Aljoes, Wills

PREPARATION OF WILLS

WHO SHOULD I APPOINT AS MY EXECUTOR?

The executor is the person responsible for your estate and for carrying out the wishes expressed in your Will.

The executor can be:-

• One or more persons including your spouse, relatives, friends or persons who have helped you in the past such as your accountant or your solicitor;

• Someone who will receive a gift under your Will.

Your Executor must be:-

• Someone that you trust completely to carry out your wishes and to act in your beneficiaries best interests.
• Someone who has the ability to do the work required, including:-

• Arranging your funeral;
• locating and sorting through your documents;
• sorting through and disposing of your personal items;
• instructing a solicitor to carry out the legal work associated with obtaining a grant of probate and calling in and distributing your assets.
• Selling items such as real estate, motor vehicles and the like;
• dealing with personal issues that might arise with beneficiaries relatives or other persons.

The executor should not be someone who may have a special reason not to act totally in the beneficiaries interests. Examples of this might be:-
• a business partner who may wish to continue on the business in a manner that does not protect the interests of your beneficiaries, and
• someone who owes you money.

We usually suggest the appointment of two or more executors in case one predeceases you or is unwilling or unable to act.

Executors should be resident within New South Wales as this will make it easier for them to carry out their duties.

Executors can be appointed to act together or you may appoint one executor to act on his/her own, with a second or subsequent executor to be available to act if the first executor dies or is unable or unwilling to act.

If money or other assets are to be held for a period of time before distribution, for example if a beneficiary is under 18, the executor will need to invest and manage those assets, including filing income tax returns.

PERSONS TO BENEFIT

You will need to consider the persons and organisations that you wish to benefit with your Will.

These will include family members friends and the charities and other organisations about which you have a particular interest.

Whilst the law allows you to leave your property to anyone and in whatever shares you wish to nominate, you must be aware that some people have the right under the Family Provision Act (FPA) to make a claim against your estate.

The only persons eligible to make a claim under the FPA are:-

(a) The spouse or de facto spouse of the deceased;
(b) A child of the deceased;
(c) A former spouse of the deceased; or
(d) A person:-
(i) who was at any particular time wholly or partly dependant upon the deceased; and
(ii) who is a grandchild of the deceased or was at any time a member of a household of which the deceased was a member.

Even if a person is eligible to make a claim under the FPA, the Court will not make an Order in favour of that person unless it is satisfied that inadequate provisions have been made for that person by the deceased either under the terms of the Will or whilst the deceased was alive.

Whether “inadequate provision” has been made will of course depend on many factors, including the Claimants personal financial circumstances and needs and the size of the estate in question.

If you do not wish to make a gift to a person who would be eligible to make a claim under the FPA, it is possible for you to prepare a Statement setting out your reasons for not making a gift.

The Statement should refer to specific facts, including

• amounts of money already given to that person, and
• the conduct of that person towards you.

PROPERTY THAT IS PART OF YOUR ESTATE

You will need to consider the assets that will be included in your estate, taking into account matters including:-

Jointly Held Assets

This can be held either as joint tenants or tenants in common.

If an asset is held by two or more persons as joint tenants, it will pass automatically to the surviving owners.

If an asset is held as tenants in common the deceased’s share will pass according to the terms of his or her Will.

If the jointly held asset is real estate the title document will state whether the holding is as joint tenant or tenant in common.

For most other assets, including for example bank accounts investments and motor vehicles there will be no statement as to whether the property is held as joint tenants or tenants in common and the law will generally deem the ownership to be as joint tenants.

If you wish to give an asset that you hold as joint tenant by your Will to someone other than the joint owner you will first need to change the manner of your ownership

• For real estate a document can be filed with the Registrar General changing the manner of ownership from joint tenants to tenants in common;
• For other assets such as bank accounts or investments you will need to put your share into a separate account in your name alone.

Superannuation

Superannuation benefits payable to a person after their death, including proceeds of life insurance policies taken out through superannuation funds do not form part of the estate.

After a person dies it is a matter for the Superannuation Fund Trustee to decide who is to receive the superannuation benefits and in what shares.

In deciding these matters the Superannuation Trustee may take into account the wishes and provisions expressed by the deceased in the Will. However these wishes are in no way binding.

It is generally possible to lodge with the Superannuation Fund a document called a “Binding Death Nomination”. A Binding Death Nomination must be renewed every 3 years to remain valid. You should review your situation with your fund trustee to ensure that your superannuation benefits will pass to the right person.

Superannuation death benefits may be liable to tax of up to 30%.

This tax will not apply if the superannuation death benefit is paid to persons including the surviving spouse or dependent children under 18 years of age.

Assets held in a Trust or Company

If assets are held in Trust all documents relating to the Trust, including the Trust Deed and any amendments together with tax returns and financial statements will need to be provided to the solicitor for careful consideration to ascertain matters including:-
• How the assets are held; and
• Who controls the company and /or trust;
• What are your entitlements.

The control and disposition of assets held in a trust or company may not necessarily be subject to the provisions of your Will.

GIFTS

Specific Items

You may wish to give specific items for example jewellery, paintings, family heirlooms and sporting goods, to particular beneficiaries.

You may include with the Will a list of such items together with the names of the persons to receive them.

Personal and Household Items

To avoid disputes concerning the distribution of such items you may give your executor the power to distribute items in such manner as the executor may decide.

If such a provision is not included in the Will the executor would only be able to resolve the dispute by selling all of the items and distributing the sale proceeds, if any.

Gifts of the Balance of Your Property

If the person or persons that you wish to leave the balance of your property to died before you, alternate provisions will be required, for example:-

• Property may be given to your spouse;
• If your spouse dies before you property may be given to your children in equal shares;
• If any of your children die before you, their share of your estate may be distributed to their children in equal shares.

A beneficiary is not entitled to receive a gift from a deceased estate until the beneficiary attains the age of 18 years.

If you consider that a person is at 18 years too young to receive a substantial gift your Will may provide for a gift not to be received until a person achieves a later age such as 21 or 25.

Until the person reaches the age at which they are to receive the gift, the Will may provide for part of the gift to be available to provide for maintenance, education or similar needs.

DISPOSAL OF YOUR REMAINS

This is not essential in a Will, however, you may have a particular wish as to the form of your funeral (in a particular church) and burial or cremation. These wishes are not binding on your executor but at least constitute an indication of your intention.

You may have thought about donating your body or certain organs to be used for anatomical examination or for medical or scientific purposes. You can authorise or object to the use of your body for scientific purposes or medical research in your Will.

OTHER ISSUES

Other matters to consider include:

• guardians for minor children to be named in your Will;

• extended powers of executors and trustees (for example, to continue to carry on your business or profession after death);

• contracts to leave property to a particular person or not to revoke a provision in your Will;

• release of debts;

• taxation and duties; in particular how potential capital gains tax will be dealt with in relation to disposal of your assets.

MATTERS TO CONSIDER

The law concerning preparation of Wills is complex and has recently been changed with the commencement of the Succession Act.

The above is only a summary of the more important matters to consider.

Each person will have unique circumstances concerning their property and the persons that they wish to benefit.

Your Will should be prepared for you by a Lawyer who has years of experience in this area of practice.