Who should make a Will?

It is very important to have a will.  A will protects the assets that you have worked hard to accumulate.  Ideally, everyone over eighteen years of age should have a will.

Terminology

Executor:           A person appointed by the Testator in their Will to administer the Testator’s estate.

Administrator:     A person appointed by the Supreme Court to undertake executorial duties where
                        there is no executor.

Testator:            The Will-maker.

Probate:             The ratification of the validity of a Will and confirmation of the executor’s appointment.

Codicil:                A supplementary testamentary instrument used to vary the terms of a Will.



What Happens if you die without a Will?

If you die without a Will, you are said to have died ‘intestate’.  In such cases, your estate will be distributed according to a rigid legal formula.  If you die without a will, you will have no say in who will oversee the distribution of your hard earned assets, how your estate will be administered or which people will share in your estate.  Thus, making a will is the best way to ensure that your wishes count when you die.

Who should you appoint as your Executor?

An executor manages your estate upon your death and is responsible for the administration and distribution of your assets to beneficiaries according to the wishes expressed in your will.  As your personal and business affairs increase in complexity, the duties of an executor can become quite demanding and complex. 

Thus, while it may seem a compliment to appoint a friend or relative to act as your executor, you must bear in mind in making such an appointment that the demands placed on executors can be difficult and time-consuming, especially given that this will be a time of grief.  If your estate is relatively complex, it is not inappropriate to contemplate the appointment of your accountant and/or solicitor as a co-executor to assist your executor in administering your estate.

What are the Duties of an Executor?

The primary duties of an executor are to attend to funeral arrangements, identify and gather all of the assets of the estate, apply for a grant of probate if necessary, pay any debts, collect any money owing to the deceased, prepare tax returns, protect business interests and then make distributions to the beneficiaries according to the directions in the will.  (Please refer to the diagram attached to this document for a more detailed explanation.)

An executor’s duty as trustee commences where assets are to be held on behalf of a beneficiary.  This capacity is enlivened by, for example, a direction that assets are to be held on behalf of children until they come of age or where income from an estate is to be paid to a beneficiary during their lifetime (life tenancy).  In such circumstances, it is useful if the executor has the assistance of a solicitor, accountant or a similarly experienced person.
 
Does marriage affect a Will?

Marriage voids all Wills.  This can be overcome by making a Will ‘in contemplation of an intended marriage to a nominated person’.

Joint Tenancy / Tenants in Common

Assets (both real property, bank accounts and investments) held as jointly pass by way of survivorship to the remaining joint-tenant rather than by the terms of your Will.  If you wish to avoid this consequence, such assets will need to be held as tenants in common.

How do I change a Will?

As a will revokes all former wills, a Will can be changed by completing a new Will.  Alternatively, a Codicil can be executed, which operates to change the terms of the original Will.

What assets can’t you deal with under your Will?

If you have made specific beneficiary nomination with respect to life policies and superannuation, those nominations prevail over the terms of your Will.  If you have assets in a Discretionary Trust or a Unit Trust, these assets cannot be dealt with under you Will.

It is possible to interlock your personal and trust assets by expression of wishes in your Will and be regulating the appointor provisions in Trust Deeds.  This exercise requires complete can and can only be handled with a full knowledge of your personal and investment portfolio.

What is Estate Planning?

Estate Planning is the process of arranging your affairs to ensure the maximum use and enjoyment of your assets during your lifetime (and upon your death, your beneficiaries), in accordance with your will.  Careful planning will ensure that people you care for will be properly looked after when you die.  Estate planning will address other important issues such as liquid funds required to keep a business afloat, financial security for surviving partners and family, capital gains tax, or death cover and life covers as lump sums or working capital.

What is a Mutual Will?

A Mutual Will is essentially a will (usually completed by husband and wife) where the terms are reciprocal.  In such wills, partners usually leave their respective estates to each other and then upon trust for their children and grandchildren.  A mutual Will in a remarriage situation requires considerable rethinking.

What is a Discretionary Trust Will?

A Discretionary Trust Will (also called a Testamentary Trust Will) contains a discretionary trust within the body of the Will.  It is a particularly useful vehicle as it provides for the protection of assets (e.g. where a potential beneficiary faces the prospect of bankruptcy or matrimonial difficulty) and it has considerable tax advantages with respect to infant children.  It can also be used to protect social security entitlements.

What factors are relevant in
determining the type of Will you make?

The complexity or otherwise of your personal and business affairs and assets will impact on your Will choice.  Certainly having assets in trust, having remarried and being in a business relationships will impact on your estate planning and business succession planning.

How can your accountant assist?

Particularly in circumstances where you have a complex business or personal investment structure it is preferable for your solicitor to liaise with your accountant to get a complete overview of the structure and the tax implications of your contemplated Will.  The cost of involving your solicitor and accountant in this exercise is minimal when compared with potential adverse capital gains tax implications.

How often should a Will be reviewed?

Ideally a Will should be reviewed annually or certainly upon any changes within your family situation or your business circumstances.  For example, the marriage of one of your children who holds shares in your business could potentially impact on your business if that marriage failed.

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