One of the certainties of life is death and, though it might not be something you want to think about, you want to ensure that you leave your hard earned property, cash and other valuables to the people that you love. This is the ultimate reason why it is worth spending time to analyse how your property is going to be distributed and this means making a will.
The following information on wills is general in nature and should be taken as a guide only. There are differences in the law in different states in Australia and you should ensure that you are aware of the requirements for Wills in your state.
- What if I don't have a will?
- Why make a will?
- What is a will?
- Simple or complex?
- Who should be an executor?
- Probate - what does it mean?
- What do I leave in my will?
- Who can be beneficiaries?
- What are mirror wills?
What if I don't have a will?
If you die without a will, this means that you have died ‘intestate’. If your estate is reasonably large or complex this can cause problems for different people that may have a claim. Most states of Australia have specific legislation which sets the rules as to what happens and the property of an intestate estate will usually be distributed to close family members. It is also possible to have a partial intestacy where you have a valid will but some of your assets are not distributed by that will and in this case the intestacy rules are applied to those undistributed assets.
Why make a will?
Making an appropriate will is particularly important if you are at all concerned about who will receive your assets after you die. You might like to consider a new Will when circumstances change, for example on the death of parent or spouse, on the birth of children or on business succession and/or sale. Generally marriage revokes a will and you should prepare a new Will providing for your spouse. In various states, a previous Will is revoked the day a person is divorced but in other states divorce has partial effect such as cancelling gifts you have bequeathed to your former spouse, and also cancelling their appointment as an executor, trustee, or guardian under the will, but not cancelling any appointment of your former spouse as trustee of property left by you for beneficiaries that include your former spouse's children.
If you have children, your spouse will usually be appointed guardian of your children during their minority. But should there be no surviving parent you have the right in your Will to appoint someone in whom you have absolute trust to be guardian of your minor children although this is only a statement of preference by you; the decision of who cares for your children is made under family law principles.
If you do not leave a will any person with a sufficient interest can apply for guardianship. This may not be the person you would choose for such an important responsibility. Your will can also contain special provisions to help ensure that your adult children’s financial needs are met and funds for them are not spent unwisely.
What is a will?
A will is a legal document and, as with all things legal, you want to get it right so as to minimise any possible disputes. The basic rules are that a valid will is one that is able to be put into effect and accepted by a court of law. You (the writer of the will) must be a mentally competent adult (age 18 or over) and your Will must be made willingly without undue influence from another person. Being mentally competent means that you know you are executing a will, and are familiar with your property as well as your family and descendants. If you anticipate problems about mental competence, you ought to consider including a doctor's assessment of your competence at the time of the signing of the will. The will must be:
- In writing (hand-written or typed). If it is hand-written, use the same pen or pencil for the whole will.
- Signed and dated at the bottom by you.
- Witnessed by at least two people. The witnesses must all be present when you sign the Will and should sign with the same pen you use to sign.
- The Will must give away your assets.
Your witnesses cannot be beneficiaries of your estate or married/de-facto to a beneficiary of your estate and must be over 18 years of age. Any bequests to a witness or their spouse, are null and void so do not use your spouse or children as witnesses.
However there are some quirks; you can be under 18 and make a valid will under certain circumstances, e.g. you are married or expecting to marry or are authorised by the state Supreme court. If you cannot write your name, a mark or your initials will be enough. If you cannot make a mark, another person, including one of the witnesses can sign the will, as long they sign in your presence and with your permission.
You must clearly identify yourself as the maker of the Will, and that a Will is being made typically by the using the words "last will and testament" on the face of the document. You should declare that you revoke all previous wills and codicils (a codicil is an amendment to a will). If your signature is not at the end of the Will, any text following the signature can be ignored, or the entire will may be invalidated if what comes after the signature is so material that ignoring it would defeat your intentions.
Simple or complex?
A Will is often quite short. You need to identify the assets that you have and how you would like to distribute these to the particular people in your life. In general, you can designate anyone you wish to be your beneficiaries and you can distribute your assets in any fashion, but you may have to make proper provision for your children and spouse. Under the Family Provision Legislation any family and dependants who are left without adequate provision in your Will may apply to the Court for further provision from your estate.
A will can be a relatively simple matter and you can draft your own legally valid will without the assistance of a solicitor. There are various companies offering on-line preparation of Wills and you can buy do-it-yourself Will kits. Prices for these vary from under $20 to around $150. However if your situation is more complex you would be well advised to seek professional legal advice particularly if you are considering one or more of the following:
- A family discretionary trust
- You want to give a person the right of occupancy in a house/unit for that person’s life or a set period of time
- You want to set up a testamentary trust (i.e. a discretionary trust in a Will)
- You think that there is someone who might challenge the terms of the Will that you are proposing to draft
- You are concerned about any possible liability for capital gains tax which might result from provisions you intend to make in your will
- You need advice regarding adequate provision for your spouse, de facto partner, children, former spouse, dependents, and any person with whom you are living in a close personal relationship
- You choose to exclude a close family member from your will
You are free to alter your will at any time. If your circumstances change, you can and should alter your will. However, you cannot simply make an alteration by, for instance, crossing something out in the original will and writing in your new wishes. If the alterations are minor, you can make a codicil (a separate document in which you change a provision in your will) but it is usually better to make an entirely new will unless the change is very simple. A codicil must be signed in the presence of two witnesses, in the same way as when you make your will.
Who should be an executor?
When you make your will you need to designate an Executor. The executor is the one you entrust to administer your estate and see that your wishes are carried out. There is no bar on your executor being a witness to your will (providing they are not a beneficiary). If you wish, you can name more than one person to act as executor. In many cases the executor manages and distributes the estate with the assistance of a solicitor. The executor is expected to administer the estate in a time-efficient manner, according to the terms of the will. Some of the tasks include:
- Responsibility for funeral
- Obtaining probate
- Collecting any debts or investment income
- Claiming life insurance
- Protecting and insuring any assets of the estate
- Selling assets
- Distributing the remainder on the estate
The executor can be a beneficiary. There are a large amount of responsibilities placed on a person when they become the executor of an estate and you should discuss this with the intended person before you nominate them in your Will. The executor has a right to be paid for his or her time and trouble in administering your estate if they are not a beneficiary. You must keep your will in a safe place. If the will is mislaid, it may be presumed to have been revoked. Solicitors hold wills on behalf of clients, usually at no charge. You should keep a copy of your Will and note on it where the original is kept. It is advisable to tell your executor where your Will is kept. If you want to give personal instructions that you do not want to appear in your Will, you can simply leave your executor a letter of instructions.
Probate - what does it mean?
Probate is the legal process of administering your estate by resolving all claims and distributing the property under the valid will. A court decides the validity of your Will, interprets your instructions in the Will, decides the executor as the personal representative of the estate, and adjudicates the interests of heirs and other parties who may have claims against your estate. There is no statutory requirement that probate be obtained in every case, but to ensure that a person seeking release of assets (e.g. bank accounts) has authority to deal with them, and to protect themselves against possible liability for handing assets to the wrong person, asset holders (e.g. banks, insurance companies or superannuation funds, etc) may require probate before releasing or transferring assets. They will, however, often release modest amounts without the need for probate to be obtained. Real estate held solely in the name of the deceased person or as tenant in common will always require a probate grant in order to deal with it.
What do I leave in my will ?
Your Will can include:
- Assets, such as houses, cars, money, shares, cash, etc
- Rights and powers, such as the right to appoint the trustee of a family trust
- Specific belongings, such as a violin, paintings, books, etc.
Some assets, such as superannuation and life insurance, cannot be distributed in a will. For example, a superannuation benefit may go directly to the person nominated to the superannuation fund. If you have a superannuation entitlement, make sure you formally notify the fund to nominate the people that you want to benefit. To learn more explore superannuation death benefits.
If you have a house registered in your name, you can put it in the Will. If you own it with another person, such as your spouse, you may own it either as a 'Joint Proprietor' which is the most common way of owning property or as 'Tenants in common' which does not mean that you are tenants but that you each own a certain percentage of the property (usually 50%) and you can deal with your holding in the Will.
If you own your home (or any other assets) as a joint proprietor, then when you die, the house automatically passes to the other joint proprietor. It makes no difference whether you have a Will or not. However, if you own your house as tenants in common, you can leave your holding to whomever you want in the will.
One of the traps that some people fall into is that they make a list of belongings they want left to certain people and it is not part of the Will. Even though the list may be useful, unless it is part of the will it may not be enforceable.
Who can be beneficiaries?
The Beneficiaries are the people or organisations who receive your property. You can leave your assets to whomever you want, including charities and not-for-profit organizations. It is important to leave enough assets to the people who depend on you so they can survive after you are gone. If you do not, they may be able to take legal action to get a bigger share of your assets after you are dead. If you leave assets to a person under 18, those assets will be in trust until they turn 18. If you leave assets to one of your descendants, and that descendant dies before you, the bequest doesn't lapse so long as the deceased descendant leaves children surviving at your death. The surviving descendants receive the bequest.
Leaving assets directly to another person is only one way of distributing assets through your will. You might include a testamentary trust in your will to:
- Ensure that assets pass to children even if a surviving spouse remarries
- Gain Capital gains tax and income tax advantages
- Provide for children with an intellectual disability or mental illness
- Protecting assets where a beneficiary becomes bankrupt
Any debts that you have while you are alive remain as debts. Anyone who can prove you owed them money can make a claim from the assets you leave in your will. It is a good idea to say that you want debts paid out of your estate before distributing your assets.
What are mirror wills?
When a couple want to make almost identical wills leaving, for example, everything to each other respectively and thereafter to the children, or where there are no children, to a named beneficiary, they are referred to as 'mirror' wills. They are individual wills, which are separate legal documents, with similar content and the respective partners usually become both sole beneficiary and sole executor to each other.
It is essential to add at least one extra executor and extra beneficiary to each will to safeguard the estate in the event that both should die together. The second executor and beneficiary can be the same people (or person) in both wills