Tara (00:54):
Welcome to episode 31 of the Art of Estate Planning Podcast, and today is a really special episode. I get to say this for the last time for a little while because I'm joined by our lovely co-host, Carrie, but Carrie today is actually going to be your last episode on the pod for a little while.
Carrie (01:19):
Yes, Tara. I'm thinking episode 31. That's my age, I think. I wish I am taking a bit of time, doing a bit of a step back to simplify my life a little bit to focus on some of the things that I need to at the moment. It's a little bit hard being across a few different things. So I'm focusing my role just on my front end practise in estate planning with Nurture Law in the short term. That's not to say that you might not see me again or might not hear me again for those that will miss the sultry sounds of my voice, but certainly in the short term, just taking a bit of a break and seeing where the world takes me or where I take myself.
Tara (01:58):
Well, I just want to say, Carrie, that on behalf of myself, but also a lot of our listeners, we have just enjoyed having your insights and your beautiful caring guidance and support for the whole art of Estate planning community for the last two years. It's just been an absolute honour to share this space with you and to have you leave your mark on it. And I personally am so grateful because I would not have been able to take any kind of maternity leave at all if you hadn't been able to step in and you literally did just step in and take care of everything while I was in that little newborn bubble and coped particularly well with me popping up and jumping in when I wasn't meant to be and not letting go. So we'll just be forever indebted to you and I know that we will keep hearing you and seeing you in the Art of Estate Planning community from time to time, perhaps on the other side of the mic.
Carrie (03:03):
Thanks, Tara. It's been one of the most enjoyable experiences getting to share knowledge with people. I've come from a family that were very, very, particularly my father, very interested in sharing information because knowledge is power in so many different ways. So hopefully some of my useless comments have been useful in helping people navigate their estate planning practise.
Tara (03:25):
Well, they've definitely been useful for me and I know that I have learned a lot from you as well. And yeah, I think you're going to be dearly missed. And yeah, please, listeners, just bear with me as I find my way in the world without Carrie by my side every day. But yeah, I'm sure Carrie, you're not going anywhere really, so not that everyone will still be able to see you in the community too. I thought we might start off with a fun fact for today's topic, which is all about, it's actually a listener topic that someone suggested, so thank you for suggesting this. It's a great one and I love it when you guys give us feedback about the kinds of topics that you want to hear. And this one is all about the pros and cons of having multiple executors. So I've expanded it out to include just all financial controllers, but yeah, is there too many cooks in the kitchen or does it actually help to have a team with you?
(04:26):
And a fun fact that I came across when I was researching this, and you guys might go, well, this is not a fun fact because we all knew this, but it was kind of new to me, is coming from Queensland, we can only have a maximum of four executors acting at one time. And I just assumed that was the case all across the country, but it's actually not only in Queensland and Tasmania do we have that rule, and in the other states you can actually have unlimited executors appointed. So that is something that was actually quite surprising to me. And I can definitely see how in other states where you're allowed, there's no maximum limit where things can get out of hand. So yeah, Carrie, you're just like, of course Tara, this has always been the case.
Carrie (05:18):
No, no, no, I just think it's wild. Why would you want many that many chefs in the kitchen personally? But I mean that's obviously what we're going to talk about today is our feelings on how many chefs you should have in the kitchen and why?
Tara (05:30):
In our Facebook Live that you did with Kate Redman at the time of recording, I think it was only two weeks ago, and she said having up to five executors, and I went, oh, that's funny, Kate, I thought you can only have four. And I went and researched and I was like, oh, yeah, okay. I can see how people are like, I've got five kids, I've got six kids, I'm putting them all in. I do just want to round out this little fun fact with whether there's a limit for trustees of trusts and particularly testamentary trusts. So there actually is a limit in most jurisdictions on the number of trustees where it's everywhere basically says you can only have a maximum of four except for South Australia, Tasmania, and the Northern Territory where I don't believe they have a limit. But there is a provision in the legislation where unless it's overridden in the trust deed, you can't appoint more than the number of trustees who were appointed when the trust was initially created. So if you started with three, you can't add more than three down the track. Now, this is just a very quick research, so if you're a South Australian or Tassie or Northern Territory lawyer and you're like, I wouldn't explain it quite like that, then please forgive me. But yeah, just really curious and another reason why we need a uniform succession and trust legislation, right?
Carrie (06:58):
Oh my goodness. I always say that if I won the lottery or when I retire, I think I'm going to be one of those people that goes around and harasses people about uniform succession and that includes attorney legislation and uniform forms. So if you are listening and you happen to be in parliament, get ready for the second plumbing, which is me at 65.
Tara (07:20):
Oh my God, that would be incredible. I love that mission for you. So Carrie, I feel like you might have a lot of thoughts on this topic.
Carrie (07:32):
I absolutely have a lot of thoughts, whether they're good thoughts is another thing, but I certainly have a lot of thoughts. I've actually divided my thoughts into two kind of categories and happy to be told this doesn't work, but my two categories are in terms of how many controllers you should have. Number one is if there's a surviving spouse, and number two is if there's not a surviving spouse. That's sort of where I was thinking because I do believe there are different kind of considerations at that point. So when we talk about how many is the right number, and I do believe that we have to think about whether there's a surviving spouse or not.
Tara (08:11):
Oh, that's interesting. Okay, so let me know what are you thinking?
Carrie (08:15):
Well, I mean for example, the different considerations I feel if there's a surviving spouse is if there's a surviving spouse, are we looking for adding a COT controller from an asset protection perspective versus are we trying to stop that spouse from actually doing something? So for example, if you're a blended family and you're wanting to appoint one of the adult children beside the surviving spouse, I also think that in those two incidents we have to weigh up things like if you've got a surviving spouse with one of the children beside you, is that creating an administrative burden that we don't need? And then also we have to think about if a blended family scenario and you've got a cot controller beside a surviving spouse for control perspective, is that akin to no provision and therefore we've got family provision application risks. So that's why I kind of separated out this argument about having, thinking about the different scenarios if there's a surviving spouse versus if there's no spouse. I do believe they're totally different considerations.
Tara (09:18):
Yeah, you're so right. So what about the scenario where both spouses have passed away and there's a bunch of adult kids?
Carrie (09:28):
Well, I'm going to share with you today my little spiel I use for clients when I'm talking to them. I say there's only two legal rules, the first of which is, and obviously this is tempered for the state, but you can have a maximum of four people and at least one of those people at all times should be an Australian resident for tax purposes. And we can obviously that's a whole other podcast, but those are the two legal rules. And then I say I have some kind of rules of thumb, which I found in my experience tend to work based on a lot of client scenarios. And my first one and mic drop moment is have more than one person. The reason I say that is primarily around this is from the perspective of using testamentary trusts is that your testamentary trusts that we use in our precedents are discretionary trusts, meaning that the trustee has total discretion about how to apply those funds.
(10:20):
If it is discretionary, I feel that you need a bit of a check and a balance on the decisions that are being made to ensure that they're fair and reasonable. Because my personal experience is that weddings and funerals bring out the worst in people, and when there's money involved, you've got to imagine that person on their absolute worst day being influenced by the absolute worst person. So that's why I sort of say more than one is the primary position. I do have some other kind of softer considerations with that. I think having more than one person, each person tends to bring a different skillset to the table. People are inherently different. You might have one that's more in touch with what the actual beneficiaries need because of their nature of being more soft or able to communicate more effectively with those beneficiaries. And then you might have the person that's much better with money or much more savvy when it comes to the administrative stuff, which I believe will be something that you'll be talking about Tara on one of the later podcasts about what sort of features you're looking for in people.
(11:26):
I do think that there's this concept too of being able to lean on each other for support because it is quite an important role to play. And there might be things pop up for those people during the course of the year that mean that they can't give a hundred percent of their attention to the particular tasks at the time. So that's my primary sort of one is have more than one, and obviously we'll talk about whether there's more than that as well. But the second reason have, and again this comes from a testamentary trust sort of thinking, is I have what I call sides of the family. And what I mean by that is if you've got a mom and dad scenario and some say minor children, and we've got a scenario where dad passes away, mom and the kids survive for a few years, and then something happens and that bloodline disappears as well, so mom and the kids subsequently pass away, that trust has to be administered for someone.
(12:23):
And generally speaking, most people want it to go to their respective families. If you've got just mom's side of the family as sole controllers of that trust, they could just distribute it all to themselves and completely leave nothing to dad's side of the family. If you've got mom's brother and dad's sister as the controllers at that point, then they're making sure that each side of the family gets represented in terms of how the funds in that trust are distributed. So that's my kind of rules of thumb. Number one, have more than one person and number two have this kind of sides of the family. And I should just clarify too, when I say family, I know people don't always have siblings or family members. It doesn't have to be a bloodline family member. It can be a close friend that is akin to a sister or a brother or a cousin, those sorts of things. So we can be a bit more liberal in this concept of family when we talk about that. So that was sort of my major thinking, Tara, obviously we're here to talk about what that number should be rather than just bluntly saying more than one. So I suppose I wanted to hear what you thought about that.
Tara (13:30):
And look, before I dive into my thoughts on the perfect number, I really agree with everything you've said with your comments about the checks and balances, which I really do think is important. And it's hard to know. There's certain categories of relationships where you don't need a check and balance, and then the more remote that you're getting away from the initial beneficiaries or a surviving spouse, I think the more checks and balances you need to bring in. But I'd like to ask your personal question and if you don't want to go there, it's totally fine.
Carrie (14:06):
Hit me with it. I'm ready. I've had two cups of tea. I'm ready for the awkward questions.
Tara (14:12):
Well, you've had to be involved in administering two estates for your parents, right? And for your father. I understand that you were an executor of his estate. Is your brother an executor too or are you the sole executor?
Carrie (14:27):
What do you think, Tara?
Tara (14:28):
Well, I don't know. I know you are the one doing all the work. I know for sure, but I was wondering, is he on there or is it just you?
Carrie (14:36):
I'm the eldest daughter. Of course. I'm the one doing all the ruddy work.
Tara (14:40):
Yeah. So I wanted to ask, how's the experience? Do you wish he was there? Is it a pain that he has to co-sign if he is a co-executor or do you wish he was co-executor if he's not?
Carrie (14:53):
So I think this is a very different scenario than most people. So most people I would always say put both kids right. That's my statement. And I've seen the very bad scenario. It's happening to a friend of mine at the moment where one kid has total governing control over everything. Here in my instance, we just went with me because my brother is not particularly excited about paperwork and it is just administratively easier for me to do it. This only works though because my brother and I are extremely close and I would never do anything without talking to him anyway. So I might be the one signing the paper, but I'm absolutely speaking to him first before I do anything. So for example, the house that my parents owned that is obviously we've got to do some work to it to get it to market.
(15:38):
A friend of mine needed somewhere to live and I could have just let her live there because I'm on the title now as the represented personal representative, I picked up my phone and said, Hey Dave, I'm thinking about X, Y, Z. Are you okay with that? So I don't really ever do anything without talking to him anyway. But again, this is that scenario and it's why we have to stress test with our clients what's going to work in their family scenario. And as you said, the further away we are from certain things, the less we do need these extra checks and balances. I also think that sometimes the family scenario means that you don't need those extra checks and balances, but it's a very different experience for everybody. And obviously the comments that we're making here are very much kind of the stuff we have to talk through as a lawyer, but what the client ultimately picks is up to them.
Tara (16:27):
And I feel like that's a really important point, customising and playing through how is this going to work for the particular relationships and dynamic in question because it sounds like things are moving faster with having you just as a sole executor and your brother's going to get his share of the estate quicker because even though you guys, you don't live in the same town but you live nearby, but having him needing to co-sign on everything would just add an extra layer, not of extreme difficulty, but it would be slow things down a little bit.
Carrie (17:08):
Tara, to open a bank account as an executor of an estate, I would've thought was much easier than it was. And this is me with deceased estates experience. I have structuring experience as well. I was already a client of that bank. My father was a client of that bank. The process was extremely painful given I think it was post financial, I can't remember what they called it, but the thing where everybody got stripped of things and there's these new rules now you have to present to the bank physically. So could you imagine trying to get two people together in the room at once? So it is a real issue, but I would tell you again, that issue can totally be worth sometimes. I picked up the phone to my brother when I spoke to him about my friend moving into that property and he said, you are doing such an amazing job. I dunno what I would do without you. And I said to him, I can't imagine that there'd be enough money in the world to make me want to fight with my brother. So when we talk about those scenarios, I think that we've got to weigh up those family scenarios like yes, that might be an admin burden to get us together in a bank, but I do believe that my brother and I are a little bit of the exception to the rule where we would always work together anyway.
Tara (18:23):
Yeah, and some of the comments you said about trustees of testamentary trust, I do want to just sort of for the listeners acknowledge that I like having the same rules for executors attorneys, trustees, but then also some of them there are nuances between how those roles work as well. So just to address that, one of the things that I often recommend is clients and our beneficiaries who are in financial control positions, they don't necessarily want to get bogged down in the detail of which legal hat they're wearing and some of these phases or stages through a person losing capacity and then dying, and then the ultimate long-term plan being established. Some of those can be really long, and obviously we don't know in the outset how long each of those phases will be. Some of them can move really quickly, and I think if you can try and have the same people acting as financial attorneys, executors and potentially trustees or some consistency that can streamline who's in charge and you don't necessarily need different combinations or teams of people handing things over or only being in roles for a short time or worrying about the phase changing from their perspective.
(19:52):
They're just the ones who have to sort out the financial positions and decisions and they don't really care where the technical stage is at. But we also need to think about the nuances of those roles. They all have different responsibilities and duties. And in terms of decision making where we have got multiple people like attorneys, at least in Queensland, which is where I'm most familiar, but most states you can set it up that where you've got two or more people you can decide are they acting unanimously or jointly means unanimously. So everyone has to agree, and if one person doesn't, you basically give them a veto power by majority where two of the three or the four have to agree or even severally where any one of them can make a decision. So you've got a lot of freedom about how that could work for attorneys.
(20:49):
When we come to executors generally they all have to act jointly or unanimously, and sometimes you can say that they're not acting, they act by majority or something, but they're all still responsible and liable for all the decisions made. And then the same with trustees as well. So we've got to kind of factor in, is everyone going to be able to agree on everything all the time or are we going to be stuck in deadlock and stalemate and can't move forward? And I just think we can talk about the stalemate type situation in a moment, but I do think it's just cognizant of us to remember that there are little nuances. Sometimes this can play to our advantage, but it's something we just have to be aware of and we are setting up these teams of people. Carrie, you also mentioned the residency and the tax issue, which I mean it's a bit of a snooze, but it is worth and very important. Do you want to just elaborate on that a little bit more?
Carrie (21:52):
A snooze, Tara talking about tax and estate planning is why we exist. I get out of bed to talk about tax and estate planning. So the way I explain this to a client, which I think is the easiest way to explain it to anybody because then the people listening in that are super nerdy can go and do the actual finding of exact pieces of legislation is that the estate or the testamentary trust is deemed to be a foreign trust unless there's one Australian resident for tax purposes involved at the control level. So it doesn't mean that they don't all have to be, so for example, if it was Tara and I as trustees of the testamentary trust, but I was living over in London and so I was not an Australian resident for tax purposes that as long as Tara still was, the trust would be deemed to be an Australian trust.
(22:44):
Now the pivotal point here is that there's a totally different tax outcome from something being deemed a foreign trust or a foreign estate to a Australian resident trust or an Australian resident estate. So when we talk about that, just really, really clear because sometimes people don't understand it's an Australian resident for tax purposes. Tax purposes being I won't bore anybody to death, but you have to have tax residency. And the second thing is you only need one if you've got three or four people as trustee, as long as one of them that is acting is an Australian resident for tax purposes.
Tara (23:20):
And I think that can actually be one of the advantages of having multiple is that you can maintain your Australian tax residency status where you have got executives or people you want to be involved in the estate overseas. There can also of course be the downside as we were talking about in terms of getting multiple signatories and everyone signing the paperwork. I feel like when we've got overseas controllers, and I guess executors is particularly the main one I'm thinking of, I think we really have to talk the client through. Yes, it's great to have these overseas people involved because they have a say and there's a clear flow of communication and information to them and they do get a say in the decisions involved in administering the estate. It is a check and balance on our Australian based executor, but yeah, do we actually need to include them? Are we just making life really difficult for everybody in terms of the processing, the signatures, the whole thing? So I really think that's a trade off. It's hard to tell clients to fully leave someone out of the role, but I do think we need to give them warning of the realities.
Carrie (24:45):
It's about giving them the pros and cons and they get to pick right. Our job is not to pick for the client, it's to give them the information they need to make an informed decision.
Tara (24:55):
Yeah, there's actually in the hot seat for the TT Precedences Club membership coming up today, this exact question where there's two adult sons and one is overseas and one is in Australia, and who should the backup executors be when both spouses have died? And we are going to go through all of this and also one of the things I'll be suggesting is, is it possible to involve those sons in the decision of the executors so that they actually get to decide the weighing everything up what they want? And if one of those sons is like, I really want to have a say for me, if it was me, I'm such a control freak, I would be prepared to take on the bureaucracy so that I knew what was happening. Whereas other people might have that implicit trust and laissez-faire attitude and be happy to sit back and just wait for their distribution whenever it comes.
Carrie (25:55):
I think Tara, what we were talking before about having those multiple people for a tax resident perspective, I just wanted to clarify with people here we're talking about executors and trustees. That same rule doesn't actually apply to say appointor or principal style powers. So one of the strategies you can talk through a client when they've got a child that does live overseas is potentially having different trustees to appointor or principals. So for example, in my will, if my brother's not here, I've got my sister-in-law as someone I want to control the trust effectively for her and the children of my brother and her. Now my sister-in-law, if my brother is not here, I would absolutely not begrudge her wanting to go back to Brazil to be closer to her family. I mean, she doesn't have a huge support network here. She has two small children.
(26:46):
If she wants to go back to Brazil, I want her to have that freedom. So I have a co-trustee appointed with her that's an Australian resident for tax purposes, and from what I can understand will always be Australian as an Australian resident for tax purposes, but I actually have just her as the appointor. So if that person's not coming to the table with the decisions and the strategies that she believes is right for the trust, she can take that person off as sole appointor and put someone else in that role. So there are ways, again, obviously we're talking here about having the same people across these different financial control roles, but this rule about tax residency is only for the executor and trustee roles. It's not actually for an appoint or principal power.
Tara (27:32):
Yeah, that's a really good point Carrie, and thank you for explaining that complex tax issue. It's such a clear way for everybody. I'm glad it was you and not me.
Carrie (27:44):
Tara's a lot more of the detail. I'm very much big picture.
(28:50):
I think I want to compare this scenario to Christmas lunch. So when you absolutely love your family and you want to get along and you want to do all the things, but there are going to be situations where it is just absolutely not right to have all the people at the table. So again, that kind of too many chefs in the kitchen, I think that we do have to make sure that if we are appointing multiple people, they are going to be people that can actually get the job done because there is a huge back catalogue I should say, of case law that says if they can't get their job done, they'll be removed and then you haven't got anybody controlling the trust that you had a choice over.
(29:34):
So when we talk about this, I think it's really critical that if the client wants more than one person, you need to make sure that all of those people are going to actually be able to functionally control that structure. So whether it be the estate or a trustee of a testamentary trust. So that's sort of the thing. If you've got two parents and their backup is their children but their children hate each other, that's just an absolute, there's no way that you should put those people together because even scenarios, family scenarios where they seem to get along when it gets to that next stage, it's a melting pot of emotion and money and stress. You need to make sure that you've got those people there that can actually get it done.
Tara (30:20):
Yeah, I totally agree, Carrie. I think the conflict risk is so enormous when it comes to someone you all love has just died. All of those past issues and buried things have arising to the surface and particularly with sibling dynamics and perceived slights or expectations not being met in the estate plan. It's just such a emotionally turbulent time for people. And I really love what you said at the beginning. You have to think about how are people going to act on their worst day? This is their worst day, right? Someone, especially if it's a parent has died and it's the worst time of their life and you're forcing them to make big financial decisions and boring paperwork decisions and also perhaps being confronted with, everyone thinks they kind of know what happens in estate planning when someone dies, but often the law doesn't always work how they think or there's things that are unexpected, like unexpected consequences or the financial position of the testator is not what they imagined and there's more debt or the assets aren't worth what they thought or they're not getting their share of the inheritance that they thought.
(31:45):
All of these things come in to just make it, like you said, a melting pot of chaos. And I feel like when you have a lot of people involved in the decision making who each have a say, we are just setting them up for deadlocks where one person has a veto power basically, and you can be stuck in this stalemate and nothing can move it forward or backwards other than going to court, hopefully mediation. But once you're getting to that phase, it just becomes expensive, time consuming. It's hard. As you said, it's really hard to repair those relationships. I think what you said about your brother is absolutely beautiful and there's so many families who do find themselves in a position where not only have they lost a parent, but now they have a really damaged relationship with their sibling over things in the estate. So it can be really hard, I think putting a lot of multiple children or all the children in as executives. That said, I do like to recommend giving people a seat at the table because being left out of the table is hurtful on its own.
Carrie (33:02):
Absolutely. I think when we talk about that role, it's that balance because people do hold on to what happened under the will or under the estate for years, absolute years. I see clients come to me now and they're like, we are doing this because this happened to me in my mother's estate. It is such a pain point for people for years to come and you're absolutely right, Tara. I think these sorts of events either bring people closer together or they push them apart. It's seldom that they kind of sit in the middle. Why would you want to sit your children up to fight when they've lost their parents? But I think that there's a way that potentially you can do a little bit of both, and this is using say, an independent person to have a seat at this table. And I know you probably would be coming to this point, Tara, but I think we undervalue the role of independent people in control roles in estate planning.
(33:54):
The idea behind an independent person is that they literally are like a tie break, so to speak, between family members that they have no vested interest whatsoever in the process. They're literally there to do a job. And that person often is someone that knows enough about what's going on or has the special sort of skillset to be able to drive the process forward. So we see often in estate planning people picking like their accountant or an older family relative that they see as having a sage mind. We do see people picking their lawyers, but I think that having that independent person can sometimes work really, really well in some family scenarios. Again, there's always negatives to those independent people because they don't have a vested interest. Do they actually know and understand your family? And the second thing is a lot of people that we put that are professionals, they can actually charge fees for those roles. We have to think about how that would impact the ultimate benefit that the beneficiaries that they get in their hands if there is someone being able to charge fees.
Tara (34:56):
Yeah, that's right. I love an independent person being involved when it calls for it, and I think you just have to factor in remuneration for them and particularly if it's like a family friend as opposed to an accountant or a financial advisor or your trusted lawyer should be set up in a way in the will that they can charge professional fees for their work when it's like your best friend or aunt or uncle or someone, it is nice to remunerate them because it is a hefty role and a lot of life admin that they are taking on to do that responsibility. One thing that sometimes can be worthwhile strategy is especially when you've got a lot of children or something like that, is setting up a representative from particular voting blocks. So if you have a group of kids and within that there's some really tight relationships and you sort of expect that these two children would see or three children would see eye to eye and then there's others who usually they see eye to eye but they don't all necessarily agree within each other potentially just asking them to all come up with a representative from that little subgroup of relationships and the other one and then having a representative from each voting block can sometimes work.
(36:29):
I think the key to doing anything like that is open transparent communication while you are still alive, having everyone have a say in what they think is going to happen, communicating the final decision and choice and so that everybody, if they're disgruntled, they can voice their opinion now while you have scope to change it and that there's no unexpected surprises. It's the surprise, the bad surprise that I think causes the most damage sometimes, not necessarily the decision it's being, having that feeling of the rug being pulled out from under you because you were thinking something different and then not understanding why a decision was made that I think can have the most long lasting negative consequences on a family.
Carrie (37:27):
We see that all the time, Tara, where parents haven't involved their children in say the estate planning process, which is totally fine. It's got to be a personal choice, but particularly if they're doing something that's quite either out of the ordinary or not in alignment with what everybody was expecting. So this is probably a bit of an opportunity to say that often when you are doing an estate plan, you should be thinking about something like a letter of wishes to run alongside your will so that you can communicate some of the soft stuff. Both my parents passed without a letter of wishes and I think it is the most undervalued document in estate planning to explain everything like this all the way up to just as I said, where do the family heirlooms go and who gets what. So if you are doing something, you are appointing people. I think that letter of wishes is invaluable to explain some of the decisions you're making around, particularly if you're appointing say one child and not all children, you're involving this independent person telling that independent person what is their job and what should they do?
Tara (38:30):
I love that Carrie. And things like speaking from the grave a little bit about this asset should be sold or this asset should not be sold and what you think because even though it's not binding, sometimes just knowing what people fight over what they thought mom or dad's wishes were because they have had different conversations with them, and I know with my parents, they'll tell me different things depending on which day it is or what mood they're in. They're not necessarily steadfast on things, but if they've committed it to paper and everyone can see it, then I'm not going to fight about what I thought mom's wishes were written down. And so I'll go, okay, well she said something else to me, but she's clearly given this enough gravity to write it down. I'm not going to hold on to this other position. I think that can be so helpful.
Carrie (39:27):
Yeah, absolutely.
Tara (39:28):
Another point I had, if I can jump in is besides the conflict issues, people don't necessarily want to be executors either because executors can be personally liable for things like the tax debts of the estate. So it's not actually the gift that you think it is putting someone in the role of executor.
Carrie (39:53):
Tara, the number of people that have asked me and I've said no, I've only said yes to two people and they're basically my two best friends, and it's because they don't have a bloodline and they're never going to have a bloodline and it's because they're family. If the first kind of mentioned person is there, they don't really have another person. They know I'm in states, and as I said, it's two of the people I love the most. So that's the only reason I've said yes. So I think that it is a really, really hard role in many respects. As I said, I an estate lawyer and just the simple act of opening a bank account was astronomically harder than I ever expected it to be. So if you're thinking that, oh, I might appoint X, Y, Z, have you actually spoken to them and said, this is what I'm thinking about because they might not want to do that role and then that gives you the opportunity to actually make a plan that will come to pass.
Tara (40:47):
Yeah, Carrie, I think that's a really important point. So at the time of recording, my eldest has just started prep and I almost need to quit this business and just so I have the time to deal with all the homework that I get from the school, honestly, Carrie, today's school photos, tomorrow he has to wear a different uniform. He's just turned five and he has to wear a formal uniform on some days and a sports uniform on other days.
Carrie (41:19):
And I've seen your fridge planner, Tara. I know that you've got a planner about what uniform has to be worn on what day.
Tara (41:26):
I know in today's school photo day. So then we have to mess up the routine and then he's got soccer and then he has gymnastics and swimming and there's a school disco and the homework and the library bag. I can't keep up. There's something different, we've got parent teacher interviews and then we've got to go to the cross country. This is just within the space of a week or something absolutely wild. And so if my parents died and I was their executive, I don't know how I would be able to do it to be frank. And of course I would and I would step up and be there burning the midnight oil, sorting things out and doing it. But you do have to be mindful, as you said, of who's actually going to be able to complete and finish the role and also factor in the fact that yeah, you can potentially be liable for the tax debts of the estate. Now there's definitely rules about that, and if you're just sitting there hearing that and freaking out, go read PCG 2018 slash four from the ATO because they're not completely unreasonable about it, but the uninformed executor can inadvertently take on personal liability for the role. So you don't take it lightly to be the executor either. And so when you've got great, every child gets surprised as executor, just bear that in mind as well, I think.
Carrie (43:02):
Yeah, I think that was one of the discussion points between my brother and I. He's got two small children, his wife was looking to start a new job. It was just not the right time for either of them to be able to commit to some of the really just high life admin tasks that you have to do in an estate.
Tara (43:21):
Yeah, I mean I remember you telling me that you were waiting on him to just send you something back to sign or perhaps send you some paperwork and you were like, this is the one thing I asked you to do and you've taken weeks.
Carrie (43:36):
I love my brother. He's the best brother in the world, but life admin is not his strong suit. I mean, I want to say weaponized incompetence. He definitely wouldn't use it as a weapon, but yeah, I can write a list of telling him how to do things and he'll still do it wrong. I love that boy to absolute death. But yeah, paperwork, not his strong suit.
Tara (43:55):
I told you about the time, am I going to get in trouble? He doesn't listen to the podcast. I told you about the time my husband Jared couldn't even put something back in the envelope properly electoral. It was like a postal vote. But anyone listening, my husband has just been awarded his PhD, right? He is like a doctor of philosophy, arguably the highest tertiary level of education possible, so he should be the smart one in the family. I went and got the filled in the website form to get the postal vote delivered to us. I set it all out. I was like, here's what you need to tick. And he puts it back in the envelope, which has the glass pre-addressed panel and the thing showing up is his name and date of birth. And I'm like, are you going to put this in the post box and expect it to get back to the electoral commission, turn the piece of paper over and it has the address. I was like, okay, okay. I can't expect you to do anything.
Carrie (44:59):
Tara, one of the reasons I haven't said this, but I've said my sister-in-law and the co-trustee for tax purposes if she goes back, but I actually have the same for my brother. It's him with a co-trustee, him as sole backup appointor because I don't trust do the, we went to the domestic airport yesterday to pick up his in-laws who had arrived from a flight from Melbourne because they came from Brazil. I set out a step by step, go to level park on level three. That's the one that has the fly across, so it'll be easier to do baggage. The security screening has changed, you'll need to go to the outside of the building on the left. I had set it all out for him. He calls me, so say, where's the security? Where are you? And I'm like, I literally wrote a message that had to step-by-step. So this is why there's a co-trustee beside my brother because I don't trust that he'll remember to file a tax return for the testamentary trust. So my accountant is sitting beside him as co-trustee because I love and adore that woman and trust her and know that she'll keep into task.
Tara (46:05):
I love it. It's great. Don't set people up to fail, right?
Carrie (46:09):
Correct, correct. I don't want him to be in trouble with the tax man simply because he has so many other things, including so much love to give but can't do a tax return.
Tara (46:18):
I also love that your last episode, we've just started paying out the people that we love with total abandon.
Carrie (46:28):
Listen, we're all God's creatures, as we say. We all bring different things to the table, and this is a really good point to make when we talk about who we're picking, what do these people have, what qualities do they have which are going to support that really important role. And I think that's probably the topic for your next podcast, Tara.
Tara (46:46):
Yeah, it will be. I just wanted to wrap up with saying one more point, which is a big point, but I'll just put it on people's radar rather than dive into it. But the choice of executor, that executor can actually have a big interplay with serious consequences on things like your self-managed super fund succession plan and who's in charge of that, and also any family trust or any trust established during your lifetime. Sometimes under those deeds they say when the actual trustee and other controllers like the appointor die, the executor or legal personal representative. So the financial attorney or the executor is the automatic controller of that trust. So we can't make these decisions in a total vacuum either now, and I just think we won't go into that. That's a whole, that's two more episodes, but that's the importance of an experienced estate planning lawyer, right? Not only are they going to play out and stress test who you've appointed to the role from a practical perspective, but they'll actually be able to identify these far reaching consequences and either sort that out or guide you to make an appropriate choice, understanding the bigger picture too. So it seems like a simple thing, but there's a lot at play when it comes to choosing your executives.
Carrie (48:25):
Tara, I just had two more things I quickly want to mention, and again, I agree these are something that I might suggest as a future podcast episode. The first one is that if you do want some really tailored dynamics in who controls a testamentary trust structure, you can actually get a company appointed and you can get some very tailored terms included as to who can own shares, can those shares only ever be owned by a lineal descendant and who can actually be at the directorship table? So for example, there must always be an independent person involved in the directorship. So if you do have a really complex family scenario and structures and you've got enough wealth to invest in a tailored company constitution, that's something to think about as well. But I think that might be a whole other topic. And also one of the things that we should mention is that there are mechanisms that you can employ to make sure that from a practical perspective, there aren't always having to be people signing off on things.
(49:28):
So we have available at the art of estate planning a power of attorney precedent for a trust structure. So this allows, for example, one person to be able to go and undertake activities on behalf of the trust to help with the admin burden that can occur when there is more than one trustee. So when it comes to some of those things, just making sure that the clients are aware that there are other mechanisms to help them still get the base control that they want, but being a bit more creative in how we make that happen.
Tara (50:03):
Yeah, that's a great point. Carrie and executors can appoint attorneys too for their role as well. So there's things that can be done once you're in the estate administration phase to try to make things easier, but would you necessarily set out with that having to do those sort of patch up strategies in mind? It kind of depends. So yeah, look, I don't think we said what's the perfect number? I don't know if there is a perfect number. I think four is getting high, and Carrie, you mentioned before about representatives from each side, which I've done that in my personal estate plan if my husband and I have both died and on my side, I've gone with my dad and my brother, and we've also done that on my husband's side, his dad and his brother, but we haven't just gone all four of them straight in.
(51:04):
Our dads are in their mid to late sixties, so they're still, and they're both retired, so they have all the time in the world to go and wait at the bank and do what they need to do, but there's going to be a point where it will that will actually become too burdensome for them. So we've done it so that on my side, it's my dad, but if my dad doesn't want to act, then it's my brother. And then on my husband's side, his dad, and then if his dad doesn't want to act or has predeceased, then Jared's brother and we are sort of thinking. So I really like using those substitute and backup roles to bring in contingencies and sometimes even when you've got lots of children, if you've got six children or something, potentially just putting the children in as backups, having a representative from the voting block or whoever you think will be the most steady and able to represent all the kids and then having the backups coming in.
(52:11):
Even just seeing your name in writing, even if it's not the first executors, sometimes that can be enough. Validation and recognition that you were up to the task you've been able to have everyone involved can be helpful. So look, I think it's such a nuanced thing. I probably don't have a perfect number. I think when you've got two or three kids, sometimes having all of them involved can be good. Carrie, you've set out a beautiful explanation of why just having one can be really powerful and effective too. I think this is where this experienced estate planning lawyers are setting themselves apart from the AI do it yourself platform.
Carrie (52:53):
No comment, Tara. I sometimes feel like I'm an AI robot, but certainly it's in those nuances that the good stuff exists.
Tara (53:01):
Yeah, actually, I should have asked chatGPT what they think in a bunch of different scenarios and see what they bring to it because I just think it's really hard to set a rule and a checklist necessarily for how to decide which of your loved ones are in the control seat and which ones are taking a backseat.
Carrie (53:23):
That better be the social media strategy. When this episode comes out, Tara is sharing chatGPT's opinion.
Tara (53:29):
Yeah, that's a great idea. I love it. Carrie, is there anything else you wanted to say before we wrap it up?
Carrie (53:35):
No, no, that's enough from me I think.
Tara (53:38):
Oh, well, I just want to say thank you to everyone listening and a huge thank you, Carrie. This is your last episode for a little while. We have just loved sharing this space with you and all your important insights, and we will be watching everything that you're doing at Nurture Law with great interest. I hear that you might be branching into litigation.
Carrie (54:07):
It has been suggested to me that that might be a possibility. I'm a lover, not a fighter, so we'll see how we go with that.
Tara (54:14):
Look, I honestly can't wait to see what these next chapters hold for you, and you'll always be a friend of the podcast and the art of estate planning, and I just want to say on behalf of everybody, thank you and we'll miss you.
Carrie (54:28):
I will absolutely be frustratingly back, I promise you.
