A Will is a specifically drafted document that directs how you wish to distribute your assets upon your death. If you do not have a Will at the time of your death, the rules of intestacy apply and your estate may not be divided in accordance with your wishes.
There are various types of Wills, including:
- simple Wills
- premium Wills incorporating trusts
- mutual Wills
- special Wills, including dealing with assets outside Australia or a Statutory Will for a child/personal without capacity.
Rayners Lawyers can provide advice on the most appropriate Will to accord with your personal circumstances.
Considerations for your Will
Your Executor is the person(s) that you appoint to administer your wishes as documented in your Will. It is common for Rayners Lawyers clients’ to appoint their spouse, parents, siblings, children, or a combination of both. If your family members are not suited to the position, you may elect to appoint an independent person such as your accountant, bank manager or your solicitor as your Executor. The decision is ultimately yours and should be made on the basis of who you believe is the best person to carry out your wishes as set out in your Will.
You may also wish to include a clause in your Will to direct that your Executor be paid commission for their “pains and troubles” in administering your estate. There are however specific provisions dealing with the cost of appointing your solicitor or accountant as the Executor of your estate and you should be made aware of these prior to appointing such professionals.
2. Testamentary Guardians
Many people mistakenly believe that their parents or siblings will automatically be responsible for the care of their minor children upon their death. However, unless a testamentary guardian is appointed under your Will, any person with a 'sufficient interest' can apply for guardianship. If this occurs, the Family Court of Australia has the power to appoint a legal guardian based on what they believe is in the best interests of your child – not necessarily the person you would have chosen. Accordingly, we recommend that you appoint a Guardian who you trust to be responsible for making decisions about the long-term care, welfare and development of your minor child.
Generally, only assets held in your sole name will go into your estate. Property held in joint names like your bank account, home and shares will ordinarily go to the other joint owner by virtue of survivorship. Your interest in family trusts, superannuation, life insurance and businesses also don’t automatically go into your estate.
You may consider including a specific gift in your Will. Examples of such gifts include:
- a gift of jewellery, such as your diamond engagement ring, watch or precious artwork to a specific individual or organisation such as a family member, charity, nursing home or local community organisation;
- a gift of money, property or shares to a specific individual or organisation;
- a gift of property (such as your house or block of land) to a specific individual or organisation;
- you may also decide to include a clause in your Will forgiving the repayment of a loan made to a specific individual such as a family member or friend.
Your residuary beneficiaries receive the residue of your estate (i.e. the balance after taking out all debts, testamentary expenses and dealing with your specific gifts as mentioned above). You may wish to consider providing a life interest to allow a person such as your spouse to live in your family home until their death or until such time as they remarry or the right for one of your beneficiaries to reside in the family home for a certain period of time.
It is important that you take time when choosing your beneficiaries as unfair division between your children and/or family members may expose your estate to attacks against your Will, which can be costly in terms of money, time and stress.
Superannuation assets generally do not form part of your Will. Usually, it is the trustee of your superannuation fund that decides who receives your superannuation death benefits. Superannuation law generally requires death benefits to be paid to those beneficiaries that the trustee considers to be most needing of it.
In a standard family situation where there is no antagonism between potential dependents, this situation may not be an issue. However, in a blended family where the deceased may have had previous marriages and children from both marriages, this can lead to potential conflicts between beneficiaries. Where appropriate, Rayners Lawyers can assist you to make your superannuation part of your estate assets under an appropriate trust structure.
6. Other Considerations
Other considerations for your Will include:-
- how you wish to dispose of your body (i.e. cremation and scattering of ashes or burial);
- and organ donation.
When should you change your Will?
You should regularly review your Will every three to five years to ensure that it accords with your wishes. You should particularly consider updating your Will when there is a significant event in your life or the life of your loved ones, including:
property acquisition and disposal;
- marriages and
A ‘Testamentary Trust’ is simply a trust that is created under the terms of your Will. The opposite of a testamentary trust is an inter vivos trust which is a trust set up during your lifetime, such as a family trust.
Common reasons for establishing a Testamentary Trust include:
- controlling and protecting family wealth across the generations;
- income tax and capital gains tax benefits;
providing a workable, flexible framework for a beneficiary who is either incapable of managing their own affairs (for example due to disability or drug addiction) or vulnerable to exploitation;
- creating a structure that allows a spouse or partner to benefit during their lifetime whilst ensuring that children (including those from a previous marriage) are financially provided for in the long term;
- the ability to create separate Testamentary Trusts for each child or limb of the family which can then be independently managed and administered;
postponing the entitlement of a young child or adult until they are older or have settled down in life whilst allowing money to be spent for their benefit in the meantime; and
- to alleviate concerns that your surviving spouse may take on a new partner and spend all your assets to the detriment of your children and grandchildren;
- providing an additional layer of protection for family assets from potential risks of bankruptcy and family breakdown.
Where you elect to incorporate a testamentary trust in your Will, Rayners Lawyers will provide you with advice on how the trust works and the benefits it offers. Rayners Lawyers will also undertake a comprehensive review of your needs, review current taxation, superannuation and other relevant legislation which would impact on the beneficiaries of your estate to ensure that any applicable income tax, capital gains taxes and superannuation death benefit taxes are minimised. Rayners Lawyers will also canvass appropriate strategies to potentially defeat any creditors claiming against your estate and your beneficiaries.
Finally, where appropriate, plans can be put in place to ensure that your superannuation death benefits pass to your beneficiaries rather than in accordance with the discretion of the trustee of your superannuation fund.