It should be noted that, before acting, you should seek the professional advice and services of a solicitor.

If you do not know one, we would be happy to provide a list of local solicitors. Click here to view our Contact Details.

Their expertise are in the areas of: Wills/Company Structures, Trusts, Specific Bequests and Devices, and Ensuring Power of Attorney.

Estate planning

  • Ensures your assets go to the people you want to leave them to.
  • Maximises the after-tax value of your assets.
  • Makes it as easy as possible for the people you leave behind to handle your affairs without you.

Wills

A will is a legal document that enables you to direct who is to receive what from your estate, and on what terms, after your death. To ensure that your will continues to reflect your wishes, you should review your will regularly and update it as your circumstances change. You can do this either by revoking your will and replacing it with a new one, or by amending it. A will is a key part of effective estate planning but it is not the only part. As you can see from the list below, you may own or control assets that cannot be governed by a will.

Assets governed by a will

A will can only dispose of assets that form part of the deceased’s estate. These include:

  • Assets you own personally.
  • Your shares in a company.
  • Your share of any asset you own as -in‑common.
  • Any superannuation death benefit or life insurance policy proceeds paid to your estate.
  • Your interest in any partnership assets, unless agreed otherwise.
  • The right to recover any funds owed to you.
  • Any rights you hold under any contract or agreement.

Assets not governed by a will

  • Assets you own as a joint tenant, as these pass automatically to the surviving joint tenant(s).
  • Assets held in a trust as the trust deed governs what happens to these assets.
  • Assets held in a trust of which the testator is a beneficiary; the trust deed governs what happens to these assets.
  • Assets owned by a company as only the company can deal with its assets.
  • Superannuation death benefits or life insurance policy proceeds paid directly to a beneficiary.

Who can make a will?

To make a valid will you must have "testamentary capacity". In Australia, this means you must be:

  • Of sound mind at the time the will is made when instructions are given to the lawyer to prepare a will.
  • 18 years of age or over. There are two exceptions to this requirement:
    • There are certain special rules for members of the Armed Forces in active military service.
    • A married person less than age eighteen can make a valid will, but only with the consent of the Supreme Court. This applies in some jurisdictions only.

Revoking your will

A will, or part of it, may be revoked at any time. For a voluntary revocation to be effective, the will-maker (testator) must have the intention to revoke the will and have the same testamentary capacity as is required for the making of a will.

A will is automatically revoked, in part or in full depending on the jurisdiction, in the following situations:

  • Upon marriage;
  • Upon divorce;
  • By the making of another will, or part of a will;
  • By written declaration; or
  • If the will is destroyed.

If you die without a will

If you die without a will, you are said to die ‘intestate’ and your estate will be administered according to the intestacy laws of the applicable State or Territory. Where there are no surviving relatives, your estate may pass to the relevant State and Territory Government. This means that your assets could pass to a beneficiary that you would not have wanted to benefit from your estate.

Power of Attorney

A power of attorney is a document empowering another person to act on your behalf. It should only be given to someone you trust since it involves you passing on important and legally recognised powers, rights and entitlements. All powers of attorney may be revoked by the maker (donor) at any time whilst they have mental capacity. You should ask your solicitor if a power of attorney is appropriate for your circumstances. Powers of attorney may be:

  • General – where the attorney is able to do all of the things in relation to your property and financial affairs on your behalf. However, this power ceases if you lose mental capacity. • Enduring – where the attorney is able to do all the things in relation to your property and financial affairs on your behalf. This power continues if you lose mental capacity.
  • Limited – where you restrict the things that the attorney is able to do on your behalf, or you restrict the time for which that person will be your attorney.
  • Medical – A medical power of attorney is a document that authorises someone else to make medical decisions on your behalf when you are unable to.

Binding death benefit nominations

As previously mentioned when a person dies who has been a member of a superannuation fund, the amount payable from the fund does not generally form part of their estate and as such is not distributed via their will. Where there is no death benefit nomination or a non-binding death benefit nomination, the trustee of your superannuation fund will use their discretion to distribute your benefits, in accordance with the superannuation fund’s trust deed. This includes to whom and in what form, i.e. as a lump sum, pension, etc.

Most superannuation funds now allow for binding death benefit nominations, which give the members the ability to nominate who receives their benefits. This is binding on the trustee of the fund. Binding death benefit nominations provide that a superannuation death benefit, including any life insurance owned within your superannuation fund, is paid to your nominated dependent or legal personal representative, not at the trustee’s discretion. Death benefits may be paid as a lump sum or a pension or a lump sum and a pension. However after 1 July 2007 death benefit pensions can no longer be paid to non tax-dependants.

Testamentary Trusts

A testamentary trust can be useful in producing tax effective income for minors. A testamentary trust is established via your will and only comes into effect upon your death. Its purpose is to manage estate assets to produce income for the beneficiaries. It also offers taxation and asset protection benefits.

Charitable Trust

A charitable or philanthropic foundation (also known as a charitable trust) is a legal vehicle which allows the transfer of gifts from an individual, family or corporation to a charity. While setting up your own trust or foundation may be appealing, the process is very complex. If you want a general overview of what is involved, go to Philanthropy Australia (who publish information about PPAFs and other charitable trusts, and also run workshops and seminars).

http://www.philanthropy.org.au/