2: money that you've put into a superannuation fund, including your 361 00:20:33,560 --> 00:20:36,760 Speaker 2: super guarantee payments where there has been a tax deduction 362 00:20:36,920 --> 00:20:40,920 Speaker 2: claimed that forms part of the taxable amount. The tax 363 00:20:40,920 --> 00:20:43,359 Speaker 2: free amount is basically money that you put into the 364 00:20:43,400 --> 00:20:46,840 Speaker 2: superfund after you've already paid tax. That goes in tax 365 00:20:46,880 --> 00:20:48,760 Speaker 2: free and it comes out tax free. 366 00:20:49,240 --> 00:20:53,520 Speaker 1: From the mast reside of people is taxable because they've 367 00:20:53,520 --> 00:20:56,520 Speaker 1: got the concession. They don't even remember getting the concession 368 00:20:56,680 --> 00:20:59,840 Speaker 1: or anything like that. But basically, by law, you must 369 00:20:59,840 --> 00:21:02,320 Speaker 1: put twelve percent if your salary package into super that 370 00:21:02,480 --> 00:21:06,680 Speaker 1: is concessionally treated. Yeah, and so in the future, let's 371 00:21:06,720 --> 00:21:08,840 Speaker 1: just say there's a couple and as you say, if 372 00:21:08,880 --> 00:21:11,560 Speaker 1: the super transfers from one person to the other, it's 373 00:21:11,600 --> 00:21:14,080 Speaker 1: not tax. But if the last remaining person in the 374 00:21:14,080 --> 00:21:19,120 Speaker 1: couple then dies, typically transfers to their adult children. Those 375 00:21:19,160 --> 00:21:22,560 Speaker 1: adult children will pay tax on most of the super 376 00:21:22,600 --> 00:21:23,359 Speaker 1: most of the time. 377 00:21:23,440 --> 00:21:25,360 Speaker 3: Is that right? That's right? 378 00:21:25,440 --> 00:21:28,360 Speaker 2: With one technical point of difference is if they are 379 00:21:28,440 --> 00:21:31,520 Speaker 2: a tax dependent okay, right, and this would only apply 380 00:21:31,600 --> 00:21:35,359 Speaker 2: to children who have like a permanent disability or children 381 00:21:35,400 --> 00:21:37,040 Speaker 2: who are under age twenty five. 382 00:21:37,600 --> 00:21:40,879 Speaker 1: Okay, but adult children being most people most of the time. Yeah, 383 00:21:41,160 --> 00:21:43,040 Speaker 1: So Chris, why is there this tax? 384 00:21:44,960 --> 00:21:48,280 Speaker 2: Well, look at it all stemmed from I mean when 385 00:21:48,320 --> 00:21:52,959 Speaker 2: Pulkating developed the tax system. You know, there was basically 386 00:21:53,160 --> 00:21:56,600 Speaker 2: tax when you exited the system, that was all changed 387 00:21:57,080 --> 00:21:59,159 Speaker 2: in I think it was around ninety ninety three with 388 00:21:59,200 --> 00:22:01,600 Speaker 2: the introduction of the Super Innovation act Ors this Act, 389 00:22:02,160 --> 00:22:05,879 Speaker 2: and the government decided to tax money going in tax 390 00:22:06,040 --> 00:22:09,200 Speaker 2: at a lower rate concessional rate, tax it during the 391 00:22:09,200 --> 00:22:11,639 Speaker 2: operation of the fund and tax it on exit to 392 00:22:11,840 --> 00:22:14,119 Speaker 2: sort of compensate for the tax that they were losing 393 00:22:14,160 --> 00:22:14,720 Speaker 2: at the end. 394 00:22:15,080 --> 00:22:18,600 Speaker 1: They wanted some money back for the favors they did 395 00:22:18,640 --> 00:22:20,320 Speaker 1: you in the early days tax Mase. 396 00:22:20,640 --> 00:22:23,280 Speaker 2: Yeah, so you know they're basically saying to you, look, 397 00:22:23,480 --> 00:22:25,920 Speaker 2: if we give you a tax benefit when you put 398 00:22:25,960 --> 00:22:28,440 Speaker 2: money into the fund, we want some of that back 399 00:22:28,480 --> 00:22:30,240 Speaker 2: when you die, as simple as that. 400 00:22:30,600 --> 00:22:33,320 Speaker 1: But the thing about nineteen ninety three when Keating created 401 00:22:33,320 --> 00:22:36,280 Speaker 1: it was that it was only three percent of your 402 00:22:36,600 --> 00:22:40,159 Speaker 1: package went in. Yeah, I was twelve, So if you 403 00:22:40,160 --> 00:22:42,480 Speaker 1: think about it, it was four times more involved. 404 00:22:42,880 --> 00:22:45,520 Speaker 2: There is a way of avoiding that, of course, James, 405 00:22:45,520 --> 00:22:47,680 Speaker 2: and that is if you pull the money out before 406 00:22:47,720 --> 00:22:48,280 Speaker 2: you die. 407 00:22:49,000 --> 00:22:51,520 Speaker 3: Yes, you avoid the seventeen percent tax. 408 00:22:52,240 --> 00:22:53,719 Speaker 1: You can pull it out and put it back in, 409 00:22:53,760 --> 00:22:56,280 Speaker 1: can't you and go do this ridiculous circular thing. 410 00:22:56,720 --> 00:23:00,640 Speaker 2: Yeah, it's a very popular strategy of recycling money out 411 00:23:00,680 --> 00:23:02,439 Speaker 2: of your taxable amount and putting it back in as 412 00:23:02,480 --> 00:23:06,040 Speaker 2: a tax free amount, and that's a common strategy, but obviously, 413 00:23:06,080 --> 00:23:09,160 Speaker 2: with the contribution caps, for many people, if as you say, 414 00:23:09,280 --> 00:23:12,639 Speaker 2: if most of their superbalances is in that taxable amount, 415 00:23:12,760 --> 00:23:15,760 Speaker 2: it might take many years to be able to recycle 416 00:23:15,800 --> 00:23:16,120 Speaker 2: that out. 417 00:23:16,200 --> 00:23:19,119 Speaker 1: So it's a recontribution strategy. And you basically, as you 418 00:23:19,240 --> 00:23:21,520 Speaker 1: take it out once you are a certain age I 419 00:23:21,560 --> 00:23:24,119 Speaker 1: think it's sixty to seventy five, you take the money out, 420 00:23:24,720 --> 00:23:26,600 Speaker 1: it's tax free. You put it back in. Believe it 421 00:23:26,680 --> 00:23:29,000 Speaker 1: or not, it's tax free. As you put it back in, 422 00:23:29,080 --> 00:23:32,439 Speaker 1: it reduces the taxable amount. It reduces the amount of 423 00:23:32,480 --> 00:23:35,040 Speaker 1: which you pay seventeen percent or at least your beneficiaries 424 00:23:35,040 --> 00:23:37,080 Speaker 1: with in the future. Have I got that? Yes, right, 425 00:23:37,080 --> 00:23:42,520 Speaker 1: in our absurdly complex, often contradictory and circuitous supersystem. 426 00:23:43,840 --> 00:23:45,879 Speaker 2: But you know what, the government's way of stopping that 427 00:23:46,720 --> 00:23:49,879 Speaker 2: is introduced the total super balance cap, yes, which today 428 00:23:49,960 --> 00:23:52,000 Speaker 2: is two million dollars. So if you've got over two 429 00:23:52,000 --> 00:23:53,679 Speaker 2: million dollars, you can't put it back in. 430 00:23:54,119 --> 00:23:58,360 Speaker 1: Yeah, okay, yeah, yeah, yeah, it's a it's capped at 431 00:23:58,359 --> 00:24:01,679 Speaker 1: that level. Very interesting, really really interesting. Thank you very 432 00:24:01,760 --> 00:24:02,680 Speaker 1: much for coming on the show. 433 00:24:02,760 --> 00:24:06,280 Speaker 3: Chris. You're welcome, thank you. That was Chris Hill of. 434 00:24:06,520 --> 00:24:09,480 Speaker 1: Inherit Australia and I did say to you, I thought 435 00:24:09,480 --> 00:24:12,800 Speaker 1: we could do a show on estates and wills and 436 00:24:12,920 --> 00:24:17,480 Speaker 1: inheritance that wasn't dry, and that wasn't dry I hope. 437 00:24:17,560 --> 00:24:18,480 Speaker 3: Okay, very good. 438 00:24:18,680 --> 00:24:22,159 Speaker 1: Let's have some correspondents the money Puzzle at the Australian 439 00:24:22,240 --> 00:24:25,200 Speaker 1: dot com dot au and just remember when you're sending 440 00:24:25,200 --> 00:24:27,679 Speaker 1: in a question if you want to send in two 441 00:24:27,800 --> 00:24:29,480 Speaker 1: or three at the same time. I noticed people are 442 00:24:29,520 --> 00:24:31,880 Speaker 1: doing it more and more and it's very very good 443 00:24:31,920 --> 00:24:33,920 Speaker 1: and it's great for the show. Okay, talk to you soon.