WILL MAKING 101 – 7 things you need to think about when making your Will

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We’ve put together 7 things you need to think about when making your Will. They are:

  1. Executors
  2. Guardians
  3. Duty to provide for those who would reasonably expect to benefit
  4. What can be given under a Will and what might be best to leave out
  5. Passing control of trust and company structures
  6. How do I give to members of my blended family?
  7. Has my Will been properly prepared and signed? What if it’s not valid?

Intro

If you want your assets and belongings to be distributed in a particular way upon your death, you must have a Will.

A Will is a legal document which details your wishes regarding the distribution of your assets and belongings after you die.

It also allows you to appoint an executor to distribute your assets according to your wishes.

Some of the reasons why you may consider having a Will include:

  • it allows you have a say on how your assets and belongings will be distributed;
  • it allows your assets to be transferred smoothly on your death;
  • if you have children, it provides security for your children’s future;
  • if you have children under 18 when you die, it allows you to nominate a guardian.

Will Making Freedom

  • must be made by you personally, voluntarily and without undue influence
  • can be kept confidential

1. Executors

Without a Will, you will have no say on who administers your estate upon your death.

Your executors are those responsible to distribute your estate in accordance with the directions in your Will.

Your executors usually appoint lawyers to advise and help them.

Think about:

  • First preferred Executor(s) (e.g. my spouse)
  • Acting jointly?
  • Age
  • Capacity
  • Relationship to each other
  • Reserve executor(s)

2. Guardians

Without a Will, you will have no say on who is appointed as guardian of your children if they are under 18 years of age when you die.

Generally, a Will maker’s surviving spouse / partner will have sole guardianship upon the death of one parent.

Think about:

  • Gift to guardian(s)?
  • Executors and trustees to advance monies for children
  • Joint appointments – conditional or continuing?
  • Guardian guidelines

3. Understanding your duty to provide for those who would reasonably expect to benefit from your estate

Section 41(1) Succession Act 1981 (Qld)

If a person dies whether with a Will (or without a Will) and, as a result, adequate provision is not made from the estate for the proper maintenance and support of that person’s spouse, child or dependant, the court may, in its discretion, on application by or on behalf of such person(s), order that such provision as the court thinks fit shall be made out of the estate for such person(s).

The only individuals who are entitled to bring Family Provision Applications are:

  • spouses (which includes de facto spouses and in some cases former spouses);
  • children (which includes step-children); or

For a dependant to be successful, the court must first be satisfied “that it is proper that some provision should be made for the dependant”, having regard to:

  • “the extent to which the dependant was being maintained or supported by the deceased person before the deceased person’s death,
  • the need of the dependant for the continuance of that maintenance or support and
  • the circumstances of the case.” Section 41(1A) Succession Act 1981.

In some circumstances, the only effective way of managing the risk of a Family Provision claim is to adequately provide for these persons in your Will.

However, reasons a Family Provision claim may be unsuccessful include:

  • dis-entitling conduct
  • adequate or substantial inter vivos provision
  • insufficient estate assets
  • strategic property holding

4. Understanding what you can give under your Will and what might be best to leave out

Without a Will, your assets will be distributed according to the laws of intestacy. In Queensland these are contained in the Succession Act 1981.

Section 8(1) – (4) Succession Act 1981

A person may dispose by Will:

  • any property to which the Will maker is entitled at the time of their death (not at the date of the Will)
  • any property to which the personal representative of the Will maker becomes entitled, in their capacityas personal representative (including after the Will maker’s death)

Think about:

  • Cash
  • Real estate
  • Shares/units in public companies/listed trusts
  • Pets, Motor vehicles, jewellery, art
  • Assets outside Australia
  • Shares in private (Pty Ltd) companies
  • All property wherever situated – do you need an international Will?
  • Property holding arrangements (joint tenants or tenants in common)
  • Liabilities – do you have a solvent estate?
  • Adequate descriptions of assets
  • Forgiveness of loans or debts (CGT implications)
  • Leaving out long lists of gifts – risk of ademption

Things that may not immediately form part of your estate on your death include:

  • Superannuation in a Retail Fund or a Self Managed Super Fund (“SMSF”)
  • Life Insurance proceeds
  • Property used in a business – subject to partnership or other arrangements?

Think about:

  • A review of the Register (folder) of SMSF core documents (trust deed, variations, and recent accounts, including member details)
  • Binding Death Benefit Nominations – must be valid
  • Life insurance policy owner same as superannuation?
  • Buy/sell or business succession arrangements

Section 8(5) Succession Act 1981

A person may not dispose by Will of property of which the person is trustee at the time of the person’s death.

Think about:

  • Trust assets
  • Company assets

5. Passing control of trust and company structures

Trusts

Family Trusts / Unit Trusts / Hybrid Trusts / Fixed Trusts

Think about:

  • A review of the Trust Deed (and any variations), latest end-of-year financials for the Trust and the Unit-holders Register for Unit Trusts
  • Trustee manages trust property
  • Appointor controls the trustee
  • Trust property – any unpaid present entitlements?

Put in Notes (not on slide):

  • Appointor depends on the trust terms.
    • Often the next Appointor of the Trust will be the person(s) who act(s) as the executor(s) or administrator(s) of the estate of the last surviving Appointor
    • Can be nominated in the Will of the last Appointor to die (if trust deed allows)
  • UPE are akin to “loans” repayable on demand to the beneficiaries of the Trust.  If there are significant UPE, this can greatly reduce the actual Trust assets.

Shareholding in private (Pty Ltd) companies

Think about:

  • A review of the Constitution, Shareholders/JV Agreement (if any) and the most recent financial statements for the company
  • Special rights attaching to different classes of shares
  • Directors manage the company (and company assets)
  • Shareholders appoint the directors

6. How do I give to members of my blended family?

If you have had or are undergoing a divorce or separation, think about:

  • court sanctioned property settlement
  • remaining outstanding property settlement matters
  • any ongoing maintenance orders or arrangements
  • child support

These things may affect the enforceability of your Will and/or the risk of a Family Provision claim.

If you have started a new marriage or de facto relationship, think about:

  • how to provide for your spouse
  • how to provide for any children of a previous relationship
  • Mutual Wills with a Will Contract with your spouse / partner / or another
  • Deed of Family Arrangement if you have adult children / dependants

7. Has my Will been properly prepared and signed?

You can prepare your own Will, however, you run the risk of not complying with the formal requirements and the relevant law relating to Wills, leaving your loved ones with costly legal proceedings.

Section 10 Succession Act 1981

  • A Will must be—
    • in writing; and
    • signed by—
      • the testator; or
      • someone else, in the presence of and at the direction of the testator.
  • The signature must be made or acknowledged by the testator in the presence of 2 or more witnesses present at the same time.
  • At least 2 of the witnesses must attest and sign the Will in the presence of the testator, but not necessarily in the presence of each other.
  • The signature of the testator must be made with the intention of executing the Will.

What happens if I don’t have a valid Will?

Make a new one while you have capacity.

Section 18 Succession Act 1981

The Court may dispense with execution requirements for a Will, or an alteration or revocation of a Will.  Where:

  • A document or part of a document purports to state the testamentary intentions of a deceased person
  • The court is satisfied that the person intended the document or part to form their Will, or an alteration to or a full or partial revocation of their Will

These can be a costly exercise for your executors, and with costs to be born by the estate, your beneficiaries may ultimately lose out.

If your Will is not valid, and not validated by the Court, your estate may be distributed according to:

  • your previous Will (if any)
  • the rules of intestacy (as if you had no Will)

You should review and update your Will as your circumstances change over time.

You may consider updating your Will if:

  • you have a child/children;
  • you have a grandchild/grandchildren;
  • you marry or divorce;
  • your spouse or partner dies;
  • death of the executor or beneficiary;
  • home or property changes.

Have further questions about making your Will?

Contact our Business Development Team on (07) 3252 0011 to arrange an appointment and learn about our 1,2,3 Will-making process or have an initial consultation with one of our Brisbane Estate and Elder lawyers regarding complex Wills.
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This presentation was made by Kathleen Watt (Senior Associate) in a public webinar.