I don’t have a will. Do I need one?
If you do not have a will, your estate will be distributed according to a set of legal rules that determine who will receive assets from your estate and how much they will receive. These rules normally favour your surviving partner and children above other relatives, but can vary significantly according to your circumstances. A will containing your express wishes helps avoid uncertainty, disputes, and additional expenses.
If you would like to decide how your assets will be divided amongst your family and friends, who will care for your children, or request that your body be disposed of in a particular way, then you should consider making a will.
What is an executor?
The executor is the person you appoint to carry out the wishes expressed in your will. Executors are responsible for arranging your funeral, drawing in all estate assets, paying all debts and expenses, and distributing your assets in accordance with your will.
How should I pick an executor?
Generally, anyone can be an executor if they are over the age of 18 and have the mental and physical capacity to make the decisions required of an executor. An executor can be a family member, friend, lawyer, or trustee company. You should pick someone you trust and who will be able to work with your family after you are gone. You may choose more than one person to be your executor. If you do, they should be people who get along and can work together.
The person or people you choose do not need to be technically skilled, as most executors seek the advice and assistance of lawyers and accountants to administer the estate. Although you may appoint a lawyer or other professional, we recommend that you first consider people who will act as your executor for free and will seek professional advice as needed.
What is a beneficiary?
A beneficiary is a person or entity that you name in your will to receive gifts or benefits from your estate when you die. For example, a beneficiary can be a family member, friend, or charity.
Can a beneficiary be an executor?
Yes. We usually recommend appointing a beneficiary of residue to be an executor.
What is ‘residue’?
’Residue’ is a technical term that refers to whatever is left of your assets after all specific gifts are made and all estate expenses and debts are paid. This is often the most significant gift.
What is a testamentary guardian?
A testamentary guardian is a person you appoint in your will to make decisions about the long-term care of your children while they are under the age of 18.
This does not necessarily mean that they will live with the person you appoint as the guardian. Generally, this person will only become responsible for the daily care of your children if the surviving parent has already died.
The appointment of a guardian can only be changed by court order and will always be subject to the Family Law Act 1975 and any orders the Family Court might make.
Can I give away superannuation in my will?
No. This is because superannuation does not technically belong to you.
Superannuation is a complex area of law. If you require advice about these issues, then you should raise this with your lawyer at your appointment.
I want everything to go to my spouse and then my children. Is that enough?
We strongly recommend you consider what you would want to happen in the unlikely event that you are not survived by your spouse, children or grandchildren.
I hadn’t thought about that. What do people usually do?
This varies considerably from person to person and family to family.
It is important to consider that if your will leaves everything to your partner, when you die your partner’s estate will consist of the combined value of both of your assets, which will then be distributed according to your partner’s will. This may result in your assets benefiting your partner’s family and friends, rather than yours.
As such, a common approach is to divide your estate into two shares, with one share distributed according to your partner’s wishes and the other distributed according to your wishes. This approach is popular as it allows partners to include backup gifts that will benefit their respective family, friends or charities.
If you require advice about these issues, you should raise this with your lawyer at your appointment.
What is a testamentary trust and do I need one?
A testamentary trust is a trust structure that can be built into your will. When you die, the trust will come into force and your assets will be distributed to the trustees of the testamentary trust, who will hold the assets for and on behalf of your named beneficiaries. The trustees can decide how the trust funds are invested, and when and to whom all or part of the assets should be distributed.
We often recommend the inclusion of testamentary trusts in wills because they provide increased asset protection and unique tax benefits to the beneficiaries.
For example, assets held in a testamentary trust are protected from third-party claims and creditors if a beneficiary faces bankruptcy. Testamentary trusts can also be used to ensure that assets are not lost by beneficiaries, or distributed to others if the surviving partner remarries or enters a de facto relationship.
Additionally, testamentary trusts offer the unique tax benefit of allowing children under the age of 18 to receive income from the trust as if they were an adult while paying lower tax rates. This is not true of trusts established outside of a will, where tax rates of 45% apply to all income earned over $1,307 (as at January 2020).
Testamentary trusts cannot be included after your death. If you think your family may benefit from a testamentary trust, you should raise this with your lawyer at your appointment.
GLOSSARY OF TERMS
A will is a legal document that contains your wishes regarding the distribution of your assets and the care of your children after your death.
Your estate is your total net worth. It includes all land, real estate, savings, shares, belongings, and other assets that you own or have a controlling interest in.
An executor is the person that you appoint in your will to carry out the wishes expressed in your will.
A beneficiary is a person or entity (such as a charity) that benefits from your will by receiving gifts or all or part of your assets after you die.
A testamentary guardian is a person you appoint in your will to care and make decisions for your minor children if there is no surviving parent.
A specific gift is a gift of a specific item to a particular person.
The residue is what is left of your estate after all debts and expenses has been paid, and all specific gifts have been distributed.
A testamentary trust is a trust built into your will that distributes your assets to the trustees of the trust, who will hold the assets for and on behalf of your beneficiaries.
Power of Attorney
A power of attorney is a legal document that gives a person (‘the attorney’) the power to deal with your assets. A power of attorney ceases once you lose mental capacity to make your own decisions or once you die.
Enduring Power of Attorney
An enduring power of attorney is a legal document that gives a person (‘the attorney’) the power to deal with your assets, personal care, and healthcare. An enduring power of attorney continues even if you have lost the mental capacity to make your own decisions, but ceases once you die.