MAKING YOUR WILL
AND GETTING IT RIGHT
- Making a will
- Trusts and Business Interests
The best thing you can do for your family after your death is to ensure that you have a valid will. Not only will this facilitate the settlement of your affairs, it will avoid fights and disappointment and more importantly, it will help keep your greatest legacy, your family, intact!
Contrary to what most people think, the most important function of your will is not to dispose of your assets but to appoint someone to act for you when you die.
By making a will, you have the opportunity to appoint the executor of your choice.
Making your will
Property always finds a home. The law provides rules on how assets will be distributed if you die without a will and there are ways in which someone can be legally appointed to administer your estate but it may not be who you would have chosen and your assets may not be given to those who you would wish to receive them. The best way to ensure that your wishes are honoured is to make sure that you appoint the right person to tidy up after you.
Appointing your executor
Executors are also called trustees or legal personal representatives. The role of your executor is to finalise your affairs and to make sure that your wishes are carried out. They have the power at law to do everything that you could have done for yourself.
When choosing your executor, our advice is to choose someone you trust and who knows what you would want to be done when winding up your estate and disposing of your assets. They should be someone who can handle the family dramas that inevitably occur and who appreciates what you would like to do with those personal possessions such as photographs or memorabilia that may have no real value to anyone but those who love you.
That is one of the main reason that we recommend that you choose someone close to you rather than a professional executor. Not only will the appointment of a professional executor such as the public trustee, an accountant or a lawyer incur additional costs for your estate, they have no idea how to dispose of those personal possessions and no real interest in doing so.
If your executor needs professional help, they can always engage a solicitor to assist them.
Who are your beneficiaries
Most wills are relatively simple. You leave everything to your partner and if your partner dies before you, you leave everything to your kids. Unless you have something specific to leave specifically to someone, most will deal in terms of the ‘rest and residue’ or your residuary estate – which is everything you have in your name when all of your debts are paid.
When considering who are your beneficiaries you should consider all of those people who would expect to receive a gift, meaning your partner, children or anyone who is financially dependent on you.
In our opinion, a will is not meant to punish ungrateful children and care should be taken before deciding to exclude anyone from your will. A family provision claim made by a disappointed beneficiary can be very expensive for the estate. Also, people change, they drift apart and reconcile and whilst you live, there is always time to make up with that child. It is too late to say you are sorry for the hurt you cause if you die before you are able to amend that will excluding the errant child.
On the other hand, there is a reason why it’s called a ‘gift’, you don’t have to give it and we believe that if you can’t take it with you, don’t leave it behind. Your beneficiaries should receive the leftovers after you have had a long, interesting and fruitful life.
What do you own?
Most couples own property jointly, that is, as joint tenants. If you hold property as a joint tenant, you don’t hold separate shares in the property you and your co-owner hold one share that will go to the survivor when one dies. You cannot deal with that property in your will unless you are the survivor. If this is not the result that you want, you should seek advice from your solicitor.
What you may give in your will is what you have in your own name at the time of your death. This does not necessarily include your superannuation which is dealt with below, because you actually don’t own the funds in your super fund.
Super is intended to provide you with an income during your lifetime and it is what is left over (plus insurance benefits) that is paid to your beneficiaries when you die.
In order to ensure that your death benefits are allocated in accordance with your wishes, you should make sure that your death benefit nominations are kept current.
Most public funds have non-binding, lapsing death benefit nominations that must be renewed every three years. The next time you receive a letter from your superfund, don’t put it in the bottom drawer of the filing cabinet as it may very well be that nomination form.
Who you can give your super to is restricted by law. You can only leave it to superannuation beneficiaries which are defined as spouse, children (including adult children) and financial dependents. If you have none of the above, it will be paid to your estate to be disposed of according to the terms of your will. This may have adverse tax consequences for your beneficiaries. When deciding on the disposition of your assets, you should consider leaving your super in the most tax effective way.
Trust and business interests
Dealing with trust assets and business interests in your will requires special consideration of your circumstances including the rights you may have under the trust deeds or the effect of the structure and financing of your company.
You should see your solicitor for specific advice on these issues or read our next blog on the subject of business succession planning.
This article contains general advice only and may not be relevant to your circumstances. For more detailed advice, call us for an appointment.