Episode 01 - The Art of Estate Planning
Tara: [00:00:00] Well, it's our inaugural episode of the Art of Estate Planning Podcast. I'm so thrilled you are here. Look, every woman and her cat has a podcast. So we thought that we would join the party. And yeah, this is a big experiment, really to see what happens when you give two women with big mouths and a lot of opinions of microphone.
I guess we're about to find out. So first I would like to introduce you to my co host Carrie Payne. She is our much beloved host of our weekly TT Presidents Club Hot Seeds and our resident cat lady and estate planning nerd. So welcome Carrie. Now Let's let everyone just know how much of a cat lady you are.
How many cats are in your house
Carrie: right now? I'm so glad you clarified in my house, Tara, because people always say to me, how many cats do you own? And I say three, but it's a loaded question [00:01:00] because there are actually six cats in my house. I've got my three, I've got my my parents cat, and now I've got two fosters as well.
So six is kind of the standard number for me. It jumps up during kitten season.
Tara: And, we might hear some meowing in the background, so.
Carrie: More likely like gremlin running around or like me shouting at them to stop scratching at the door. So, meowing is a cat's way of communicating with humans and mostly it's just kind of hissing, so, and scratching around.
We should have added that to the disclaimers.
Tara: But anyway, I've got my cup of turmeric tea and I am ready to sit down and have a big chat with you. And our very first topic is actually one that came up in one of our weekly TT President's Club hot seats. And I just felt that. Carrie, you and I, I had a little bit more to add to the topic and I wanted to do a deep dive on it.
So the scenario is you are [00:02:00] in an estate planning meeting with a couple, a husband and a wife. The husband is the breadwinner of the family and the wife is currently on maternity leave, homemaker duties. And they say to you, does she even need a will, or she just needs a very basic will. We're doing a testamentary trust will for the husband because all the assets are in his name.
Does this wife even need a will? Does she need a testamentary trust will? How do we navigate this topic? Now, Carrie, I know you have some opinions on this, so hit me .
Carrie: Why did you bring the, like in the question that's inherently tied to gender as the first topic, we are going to like halve our listeners to be all the people that agree with us.
So I'm sorry everybody in advance, but I'm not sorry as well. So, I think this is a really good question and again for those that haven't had the pleasure of listening to, Tara and I talk before we are. Feminists. [00:03:00] Raging feminists. Raging. So, you know, I think this is a really good topic to talk about for multiple reasons and obviously also this position of who is the homemaker is something that is slowly changing.
You know, we are seeing a lot more men in that homemaker position and so while I think it's still a really relevant topic because the tables are still very much turned and the fact that women are the ones having children, it does mean they tend to play that role, at least in the early stages, more often.
What I thought was really interesting in general, though, that concept of not worth anything is so interesting to me because I think we think we're not worth anything while we're alive. You know, like I think I'm not worth very much, but if we, you know, we start to add in assets that are only kind of realized on our passing.
Very much we are worth something then. So you know, this is obviously the obvious ones are things like superannuation and insurance, right? So they're absolutely worthless to us while we're sort of, you know, anything under sort of [00:04:00] 60 and we're very much alive, but very, very valuable assets.
And I'm sure you've shared some statistics before Tara on what those kinds, the value of those assets actually are. And, you know, the fact that those older generations that are now sort of passing away with both of those types of assets, the sheer volume of wealth being transferred is huge. So I think that that concept of not being worth anything is, you know, something that we only think about because we can't get our hands on the cash now.
So yeah, and then even then, I mean, obviously it's not necessarily relevant while there's a surviving spouse, but even like your main residence, you know, your main residence isn't really worth it. worth anything to you while it's putting a roof over your head. But if you're not here, it's worth a lot.
So, you know, you might think I don't really have anything very much. I've got a house and some cash, but you know, property is a very valuable asset and unrealized asset when it's your home.
Tara: Yeah, I totally agree. I think it's so worth diving deeper [00:05:00] into how are those assets held and just challenging that assumption from the clients.
Are you going to also mention about replacing the roles? Yeah.
Carrie: Yes. I'm just talking about the actual, like, that concept of like, don't have anything, but you're absolutely right. And Tara should I say stupidly sent me a meme the morning about replacement of homemaker people about how much those homemakers generally do in the home and what the actual cost is of replacing it.
You know, and I think, I mean, I was definitely raised in a household where my mom did absolutely everything. And even when my mother passed, I had to teach my own father who was 60 something at the time how to separate laundry and do laundry. You know, and then I had to get him an ironing lady, you know, like all these things, like these replacement costs.
And this is if someone is totally useless, like my dad was. I mean, even if you're still functioning, you know, being able [00:06:00] to do your own daily care. I mean, Who's going to look after the kids? Who's going to pick them up from school if you've got a job? Who's going to be making sure that you've got meals for rainy days?
You know, who's going to be taking kids to the doctor when kids are sick or having the day off when you've got a sick child? So that actual physical replacement cost, I mean, I always say there's, I don't know if you can put a number on it. There, there is no magic number, but yeah, well, I think
Tara: about in my own family with our two little kids, like how many people would we need to hire if one of us died, you know, a gardener, a, probably a housekeeper, a cleaner, we would have to pay a lot more for meals, like ready meals an ironing person.
Like when you actually look at. What the homemaker spouse is doing and how many hours a week you would [00:07:00] need to pay or outsource that labour to replace them, especially when the surviving spouse is still working full time and looking after the children that adds up like the annual cost of that adds up so quickly that it is It is really valuable.
Like, there needs to be a way to quantify and value that. And so, I guess, how do you deal with this as a practitioner when these clients are sitting in front of you?
Carrie: I think, I mean, I always. Let's obviously do the exercise where you show them those unrealized assets, but also I think it's a really big discussion.
I mean, I'm going to preface this that I'm not a financial planner and I'm never giving any financial advice ever because you know, I pay one credit card off with the other, but I think that this is a really important part as an estate planning solicitor that you need to be working collaboratively with someone like their financial planner, or if they [00:08:00] don't have a financial planner recommending that they seek advice from someone that they that is qualified to give advice around things like insurance to actually cover some of those costs.
You know, again, I'm not sure how they calculate, I'm pretty sure it's witchcraft how they calculate what the value is, but certainly, you know, as a lawyer, it's not our job to know exactly what that number looks like. But I think it is our job as an estate planning lawyer to say, Hey, if one of you goes, there's going to be this very real problem, like whether it be actually covering debt, like of the mortgage and things like that.
And then, as I said, like that's just the asset stuff. And then actually the replacement cost of the other non financial benefits of that person brings to the relationship that have a real financial impact. ticket attached to them if they're not here. So, I think that for me is always a really big piece is, you know, in our, you know, our checklists our processes and our systems, we need to have this reminder, you know, does, do we have enough [00:09:00] to cover the debt and do we have enough to cover the person?
Tara: I love all of those points, Carrie. And I actually, I think, leads into this bigger conversation about what is our role as estate planning lawyers? Because are we just here to document wishes in a will and be the, I want to say mouthpiece. It's not mouthpiece, but you know, like basically write down the instructions of the test staters and what they're telling us, or do we actually have a bigger duty or obligation to help them stress test their plan?
And I'm certainly in that camp of our responsibility. If you're a good estate planning lawyer, you are stress testing that estate plan with the clients and making sure it actually works. Practically, because for a lot of people, they are only making one or two wills in their entire life. They're not going through this process all the time.[00:10:00]
And especially in that younger demographic where they're like 30s or 40s and they've got younger kids, this might be the first time they're ever approaching the exercise. So they don't know what they're doing. They don't know. And they've only ever heard what their parents say. have done with their wheel, which probably wasn't very sophisticated or well thought out.
So I personally am of the view that. Can add so much value to the process if you actually sit down and give them a very kind and gentle reality check about this is not just a in the never never situation if we need to rely on this will and estate plan it's got to work it's got to do a lot of heavy lifting and we want to have a plan that when you have just gone through one of the worst experiences in your entire life losing a son spouse and a parent of children that the financial stress is not [00:11:00] added to all the other emotional stress.
But I know there's a lot of lawyers out there who might disagree and say, that is not our job. So, and you're overstepping. So what do you think,
Carrie: Carrie? I mean, I usually preface both my, because I usually do a two meeting approach in my first meeting is kind of strategy discussion, and then second meeting is going through the documents.
Sometimes there's a third meeting if there's extra things, but I always preface the start of each of those meetings with reminding the client that the whole purpose of an estate plan, and I'm saying estate plan, not a will. Okay. There's a very big difference. The whole purpose of an estate plan, which is this exercise that we're doing, is to make it easier on each other and your family if something happens to you, right?
I mean, I don't know what person, what law society in Australia would have a problem with us saying that that's what a proper estate plan should do, right? It should absolutely be about making it easy for your family. And I know there's ways that you can, you know, [00:12:00] Do the stuff that you need to do legally.
As you said, I can hear those people saying, it's our job just to be lawyers. I can hear that, but I think there's a way that you can have that conversation or start that conversation and then get them reach out to people that are qualified into doing those things. You know, like we're not, we're also not you know, This isn't necessarily mediators in anything, but I can tell you that half the time I feel like a relationship counsellor when you're going through who should be the trustees of your testamentary trust for your children or who should be the guardians for your children.
And, you know, I'm not a qualified relationship counsellor. I have six cats in my house and no partner, so I'm not the one out here to tell people how to run their relationships. But I think, you know, it's a part of our job as solicitors to almost facilitate that process. We don't have to give all those pieces of advice.
We're here to be the guardians of their estate plan and then pull in the relevant people or direct the relevant people or direct them to the relevant people to give those [00:13:00] pieces of advice.
Tara: Yeah, I totally agree, Carrie. And I do think it's hard when you're in that situation in the meeting and when you're a raging feminist like us and you're hearing those types of things being said, I do think it's important to know that, you know, no one's deliberately being a misogynist.
We hope, you know, it's more just about the way that Australian society has taught us to value, you know, domestic labour, unpaid labour, caring. And so as much as for me, I'd just love to like read them the right act. I don't think that's going to help anyone. It's not going to get the will done. It's certainly probably not going to help the homemaking spouse or, or the children who, cause ultimately, you know, like this is for the kids.
I'm using the standard sort of scenario [00:14:00] of, you know, 2. 5 kids, but like, this is ultimately, we want to help make sure that these little people who've lost a parent have the best chance at a good childhood they had and freeing up the surviving spouse to be able to spend time with them and be there and not be stressed is what this is all about.
So I love your idea about. You know, just gently, gently suggesting bringing in an external professional, like a financial advisor. I also love the idea of, like, getting out the whiteboard or the back of the envelope, paper, and just kind of saying, like, what does this really look like? Like, where is the money going to go?
How, is there enough money to pay off the mortgage or will you still have a mortgage? Will you have to reduce your hours as the surviving spouse who's working to do all the extra stuff that your homemaker spouse is doing and really get them to [00:15:00] take this from the theoretical, like, ye olde will.
Your last will and testament to like, this is my family's future. And what is that going to look like for us? And I think, you know, going through that exercise, the answers sort of almost unfold for themselves. You would hope at least.
Carrie: Yeah, I think you're right about the slowly, slowly part, like when we're challenging any belief systems, you can't just like jump down people's throats and be like, that's wrong X, Y, Z.
You know, it's about finding a way that resonates with them. I mean, you and I talked recently about an example about that. balance between what assets partners own, you know, the working spouse generally has more super. Okay. And therefore, you know, that's, it's seen, I worked hard for this super sort of thing, but I mean, a family member very close to me recently was talking about, Oh, you know, this mate's coming over and poor thing is, you know, wife separated from him and took everything, took [00:16:00] half of everything, including half his super.
And I'm like, I think you mean half her super too. And he said, what do you mean? And I said, you know how you've got two small children at home and your wife raises your children at home while you go to work? I said, do you not think she's worth half of what you're earning as well? So I think like, That was a close family relationship and so I could actually have that conversation a bit more bluntly, but finding like unique ways of discussing things is really important.
I think sometimes as lawyers that do estate planning, we are storytellers. You know, we have to tell those worst case scenarios and what that plays out like. So I think using those same skills is really important when we're talking about, you know, yes, it's the numbers as well, but finding some ways to get on the same level.
And what you said before, too, Tara, about. It's all about the children. I find that, you know, when we are getting into these discussions and there are some disagreements around things, including, you know, what the replacement cost of people might be. And I [00:17:00] hate saying that replacement cost of a person because that sounds so insensitive.
Here we are. You know, you're right. The common denominator between two partners is children. And both of them get on that, that into that emotive part. You know, that. Rather than focusing on numbers, they both realize, oh, hold on, you're absolutely right. This is what this is all about. So,
Tara: yeah, look, I could not agree more.
And just as a sidebar, one of my pet peeves or things that I'm just constantly doing is like telling people to contribute to their spouse's super when they go on maternity leave. Because What no one is doing. I'm like, Oh, you've been working part time for five years. My son's about to go into prep. So, you know, there's a lot of people in that demographic who have wound back their work or not working at all.
Like, I really hope you've been keeping your super balance up and your partner's been contributing. So yeah, I'm really fun at parties. [00:18:00] As
Carrie: I said before, Tara, I'm glad you're raising two sons, you know, challenging all those gender norms. But I, yeah, I think it's totally right. Like that imbalance is created over time because the person that's working has those normal contributions.
So, you know, and. That can be sometimes something that's very clear later on in life as well. I mean, obviously we're talking about sort of, you know, young couples in this instance, but certainly by the time they get to say retirement age, we've got people who were homemakers having significantly less, sometimes like one eighth the amount of super.
of the working spouse. And, you know, just this concept of who's super is super and then having to do strategies to move super around, you know, I think if we can jump on it early, then yeah.
Tara: No, I totally agree. And you're right. The financial advisors are so good at having those conversations. And [00:19:00] obviously if they're working with the Client when they're at the baby boomer age, and they don't have as much time to rebalance those super contributions.
So, you know, I think suggesting to clients to start working with a financial advisor when they're younger can just be the greatest gift, but let's talk. Practicalities, because say that you've got one or two meetings with the client, right? And you want to get this will done. Like you've quoted them.
You don't want it dragging on like this. They're going to like dilly dally over whether to engage the financial advisor on which one it's going to take time. Then this financial advisor has to do all their onboarding. There's a statement of advice, you know, like it could take like a year before they might get insurance policies.
in place to fund the contribution of the homemaker spouse. So yeah, like [00:20:00] what do we do in the interim to get your, keep your matter on track and for it to not, you know, these clients who get wills signed within a reasonable time.
Carrie: Great. You mentioned this, Tara. I hadn't prepared for this. No. I think, um, what I usually do in these scenarios is in fact, even when there's a debate as to whether a testamentary trust should be used or not, I always sort of mentioned that and this is where we say good precedents save lives.
So taralucke.com.au, no I think that, um, you know, I think that you know, if you're using a high quality precedent, it should have like an inherent bypass power, or what I call a bypass power, where, you know, the executor can consult with the main beneficiary of the testamentary trust, which would be, the surviving spouse.
And You know, potentially, if there's not enough value in the estate, not actually use the testamentary trust. And that way, you know, you've got both actions covered, you know, if there is enough [00:21:00] value, well then, yeah, we've got a testamentary trust. And if there's not, we've got the ability to bypass it.
And I think to You know, that's the way to, to get the client on board with both sort of schemes of it being like a simple will and a testamentary trust will at the same time while they're going through the exercise because I think then once they sit down with the financial planner and go, Oh, wow, the financial planner wants me to get 2 million worth of insurance.
I didn't realize I was that valuable. You know, you've already got the really great documents in the background that have that longevity. So, for me, that's my biggest strategy is sort of saying that there is this ability to not use the testamentary trust and you're better off to have the testamentary trust in the will and not use it than to not have built it in and wish you had it because of the complications with, you know, not having the ability to add those things back in.
Tara: Yes I love that and that is what I would have done as well, I think, those Let's be frank, it's a lot easier for us as the lawyer to do the mirror [00:22:00] image. Wills for both spouses, then to try and do a testamentary trust will for one spouse and then a basic will for the other spouse and map it all out and think so.
Yeah, I totally agree. I think if you can just sort of position the optionality of it and then do the mirror image kind of. buys time for them to get their insurance sorted. They don't have to come back and like redo the whole estate planning exercise. Cause no one wants to do that. You can just do a quick review and double check, but you know, your plan should be reasonably robust and yeah, maybe We've changed someone's life by having that conversation instead of just documenting.
Okay, you're telling me this. I'll write that down and sign here.
Carrie: I think that's so important, Tara, about that, the life of the will. Like I said to you at the start of you know, at the start of every meeting, I'll say like the purpose of the exercise is to make it easier on each other. I actually say a second thing, which is I don't want you to have to revisit this again in a hurry.
So, [00:23:00] I want to draft a will that is as robust as possible so that you get longevity out of, your estate plan. I mean, there's always things that happen that mean you have to update your estate plan, but certainly, nobody really likes spending lots of time with their lawyer, right? There's a reason why lawyers sit in the corner in the dark at parties.
So, you know, if we can make that document as robust as possible and give that person as much life, you know, out of their wills. You know, nobody wants to spend money on a lawyer. They don't have to. So if we can build it in and have that optionality, then, you know, you're getting a better, you know, they're getting more life out of what they've paid you for.
So
Tara: yeah, I love that. I mean, that's, It's our job, isn't it, to just sort of set them up in a structure that has longevity, flexibility, and, you know, can cater for different situations and go the distance. You and I could talk about this all day, but is there anything else you've wanted to say?
Carrie: No, no, I think I've done, yes, tick to [00:24:00] cats, yes, tick to playing on a family member, yes, tick to feminism, I'm done.
Tara: Well, I am. Really interested to hear from anyone listening, if you have dealt with this situation, how you approach it, if things went really well, if things went very poorly, pear shaped, all of the things. We love hearing from you, so send us an email or reach out on the socials and share your thoughts. I have to say, it's been great.
As I grow with life experience and experience in the law, you know, my estate planning approach has really evolved to think a lot more practically. This is not an issue that I would have ever turned my mind to when I was a student. estate planning lawyer. And I would have been a lot more of a you know, okay, that's what you told me to do.
We'll write it down and not really challenged it. So I do think it's [00:25:00] worthwhile having these types of conversations to get our brains Whether you agree with us, whether you violently disagree with our approach, I just love having these types of conversations to keep seeing how can we make estate planning more relevant, more practical and actually, um, more meaningful.
you know, do what it's meant to do for our clients. So, yeah, if you have anything you want to contribute to the conversation, Carrie and I would always love to hear you. Otherwise, we're going to wrap it up. And yeah, say thank you for listening to our very first episode of the Art of Estate Planning Podcast.
