Why Wills + Estate Planning Is Never Simple

Whether you’ve made your own will, used a post office will kit or had it made by a Lawyer, preparing a Will and planning for death is never simple.

Caution should be exercised, particularly when drafting a will to ensure that your wishes and intentions set out in your will are effective and able to be carried out as you have directed upon your death.

There are several different type of wills available, ranging from a standard will that is clear and straightforward to a more legally engineered will, one that might contain a testamentary trust, protective trust or special disability trust.

Legally engineered wills are designed to contain mechanisms to protect your beneficiary’s inheritance once you pass. For example, testamentary trust wills are discretionary in that they give flexibility in regard to the distribution of income and/or capital. Some major benefits being taxation and asset protection for your beneficiaries which can be particularly relevant if there is a risk of your beneficiary becoming insolvent, bankrupt, if they work in a high risk profession, own a business or become involved in a family law breakdown.

Regardless of the type of will, to ensure your intentions are carried out, your will needs to be valid.  What makes a will valid?

Generally, a will should be:

• in writing
• signed
• witnessed by two independent adults who are preferably not beneficiaries of the will or related to the beneficiaries.

There have been cases where wills have been admitted to probate that were video recorded, written on napkins or emailed.  However, it is important to note that where a will falls short of the minimum standards above a different process is required to attempt to admit that will to probate.  Such applications are often far more costly to the estate than those where the will was validly prepared and executed.  In some cases, the defect can’t be resolved, and the will cannot be admitted resulting in an intestacy whereby the estate passes to the next of kin in accordance with statutory legislation.  Often this is not what the will maker had intended.

Preparing a will is never simple, we’ve highlighted a few key areas (below) where poorly drafted wills have failed.

The Executor –

The executor is the person(s) responsible for dealing with the estate upon death. An executor can begin acting immediately after the will maker’s death by making funeral arrangements, securing and protecting deceased’s property, etc. If you don’t have a will, your estate vests with state trustees until your next of kin applies for a grant of letters of administration.  An executor can renounce her/his position provided there has been no intermingling with the deceased’s estate, however once the executor accepts the role, the executor becomes personally liable for the estate so it is important to choose the right person(s).  An executor can be a friend, family member, trusted advisor such as a lawyer or accountant or a trustee company. Professionals (such as lawyers, accountants, trustee companies) can charge for their time and can claim commission). It’s a very big responsibility and one that can be ongoing for many years so it is important to choose wisely.

The Estate –

It is Important to ensure that the assets you are gifting in your will are capable of being gifted.  For example, a gift in your will of your home to ‘A’ will fail if your interest in that home is as a joint proprietor with ‘B’ as the surviving joint proprietor will take the home upon your death by way of the rules of survivorship, regardless of what your will provides.

Similarly, not all assets are ‘assets’ that form part of your estate. Superannuation for example technically sits outside your estate, as does Family Trusts and other corporate entities.  It is possible to make provision in your will with regard to the control of such entities upon death but any provisions seeking to gift those ‘assets’ will not be binding or effective.

Consideration should be had with regard to the location of the asset, particularly where the asset is located outside Australia. Whilst Australian wills generally meet the minimum standards required to qualify as an international Will, not all countries are signatories to the Convention providing a Uniform Law on the Form of an International Will.

The Beneficiaries –

The Administration and Probate Act 1958 provides an obligation on a will maker to provide for their spouse and children, and if more than one equally.  Generally, departures from this obligation will lead to the disappointed beneficiary having grounds for a claim against the estate.

What happens if you have separated or divorced from your spouse?

What happens if you have more than one spouse?

Do you need to provide for your step children?

At what age should your beneficiaries be able to receive their inheritance and do you want them to receive it al at once or over a period of time?  What happens if your beneficiary doesn’t survive you?

If you have any questions  or would like to know more about estate planning or dealing with an estate after death, please reach out to Kirsty Brealey in our Wills + Estate Law team on 03 8600 9346 or email [email protected].