By: B Stead
Why make a will and what can it do?
Dying without leaving a will, or leaving an invalid one, is to die intestate. Dying intestate means property left (the estate) is distributed according to the intestacy law. The intestacy law has been prescribed by legislation as the ‘default’ rules to apply in these circumstances. The problem is that the intestacy formula for distribution may not produce the desired outcome.
To make a will is to properly document your wishes and instructions for what you want to have happen to your property when you die. There is no legal obligation in Australia to make a will, but it is still worthwhile to do so, regardless of the size of your estate. Here are some reasons why, and what a will can do.
Make a will to:
- ensure your property is distributed according to your wishes – put your intentions for what you want in writing;
- choose and appoint personal representatives to act on your behalf;
- facilitate efficient administration, reduce family stress and worry at a time of mourning;
- decide who benefits and how from your estate;
- decide who inherits family heirlooms, jewellery, collections;
- reduce potential for family disputes,
- make it easier for others to finalise your affairs;
- provide for minor children and dependents, protect beneficiaries with special needs, – establish trust funds;
- consider asset protection issues for beneficiaries who are professionals or in business – establish trusts;
Choose your personal representatives
- ‘Personal representatives‘ refers to executors and trustees and also to administrators, the term used when no will was left or no valid will.
- A will is where you document who you wish to be your personal representatives.
- Executors carry out the will-maker’s instructions as left in their will and on their behalf. They attend to disposal of the body, administer the estate; collect the assets, pay debts then distribute the property according to the terms of the will. Executors are required to defend the estate against any claims.
- You can choose and appoint in your will people you know and trust, and who know you, to act on your behalf as your personal representatives when you die. Preferably seek their consent first.
- Choosing personal representatives is especially important if you have minor children or children with special needs or disabilities.
- With no will, personal representatives are appointed by the Probate Court of the Supreme Court. Someone needs to apply to the Court, a family member or public trustee. It is a strict legal process and legal assistance should be sought.
Choose who is to inherit, what they get and when
- With a will you can say who you want to give your hard-earned assets to. You can express your wishes for how your dependents are to be provided for.
- While succession law permits freedom of choice in to who make gifts to by will, care needs to be taken, as legislation everywhere requires ‘adequate provision’ be made for anyone ‘eligible’ to make a claim for family provision. The last thing wanted are bitter and costly disputes.
- To make a gift to a friend or non-family, charity, sporting club or community organisation, carers then you need to make a will. The statutory rules of intestacy, click here, only provide a legal formula for distribution along family or blood lines.
- Choose who will take the family heirlooms, jewellery, artworks, special articles, collections
Provide for minor children – appoint a guardian
- If you have minor children you can appoint someone to act as guardian. Such appointments however should be carefully considered, and in consideration of individual family circumstances.
- Trusts can be established by will to provide for their maintenance, education and other expenses.
- By making a will you can declare the age at which your children can take their inheritance, or in stages.
Provide for anyone with disabilities or special needs – special purpose trusts
A will can be used to establish special purpose disability trust arrangements for disabled beneficiaries. Similarly use a will to establish a trust fund to provide for any beneficiaries who might be spendthrifts or may engage in gambling, drinking or drugs. Professional legal and financial/accounting advice is essential to ensure these structures are set up properly for individual circumstances.
To be certain a step-child benefits or step-grand child they need to be named in a will with instructions as to the gift. Most states don’t recognise step-children as yet.
Professionals, business owners, primary producers
In these situations and complex and larger estates, a will becomes part of an overall estate plan. Professional advice needs to be sought from accountants, lawyers, tax and financial advisers to establish and maintain an estate plan tailored to individual circumstances.
Finalising your digital estate and online footprint
- With much of our life online there are ever increasing ‘accounts’ of all kinds with an array of login details from social media, email, photographs and subscriptions to taxation, business, professional, financial and health data. What it is to happen to these when we go? How may we make arrangements for terminating accounts effectively and conclusively, and to protect our identity? It is a developing area.
- Procedures for the termination of accounts where they exist vary among providers. As in other areas presentation of authenticated evidence is required that the person seeking to deal with it has been properly authorised.
- This is made easier if someone with technological knowledge is appointed by will as a digital executor and given specified powers to deal with the digital estate, as defined in the will.
- Leaving your preferences as to finalising your digital estate in a will and appointing someone with the task makes it easier than if the issue is left unsaid.
Pets – make arrangements for their maintance and leave provision
- Instructions for what you would like done with your pets can be made in your will; who has agreed to care for them, and some provision for their maintenance, whether by a lump sum or by establishing a trust fund for example.
- What about me? Your pets & your will” is a useful guide by the Young Lawyers Animal Law Committee of the Law Society of New South Wales containing practical information to consider in deciding what to do.
- Read more about Pets – making provision for their care in a will here.
Estate administration – administrative efficiency, costs to the estate
- A valid will facilitates estate administration, taking less time and at less cost to the estate than if there is no will.
- Certified copies of the death certificate and will are at the top of the list of documents banks, government agencies, ask for in their checking process of settling accounts of deceased estates. A will is the official legal document of a will-maker’s instructions and ‘speaks’ for them.
- Without a will no-one has been appointed to represent the estate. As there is no named executor someone (spouse, partner, family or the public trustee) has to apply to the Probate Court for permission (letters of administration) to administer the estate. This requires more documents and information which all takes time to prepare. Professional legal advice is essential, generating extra costs to the estate, less for the beneficiaries) and delays distribution.
- Leaving a will with a named executor assists administration, making it less difficult when contacting government agencies, instrumentalities, financial institutions and dealing with officialdom generally.
Seek legal advice to make a will which is valid from a lawyer, public trustee or trustee company. To find a lawyer offering services in this area follow the links on the Australian Law Societies here and links to State and Territory public trustees are here.
10 May 2014
© BHS Legal