What should I consider when making a Will?

When you die, any assets you own in your personal name form what we call your ‘estate’.

Preparing a Will allows you to provide instructions as to who will administer your estate, take care of your children, receive gifts, and ultimately, who your beneficiaries will be.  As part of the estate planning process, there are a few things you should consider before preparing and signing a new Will.

1. Who should be your Executor?

The Executor of your Will (who becomes the Trustee of your estate) is the person who attends to administering your estate after your death.  They are required to ensure the terms of your Will are upheld.  Depending on the complexity of the estate, and whether or not a Grant of Probate is required, Executors frequently engage lawyers to assist with the estate administration process.

You can appoint up to four Executors, as well as additional substitute Executors.  Your substitute Executors only act if your original Executors are unable to act (for example, due to lack of capacity or being outside of Australia) or have passed away before you.  Your Executor should be someone you trust to handle your affairs after your death and uphold your wishes as expressed in your Will. We also recommend considering a back-up Executor/s in case your first-appointed Executor/s are unable to act at the time you pass away.

If you fail to appoint an Executor in your Will, then the responsibility typically passes to the primary beneficiary of your estate.  An application to the Court would be required to appoint them as Executor, so it is certainly best to ensure you include sufficient options in your Will.

2. What assets and liabilities will you leave behind?

In order to prepare a Will that adequately provides for your loved ones, you need to have a sound understanding of your assets and liabilities.  This allows your lawyer to calculate what your net estate might be worth, if any liabilities will need to be paid out after your death, and if your circumstances warrant the inclusion of protective structures such as Testamentary (Family Will) Trusts.  Assets generally include bank accounts, real estate, investments such as shares or term deposits, motor vehicles and can include superannuation and life insurance.

Important:  superannuation and life insurance do not automatically form part of your estate.  Your lawyer will discuss the role that Binding Death Benefit Nominations, or Superannuation Proceeds Trusts, can play in your estate planning.

A common issue that arises as part of this process is identifying how real estate property is held.  When couples purchase property, the default manner of holding is ‘joint proprietors’, however some may elect to own property as ‘Tenants in Common’.  So what’s the difference?

a) If you hold property as Joint Proprietors (commonly referred to as Joint Tenants) then both parties hold an equal share in the property and when the first owner passes away, their share will pass automatically to the surviving owner by survivorship.  A property will therefore not form part of your estate to be administered pursuant to your Will.

b) If you hold property as Tenants in Common, then each person on Title owns their distinct share in the property and there is no right to survivorship.  Instead, on the death of one of the owners, their share does not pass to the surviving owner/s and instead falls into their Estate to be distributed either in accordance with the terms of their Will or the laws of intestacy (if the owner did not leave a valid Will).

3. Who will take on the care of your children?

If you have children under the age of 18 years at the time you make your Will, you should appoint someone to be their Guardian, in case both parents pass away prior to the child turning 18.

If one parent passes away, the surviving parent ordinarily becomes the sole legal Guardian of the biological children of the relationship.  However, if both parents pass away, the process of appointing a legal guardian for your children can be made easier if the Will provides guidance as to your wishes.  Whilst a difficult decision to make, working through who you wish to appoint as Guardians and the guidance you might wish to provide them is worthwhile addressing when working through your estate planning. For more information on appointing Guardians, click here.

4. Are there any gifts you wish to make?

You may wish to leave specific items to loved ones in your Will.  Common gifts include jewellery, motor vehicles, monetary gifts, furniture, personal effects, family heirlooms and collectibles.

You may also wish to consider whether you would like to include a bequest to a charity (or multiple charities) you have supported during your lifetime.  A bequest could be made as a specific monetary amount, a percentage of your estate or the entirety of your estate.  Significant bequests to charitable organisations should only be made after taking into account any obligation you owe to any particular persons to ensure that adequate provision is still made in your Will for loved ones.

5. Do you have a legal or moral obligation to provide for someone?

Whilst you generally have the freedom to distribute your assets by your Will as you see fit, the law provides that there are certain people you should provide for in your Will.  Generally this includes your spouse, your children or a person who is a member of your household who has some form of dependency upon you.  Depending on your circumstances, this obligation may extend to include stepchildren, grandchildren or other people who are financially dependent on you.

A person can contest your Will if they consider they have not been sufficiently provided for (they are known as an ‘eligible person’).  If you are unsure if you should include or exclude someone as a beneficiary, it is best to seek professional advice to avoid the risk of costly estate litigation after your death.

6. Do you have preferences for your funeral or other personal wishes?

A statement can be incorporated into your Will which expresses your preference for burial or cremation, whether or not you want your body to be made available for organ donation or scientific purposes and can include your wishes for funeral arrangements.

7. Do you have complex circumstances that may require more advanced estate planning?

If any of the following circumstances apply to you, it is recommended you engage a lawyer to ensure your complex estate planning needs are dealt with appropriately:

• You have a blended family (i.e. you and/or your partner have children from a previous relationship, or have been married previously);
• You are over the age of 80 years or have been diagnosed with a medical condition which may impact your capacity to prepare a Will;
• You have a Self-Managed Superannuation Fund;
• One or more of the people you wish to include in your Will may be considered vulnerable or exposed to asset risk (i.e. they are in receipt of a government pension, run their own business, have a history of substance abuse or otherwise require support to handle their finances);
• You run a business, have an existing Trust, or are a Director of a Company; and/or
• You wish to exclude someone as a beneficiary from your Will.

8. What else should I consider?

You may also wish to prepare Enduring Powers of Attorney and Appointments of Medical Treatment Decision Makers.  These documents can play a very important part in your ongoing care should you unexpectedly suffer a decline in your decision making capacity.

Preparing these documents can make it simple for you to appoint loved ones or trusted friends to make financial, personal and medical decisions on your behalf.  To find out more about Enduring Powers of Attorney and Appointments of Medical Treatment Decision Makers, click here.