For our latest Balance the Grind conversation, we were fortunate enough to speak with Isabelle Marcarian, the Principal Solicitor at Safewill Legal. Isabelle’s journey into estate planning started by chance, but she quickly found her passion for helping families secure their financial futures.
In our chat, Isabelle shares what inspired her to specialise in estate planning, the importance of educating clients, and how she manages her work-life balance. She also discusses the benefits of testamentary trusts and offers advice on having open conversations about inheritance.
Isabelle, can you share a bit about what inspired you to specialise in estate planning and what drives your passion for helping families secure their financial legacies?
Estate planning is something I fell into by chance, but certainly specialised in by choice. At its core, estate planning is about people and that’s what makes me love it so much. To do my job correctly, I need to understand everything about my clients – their family structure, relationships, their assets, their business, their risk profile and their ultimate wishes for how they want their life’s work to pass.
I then get to work with them to build a plan they are knowledgeable and secure in, and it’s always rewarding seeing the comfort that comes when a client knows that everything is taken care of.
For me, education is a big part of this also. It’s not just about me imposing a plan that I understand. I love to work with clients to teach them what we are doing and why – because this gives them lifelong knowledge beyond the contents of a simple Will.
How does super work? Why do you need insurance? How will state and federal taxes impact asset structuring? Estate planning is all of this and more, and it’s constantly evolving. It’s a truly dynamic area of law that I feel privileged to be working in.
With the massive wealth transfer expected in the coming years, what are some of the most common concerns families have about their inheritances, and how do you address those concerns?
I think the sheer volume of wealth at stake is only going to heighten the concerns that we have already seen over past decades.
The heart of any person’s concern is to ensure that their wealth is going to pass in the way they intended. The most common ‘intention’ is that a person’s wealth will pass down their bloodline. From this concern stems two issues; the risk of re-partnering, and the risk of a relationship breakdown. Both of these issues result in wealth moving ‘sideways’ instead of ‘down’.
For re-partnering, we are talking about the risk of your surviving spouse entering into a new relationship after your death and for all of your wealth to potentially move to this new partner, rather than your children.
This risk is also present with blended families – even if your surviving spouse doesn’t repartner they could have children from another relationship who might take your assets instead of your own biological children. There is no ‘one size fits all’ approach to solve this risk, however the strategies we consider may include gifting certain assets to your children directly in your Will, or even during your lifetime.
We also look at the idea of creating main residence trusts for partners that allows the partner flexibility over a capital asset for their lifetime, but after their passing this asset moves to children rather than forming part of the partner’s estate.
In terms of ‘relationship breakdowns’ – here we are talking about the risk of leaving significant wealth to your children, only to have them go through a divorce and for half of this wealth to move to an ex spouse. The use of testamentary trust Wills is becoming increasingly common as a strategy to help manage this risk.
The concept of testamentary trusts is fascinating. Could you explain how these trusts can not only provide financial benefits but also offer peace of mind for families planning their estates?
A testamentary trust is a type of trust that is created directly inside someone’s Will, and only comes into effect on their date of death. The Will names a trustee, responsible for managing the estate’s assets for the benefit of a group of named beneficiaries.
Because the assets of the trust aren’t owned directly by the beneficiaries in their personal name, a testamentary trust will offer strong asset protection benefits against creditors, and can also protect against risk in divorce proceedings. For this reason, if your chosen beneficiaries are in an ‘at risk’ profession e.g. doctors, lawyers, business owners, or at risk of a relationship breakdown, this type of Will can better protect their inheritance.
Testamentary trusts also offer superior tax benefits compared to gifting assets to individuals directly. Firstly, the trustee of a testamentary trust has the power to distribute income generated by the trust across multiple beneficiaries in a way that minimises overall tax payable.
Secondly, the testamentary trust allows underage beneficiaries who would otherwise be taxed at high rates to receive distributions of income at normal adult tax rates. This means children under 18 can receive the adult tax free threshold of $18,200 each year if inheriting via a testamentary trust.
More broadly, by disconnecting legal control over the assets from beneficial interest in the assets, this type of Will provides good optionality for parents wanting to protect spendthrift children, or children with special disabilities who are not otherwise able to manage their own funds.
However, these types of trusts do create some operational complexity in managing inheritance so it’s important to speak with a specialist estate planning lawyer to understand if it’s suitable for your personal circumstances.
Open discussions about inheritance can sometimes be challenging. What advice would you give to families on how to start these conversations and ensure they are productive and positive?
While at its surface discussion inheritance can seem awkward, it’s important to remember that the people most impacted by your estate planning are your family members or beneficiaries. Therefore, the best gift you can give here is transparency so that any confusion and stress after your passing is reduced.
The way I try to frame it is that a Will is just another piece of personal admin – you don’t get too awkward talking about car insurance or superannuation. Ideally, we can extend the discussion to allow conversation about Wills.
There are two key benefits here – firstly talking about your Will (or other estate planning documents) makes sure the relevant important people know that you have completed the document. If no one knows you have made a Will, no one knows where to look for one. My recommendation is always to make sure your executor and beneficiaries know you’ve made your Will.
The second benefit is allowing for misunderstandings to be clarified, or learning to occur, while you’re around, rather than when you’re not around. Talking about estate planning is educational and can prompt your family to sort out their own estate planning.
Further, if you have made some decisions that result in minor or major disparity between beneficiaries, discussing such decisions today helps prevent resentment and arguments later – particularly in families that have generally strong and trusting relationships.
Complete transparency can sometimes be unsuitable depending on family dynamics, so if you are looking to cut children or other dependents from your Will, I would always recommend obtaining legal advice before having any family conversations.
Charitable bequests are becoming more popular. How can including a charitable component in a Will enrich both the legacy of the giver and the lives of the beneficiaries?
I’ve seen firsthand how grateful charitable organisations are to receive bequests to continue the amazing work they do. In Australia, around 20% of charitable fundraising is made up from gifts in Wills and I have certainly seen an increase in the willingness and awareness to include charitable bequests as part of a client’s estate planning in recent years.
For the giver, I think there is a certain warmth and pride that comes from knowing that they are able to make a positive difference even after their passing. Even 1% of someone’s estate can make a profound impact for a charitable organisation, and this still leaves a large proportion for loved ones and family.
For the charitable beneficiary – the bequests allow them to not only continue their usual activities, but depending on the nature and size of the bequest, it can also allow them to take on other transformative projects that would otherwise not be possible based on standard yearly funding.
Managing an inheritance can be daunting for the next generation. What are some of the best practices you recommend to ensure they are prepared and confident in handling their new responsibilities?
Advice. Advice. Advice. It is much easier to obtain advice before you’ve made certain decisions about your inheritance, rather than after. A combination of estate planning, tax and financial advice is recommended to make sure you’ve properly thought about how to structure your inheritance (including the appropriateness of trusts or self managed superannuation funds), and what investment strategies to utilise.
Surrounding yourself with a strong estate planning lawyer, accountant and financial advisor will ensure all aspects of your inheritance are properly considered and managed. The rights advisors will also teach you, as well as advise you, so that you can make informed decisions well into the future.
From your experience, what are some of the most rewarding aspects of helping families through the estate planning process, and how does Safewill Legal support them every step of the way?
I am beyond proud to work for a company that is fundamentally changing the cost and accessibility of estate planning in Australia. I have had so many clients come up to me and say they have put off their Wills and powers of attorney for years because they didn’t have the $2000+ required to put these important documents in place, or because they didn’t have the time to go into the city. Hearing how grateful they are to have the ability to affordably create these documents online via the Safewill platform is incredibly rewarding.
As an estate planning lawyer, I’m also very proud to be able to deliver an online Will product that incorporates legal oversight and review, to ensure that Australians are getting the best possible outcome. Safewill Legal reviews every single Will submitted to the Safewill platform to make sure that customers are using the technology correctly, and are not trying to include instructions that are more complex than what can be achieved.
For those with more complex needs, we provide them with the ability to obtain legal advice directly from our firm for a fixed price. Our legal advice service allows Australians to access one of the lowest cost lawyer prepared Wills in the country. The service ensures that the Safewill Will writing experience is able to cater to not only simple circumstances, but to more complex and unique instructions.
As part of my work, I have dealt with thousands of families after they have lost a loved one. Without a doubt, the process is infinitely harder both administratively, financially and emotionally when a Will is not in place. Knowing that with Safewill, and Safewill Legal, we are better protected against the pain of passing away without a Will is something that motivates me each and every day.
