Age for Making Wills
If you are over the age of 18, have a car, some savings or some sentimental items, then you need a Will. Don’t forget that most employed people also have superannuation which is constantly accumulating during our working lives, very frequently with a life-insurance component. Almost everyone needs a valid Will. Even for those people who are not married, have no children and who do not leave a large estate, there are advantages in making a Will to simplify the administration of the estate you leave.
You may not realise the extent of your own estate. Most people nowadays have superannuation, and many super funds carry life insurance or “death benefits”. When this is added to your possessions like a car, a bank account, some furniture & jewellery, and it is easy to see how it all can add up to quite a large sum. Make sure you protect it, and leave it to people or charities that you care about.
There are two ways of allowing someone to live in your home at death without giving them ownership of the property: Life Estates and Rights to Reside. Life Estates and Rights to Reside have adverse tax consequences – potentially triggering Capital Gains Tax. They generally lose the principal place of residence CGT exemption.
Superannuation as an „Estate Asset‟ Superannuation does not automatically form part of the estate. It often does not go into the Will. Want to know how to deal with Superannuation and get it to non-dependants tax-free?
The best Executors are those people getting the proceeds of the Estate. This usually means the spouse in the first instance and then all the children once Mum and Dad both die. What if the children don‟t get along? We hold firm our view that even where this is the case, the best Executors are still all the children. This is because the Executors hold a subservient position. Their prime duty is to pamper and obey the whims of the beneficiaries. It is often forgotten that the naming of a person as an Executor is simply an invitation. It is not a mandatory appointment. If a person who is named as an Executor is unable or unwilling to act they can renounce (give up) the position.
Simple Wills do not protect any beneficiaries who are bankrupt. This results in the beneficiary‟s inheritance passing straight out of their hands to the Trustee in Bankruptcy. Effectively the beneficiary‟s inheritance is lost. A Protective Trust keeps the wealth in the family. A Protective Trust is an instruction to the Executor to not make a gift to a beneficiary if certain criteria are true for that beneficiary – for example the beneficiary is bankrupt, lacks mental capacity or is under age.
The Protective Trust is there to protect the beneficiary and not deny them of their inheritance. Once the beneficiary is out of bankruptcy, mentally sound and has attained the age of majority they are entitled to their inheritance.
Challenges to Wills
There is a strong blood line relationship which defines who can make an application to the Supreme Court to challenge a Will. The class of people who can challenge your Will include, your:
- biological and adopted children
- biological and adopted grandchildren
- brothers and sisters, nieces and nephews
- anyone that can claim financial dependence on you
Need for a Solicitor
Property-rights from domestic relationships can now arise in as little as 3 years; second marriages are increasingly common; complexities can arise from blended families, soaring property prices, business/investment structures and diminishing health eg. obesity, cancer, diabetes etc. The risks of not having a Will far outweigh the modest costs or inconvenience in having one properly drafted. It is dangerous to assume that your estate will automatically pass to your spouse or partner when you die in the absence of having made a valid Will. In some cases, especially those involving domestic partners, those partners may receive nothing. Having this problem rectified and distributing your estate to people whom you intended to benefit may result in costly court proceedings that may take years to resolve.
Trustee Companies and Office of Public Trustee
Some Trustee companies offer free Wills on the condition that they are named as Executor to your estate. This means that they can charge a percentage of your overall estate to administer it – frequently this is thousands of dollars more than a solicitor would charge for
Do it Yourself Wills
Many people underestimate the complexity of their affairs. Even if you just have your family home and a car, you still need a Will that is drafted clearly and correctly. Add in complexities such as superannuation, investment properties, blended families, ex-spouses – and the importance of a good Will increases exponentially. Otherwise, you may as well name the tax-man and your ex-husband‟s new mistress as your main beneficiaries.
Wills are complicated legal documents which require a high level of precision and thought. Only instruct a lawyer to prepare your Will for you. Please do not attempt to write it yourself. Although it may appear simple and clear to you, we guarantee your beneficiaries and the Probate Court will see it differently. Using your “simple self-drafted” Will, your beneficiaries may be tied up for years and spend all of their inheritance on legal fees to figure out who gets your assets.
Self drafting is possible, but not advisable. A single small mistake in making your own Will can be disasterous, and don’t forget, you won’t be around to clarify things. Family conflicts and arguments may also make preparing a Will a stressful process. Some people don’t wish their family to benefit from their estate. This is perfectly acceptable since many charities are more than happy to receive distributions from estates (however proper advice would need to be given regarding potential claims from family members).
Depending on the complexity of your affairs, fees for preparing a Will are similar to an accountant’s fees for preparing and lodging a tax return – with the benefit that a Will doesn’t always need to be reviewed each year whereas a tax return does. A proper Will can be surprisingly inexpensive, especially if a husband and wife prepare one at the same time. The real expense usually is in dying without a valid Will. That can possibly create a financial nightmare for the surviving family members. Almost everything the family will have to do
after a death is more expensive to do without a valid Will. By spending a small amount of money now, you may save your family thousands of dollars and hours of frustration and aggravation later. The expense will vary depending upon your personal and business circumstances. You could think of it like paying to have someone prepare your tax return – greater complexity requires greater skill and time. Although most people only require simple Wills, it is very important that these be properly prepared.
We can also discuss making a Power of Attorney or Enduring Guardianship at the same time. Ask about our estate planning packages.
Disclaimer: This fact sheet provides general information and does not provide legal advice. If you have a legal issue, you should contact a lawyer before making a decision about what to do or applying to a court.