Making a Will
You work hard to build up and maintain your assets. It makes sense to take the same sort of care in making sure that your loved ones get the benefit of them when you are gone. But if you don’t have a will, your property will be divided up according to a set formula, whether you like it or not. And if you don’t have any next of kin when you die, your property will go to the State.
What is the point of a Will if your wishes aren’t carried out? In Australia a person has the right to leave their property to whoever they name in their Will.
Below are some of reasons you might want to consider when deciding whether to have a will professionally drafted by a specialist will lawyer as opposed to using a free will kit.
Asset Protection Wills
Asset Protection Wills are aimed at protecting the assets you pass on to your beneficiaries to ensure that your beneficiaries receive the benefit of these assets.
You may need an Asset Protection Will if you have children under the age of eighteen years old or a loved one who would not be capable of managing their inheritance without assistance such as a special needs relative.
Next Generation Protection Will
You may need a Next Generation Protection Will if you want to ensure that your assets survive and increase in value for the benefit of your grandchildren and their children.
Next Generation Protection Wills can mean that you set up a Trust and appoint a Trustee to look after your assets for the benefit of the next generation.
Second Marriage Will
Second Marriage Wills are becoming more common as more people remarry later in life and both have children, and maybe grandchildren, from a previous marriage.
Generally, both parties in Second Marriages have concerns over how to ensure that their assets are passed on to their children. There are number of ways in which to ensure that this occurs which can be discussed and incorporated into a person’s Will.
Foreign Property Wills
If you own Foreign Property then you will need a Specialised Will to address how this asset is to be dealt with after you are gone. Foreign Property will be dealt with in accordance with the laws in the land the property is owned which is why it is extremely important to obtain expert advice on how your foreign property can be gifted to your beneficiaries.
Property Fragmentation Will
If you intend to leave parts of your property to different beneficiaries then you need to ensure that this is adequately addressed in your Will and that your intentions are able to be legally carried out.
Fragmentation of Property can include wanting to leave a property that you own jointly with another party to a different beneficiary. This will necessitate an application to terminate the joint tenancy so that the property can be held as tenants in common and your share passed onto the beneficiary of your choice, and not the other joint tenant.
Leaving your assets or property to charities can bring its own specific issues that will need to be addressed in a Specialist Will.
One of the common issues with Charitable Wills is that they can be susceptible to Will Challenges if you also have relatives that believe they should have inherited under your Will or, if they do inherit under your Will, believe they should have inherited a larger share of your Estate.
A recent Court case of highlights the special issues involved in estate planning where superannuation, and in particular a Self-Managed Superannuation Fund (SMSF), is involved. In this case, a wife died whose Will directed her superannuation to be paid to her children. She will specifically state that she did not want any of her superannuation to be paid to her husband. However, on her death, her husband assumed control of the SMSF and caused her entire superannuation benefit to be paid to him. The deceased’s children contested the will and disputed the Trustee decision to not to pay the pay the superannuation benefit to them.
Francesca and Augusto Conti were the only trustees and members of an SMSF known as the Conti Superannuation Fund (Fund).
In August 2010, Francesca died. She had a valid Will which left her superannuation benefit of approx. $650,000 to her children. Her will specifically stated that she did not want any of her superannuation entitlement to be paid to her husband, Augusto.
After Francesca’s death, her husband retired as trustee of the Fund and appointed a corporate trustee, which he controlled, as trustee of the SMSF (Trustee). Appointing a corporate trustee enabled the Fund to satisfy the requirements of a single-member SMSF under the Act.This meant that there was no need to appoint any other persons as trustees or members of the Fund.
At the time of her death, Francesca did not have a valid death benefit nomination in place. The Trustee exercised its discretion and determined to pay the deceased’s entire superannuation entitlement to her husband.
The Court Case
The children contested the will and brought an action against the husband and the Trustee in the Supreme Court of Western Australia in Ioppolo & Hesford v Conti. The children argued that, as executors of the estate, they were entitled to be appointed as co-trustees of the Fund. In so, the children would have had some power to influence the decision in relation to the payment of their mother’s superannuation benefit. The court found that, while the law allows an executor to be appointed as a co-trustee of an SMSF, it does not require that such an appointment be made.
The deceased’s failure to correctly document her wishes resulted in a substantial financial loss to her children, as well as a financially and emotionally costly family dispute. Superannuation is not an ‘estate asset’: that is, it can only be dealt with in your Will if the superannuation trustee pays your death benefit to your estate. The trustee may be bound to do this, or may choose to do this. In order to direct the trustee it is best to have in place a binding death benefit nomination or death benefit agreement.
A Will is not a public document while a person is alive. When a person dies there are a number of people who are entitled to see a copy of the deceased’s Will. This includes:
- Any person named or referred to in the Will whether as a beneficiary or not.
- Any person named or referred to in an earlier Will as a beneficiary of the deceased.
- The surviving spouse, de facto partner (including same sex de facto partners) and any children of the deceased.
- A parent or guardian of the deceased.
- Any person who would be entitled to a share of the Estate of the deceased if the deceased had died without a Will and their Estate was dealt with under the Intestacy Rules.
- Any parent or guardian of a child referred to in the Will or who would have been entitled to a share of the Estate if the deceased had died without a Will and their Estate was dealt with under the Intestacy Rules.
- Any person (including a creditor) who may have a legal claim against the Estate.
- Any person appointed as the deceased’s guardian under the NSW Trustee and Guardian Act 2009 immediately before the death of the deceased.
- Any attorney appointed under an enduring power of attorney by the deceased.
- A person who has control or possession of the Will of the deceased is also legally required to provide a copy to a Court if requested to do so.
The above groups of people are entitled to see the deceased’s Will before the Will has received a Grant of Probate from the Court. After the Will has received a Grant of Probate from the Court any member of the public can obtain a copy of a Will on paying a fee to the Supreme Court of New South Wales.
Not all Wills are required to receive a Grant of Probate and it will depend on the size of the deceased Estate as to whether a Grant of Probate is required.
Leaving money to a charity in a Will is a wonderful way in which to assist future generations. To ensure that your charitable intentions are carried out you need to obtain expert legal advice when on the drafting of your Will.
There are two main issues that can arise when money is left to a charity in a Will and the deceased did not receive expert legal advice on the drafting of their Will:
- The charity to which the money is left is no longer in existence. This issue arose in the recent Supreme Court case of Application of Sachs  NSWSC 1410 where the deceased had left half of his net Estate to a New South Wales based children’s charity. The charity had later been wound up voluntarily and its assets transferred to the national organisation of the charity. The Executors of the deceased’s Estate had to apply to the Court for an order in relation to the payment of the money to the national organisation. The Court directed the Executors to make payment to the national organisation on the basis that the deceased had a general charitable intention and would have directed the gift to be paid to the national organisation instead. Without obtaining this direction from the Court the charitable gift would have lapsed.
- The Will being subject to a family provision claim. A family provision claim is a claim made under the Succession Act of New South Wales by an eligible person seeking money or a larger amount of money from the deceased Estate. A family provision claim is made on the grounds that the deceased has not adequately provided for the proper maintenance, education and advancement in life of the person making the claim. In circumstances where money is being left to a charity in your Will, it is important to ensure that all other persons in your life who would be eligible to make a family provision claim have been adequately provided for. In the event that they are not provided for, then the reasons for this lack of provision need to be discussed with your expert legal adviser to minimise the risk of a family provision claim being made on your Estate.
If you are leaving money to a charity in your Will, make sure you get expert legal advice to ensure that your gift reaches your chosen charity.