The information provided below is general in nature and should not be relied upon legal advice. You should call 03 5445 1000 and speak to a lawyer at OFRM about your particular circumstances.

Wills — When equal is not equal!

Frequently I am preparing Wills for people who have a number of children spread over a relatively wide period of time. Usually the desire to leave the assets equally between the children seems straight forward and appropriate. But is it?

Assuming that there are two children; Jason 18 years and Kylie 12 years. Jason has just finished Year 12 and Kylie has just finished Grade 6. Further assuming that there is a pool of assets totalling $500,000, an equal split would result in funds of $250,000 to each child. But this is not an equal result for Jason and Kylie as Jason will have had the advantage of a further six years of education and maintenance during that period of time as compared to his younger sister. Consequently a division of the assets in the Will in equal shares is not an equal result for Kylie.

A simple, but effective approach, is to create a separate Education and Maintenance Fund for Kylie. If Kylie went to a Government run Secondary School, then her educational costs would be at the lower end, but could easily amount to $2,000 to $5,000 per annum. General living costs might be in the range of $10,000 to $15,000 per annum, but could be more. Therefore if an allowance of $20,000 per annum was made in an Education and Maintenance Fund, you would end up with this result:

  • Education and Maintenance Fund for Kylie - $120,000
  • Half share of residue for Jason - $190,000
  • Half share of residue for Kylie - $190,000

If Kylie was attending a Private School then the fees would be much higher and the provision in the Education and Maintenance Fund can be amended accordingly.

There would usually be a provision that the Education and Maintenance Fund would be managed by the Executors until Kylie has completed her Secondary or Tertiary education. The other funds would probably also be held on Trust until Jason and Kylie have either attained 18, 21 or 25 years, depending upon your preference.

It is impossible to obtain perfection with this method, but it does produce a much fairer result for Kylie than a straightforward equal division of the Estate.