You’ve asked. We’ve delivered.
Social media and the online world play a big part in our lives these days and is often our first port of call when we seek information. When it comes to complex topics like Wills and estates and Will challenges and disputes, very often we see our clients bring to us a lot of myths and popular misunderstandings of how things work. Sometimes clients are working on advice given to them by friends and family, usually well meaning, but which are out of date and based on old laws, or just plain wrong. Sometimes people come to us having already done their own Google research and don’t realise that the laws in other countries or over east are different to ours. Often too, the answers popular online are often not written by experts and are based on either very particular personal situations or extremely general scenarios that simply don’t take into account each individual’s unique landscape and circumstances.
We’ve recently asked a group of over 24,000 West Australians for their questions when it came to Wills and estates – the questions were diverse and they were very insightful. We’ve collated them here along with our responses in the hope this helps you on the right path.
If we can give you just one piece of advice it would be this: your own particular circumstances and needs and outcomes are your own and vary greatly from person to person and from time to time – do not rely on generic Google searches or advice from others – get your own advice.
As succession lawyers who specialise in Wills and estates, we’re very keen to dispel these myths and correct the misinformation. We’re also keen to ensure that as many Australians as possible are armed with the right information, so we recently put the call out and asked you, a group of over 24,000 people for their burning estate law questions. The response was tremendous with lots of really relevant, valid and interesting questions, and here is the guide we’ve put together on the back of the things that were asked of us.
No doubt as you read the information here you’ll start to think about how this information applies to your particular circumstances. Jot down any notes as you go and the questions or considerations you’d like to discuss with us, and then simply get in touch and we’ll take it from there. We trust you enjoy the guide and that it points you in the right direction.
Before we begin …
This guide is just a taste of the different aspects of estate planning and estate administration and of course every person’s situation is unique. However, we’re confident these answers will put you on the right track with some of the information you need to make the right decisions.
It’s also important to note that the content here is based on Western Australian law and that laws do differ from State to State. This guide is based on our experience and our opinion and must be treated as just that; a guide – it is not designed to take into account your particular circumstances. If you are unsure or would like information relevant to your unique situation, simply get in touch.
Wills and Guides
Having a valid Will in place is a good idea for a great number of reasons, not least being protecting those around you and the wealth you’ve worked so hard to accumulate, the fact that a Will can help when it comes to family legacies and relationships, cost effective asset distribution, potential tax minimisation, and delivering the right outcomes when it comes to executors, trustees and guardians.
Wills are vital not just for saying who should benefit from your estate; they are vital for determining who should not benefit and why.
One of the great myths we hear time and time again is this: “I don’t need a Will, I’m married and so everything goes to my spouse automatically.” This myth persists even though it is just not true. We know why many people think this - in generations past, married couples often held all their assets jointly which meant it all went to the survivor, but these days with Super and life insurance and mortgages larger than ever, these things just don’t work.
A well-considered Will and estate plan can also protect loved ones from situations where a spouse ends up almost fighting their beloved young children and the trustee that acts for them for control of the estate, often held in a mandatory trust for the children until the children come of age. We’ve seen the most terrible situations here where the surviving spouse is unable to pay the mortgage or is forced to sell the family home as they simply cannot get control of the estate automatically held in their young children’s names.
If you have children under 16, then it is the way to appoint legal guardians. Choosing the right legal guardian for infant children is a decision that if wrong can outweigh everything else. We have seen sharks circling around infant children to try and get control of their trusts, or be legal guardians for all the wrong (financial) reasons.
You can use your Will and estate plan to make smart tax planning decisions to potentially save your beneficiaries significant sums that otherwise could be sucked out of your estate.
Ultimately, you can have your say, instead of leaving it to the winds of fate. And in doing that, you can leave a neat and decisive plan that works for all concerned, mastering the image and memory you leave behind.
If you die without a Will you are called ‘intestate’.
Recent statistics tell us that over 40% of Australians die without a Will. That remarkable and troubling statistic has held pretty firm for years, so it is apparent that it is not for lack of education that people die intestate. But whatever the reason someone chooses not to write a Will, the consequences, although not the precise path by which they will apply, are pretty predictable.
For a start, the costs of applying to the Court for Letters of Administration (where there is no Will), instead of Probate (where there is a Will) are, at the very minimum, two or three times as much as the cost of a getting a good Will in place. Where there are complexities (and we shall get to those in a minute), the costs can and usually do skyrocket. But increased legal costs are just the start of the agony that usually accompanies intestacy.
If you don’t have a Will and own more than $10,000 worth of any sorts of assets, as an intestate your estate is carved up according to the strict mandated intestacy formula that says who gets what, and this is key – you have no say in it, and the administrator of your estate cannot alter the formula either - its set in stone. The graphic here gives a good indication of the strict formula set out in the Administration Act WA (1903), dictating who your beneficiaries will be, and what share they will receive. As you can see, without a valid Will, the operation of these automatic intestacy provisions can lead to some pretty disastrous or inequitable outcomes. The Administration Act also gives the person with the greatest share of your estate the first opportunity to be the Administrator of your Estate (the equivalent of the Executor when there is a Will). Again, without a valid Will, you have no say in this at all.
The other thing to remember is that the intestacy provisions have not been updated in some 30 years - so amounts in the formula (for example $50,000 to a spouse) are based on the WA cost of living two generations ago. When the legislation was last amended, $50,000 could buy a modest house here in Perth which of course is so far from the case now. That being said, there are changes afoot – the WA Parliament is currently considering proposed amendments to the Administration Act to increase the partner’s legacy to $435,000, so watch this space!
In any event, before you question the results of intestacy created by Parliamentarians, remember that it is a legislative back up plan. You are supposed to have a Will, and as a responsible adult who owns assets of even modest value you are expected to have a Will, and the formula is really to try and create a sort of average for those that die without a Will. It is hardly ever going to match your own situation, because that is what your Will is supposed to do. Remember this when contemplating your own estate planning situation - the default position is that you do have a valid Will. The back-up plan of the Administration Act intestacy provisions is no more than a back-up plan, and not a particularly good one at that. If you don’t have a Will then the law assumes you thought the legislative back-up plan was good enough, and so that is what your loved ones are left with.
1 - Having the last word: Will making and contestation in Australia, Op. cit. p.2
One of the most common myths we hear is that your spouse will get it all regardless. It’s this myth that has created some terrible outcomes, most along the lines of people thinking why bother, there’s no need to have a Will.
Another myth we hear often is that because my Will is going to be challenged there is no point in having one in the first place. This is like saying any castle I live in is going to be attacked so I might as well live in a tent.
A myth that still circulates is that the executor of your Will can do as they please with the estate assets, including making up their own mind on who gets what, which is far from the truth. In rare circumstances some Wills are specifically drafted to give their executor very broad discretionary powers, but unless you create such a Will, your executor is bound to follow your Will to the letter.
Having the right Will in place gives you the right and best protection, and gives you the peace of mind that those closest to you will be looked after in the right way, given the powers they need to benefit the most, and has the best shot at preserving the wealth you’ve worked so hard your whole life to achieve. Needless to say, it also takes away so much of the emotional cost of not having your affairs in order.
A well-drafted Will should remain effective through the normal progression of your life, provided that the status quo remains within the bounds of what can reasonably be foreseen at the time of its preparation. Of course, it is not always possible to see the future, and a Will that covers every possible eventuality would be an impossibly large document indeed.
For this reason, we recommend reviewing your estate plan every two to three years – this does not mean it needs to be re-done, by any means, it may simply involve reading over the documents you have in place and satisfying yourself that they still reflect your wishes.
However, there are certain life events that should also trigger a review of your estate plan, and they include the following:
- Changes to your relationships or those of your children or grandchildren - this includes marriage, separation, divorce, and new partnerships. It is especially important to remember that your Will is automatically revoked when you marry or divorce – but be careful to remember that entering a new de facto relationship or ending one does not revoke your Will.
- Changes to your superannuation.
- Significant changes to your asset pool, such as acquiring property, investments, business interests, investment properties, family trusts or the like.
- Births and deaths of family members and other potential beneficiaries.
- Significant travel.
- Disability, illness, bankruptcy, medical conditions or addiction – for you or your potential beneficiaries.
- If you come into money, such as inheritance, and need to protect it or future proof it against possible relationship breakdowns, or business or financial risk or to ensure it is quarantined for your own bloodline.
The last few years have seen some notable and important changes across the legal landscape in Australia and here in Western Australia, particularly in the areas of estate planning and estate litigation.
It’s a very different landscape than it was even just 5-10 years ago, and it’s more important than ever to keep up to date to ensure you have the right protection in place.
Why such rapid change? Australian family structures, business structures and asset pools are all becoming more complex, with precedents and laws changing to keep up with changes in society. 2017 also saw a raft of changes around superannuation laws with some flow on effects when it comes to estate planning and some interesting cases around binding financial agreements that highlight the importance of the right advice. We of course also saw the landmark decision to legalise same sex marriage and with every marriage (and divorce) automatically revoking a Will the flow on effects are becoming evident.
In Western Australia we’re also seeing a marked rise in the number of people challenging or contesting an estate. We put this down to a number of factors, including the rising value in property asset pools and the rise in value of life insurance and superannuation. As asset pools continue to grow, so does the risk of a challenge as the size of the prize increases. We’ve also seen a host of very high-profile cases with well-known families contesting estates hit the front pages here in Perth - increasing awareness on the ability to challenge.
The number of intestacy cases (someone dying without a valid Will in place) is still alarmingly high here in Perth - yet another factor behind the rising numbers of estates being challenged. With intestacy so often proving both an emotional and financial nightmare to unravel the automatic beneficiary provisions set down by old and increasingly outdated laws, it’s not hard to see why so many of these are ripe for legal challenge.
Recent statistics suggest around 59% of Australians have a Will in place. Our job is to ensure the number continues to rise; to see more West Australians with the right Wills and estate planning in place – Wills that are well drafted and well considered and that make proper provision for loved ones. It’s all about leaving the right legacy in place.
It is not unusual to acquire assets after you have written a Will. A good Will would actually contemplate those, a poor one wouldn’t.
But essentially the answer to this question really depends on what your Will actually says.
For example, if a person has total assets of $310,000 and they write a Will which says “ I leave $100,000 to each of my three children and the remainder to my favourite charity ” then that Will covers all those assets at the time the Will was written fairly neatly. If the person dies 20 years later and those assets are now $1m, then the children still get only $100,000 each and the charity gets $700,000 - almost certainly not what was intended.
Again, the answer to this question depends on what your Will says and how well its written to accommodate changes in your assets. We would routinely address this by writing a Will which says “I leave 97% of my estate to my three children equally, and 3% to my favourite charity.” With this type of focus, even if you acquired millions of dollars the outcome is always the same.
It is also important to remember that different sorts of assets have different paths they follow - jointly held assets go to the survivor, for instance and super goes according to the terms of the Super fund you are a member of, and family trust assets don’t go anywhere and stay in the trust.
Unfortunately, this is one of those “how long is a piece of string” questions and is almost impossible to answer. Some organisations offer simple Wills for a few hundred bucks, some into the thousands. The cost of your Will and other estate planning documents you may need will come down to the how complex your situation is and what you’re looking to achieve.
At Solomon Hollett Lawyers, we create customised estate plans designed to meet each client’s needs and these needs vary from person to person and from time to time. As every person is unique, there is no ‘one size fits all’, however the following schedule provides indicative prices for some of our more commonly provided estate planning services.
|Will||$800 - $1,500|
|Will incorporating testamentary trust||$1,500 - $2,500|
|Enduring Power of Attorney||$350 - $500|
|Enduring Power of Guardianship||$350 - $500|
|Advance Health Directive||$400 - $600|
|Binding Death Benefit Nomination for Self-Managed Super Fund||$750 - $1,000|
|Irrevocable resolution of company or trust||$650 - $800|
|Deed of Variation of Trust||$700 - $1,200|
|Establishment of Discretionary Trust||$1,000 - $1,500|
|Establishment of Discretionary Trust and establishment of corporate trustee||$2,000 - $3,000|
All prices are exclusive of GST and disbursements (such as Landgate and ASIC searches and Landgate registration fees for Powers of Attorney). Complex estate planning, for example the creation of multiple testamentary or protective trusts, or special disability trusts for the disabled within a Will usually result in increased costs. However, in recognition that there is often an economy of scale in creating multiple documents at the same time for a client, the total fees for a suite of documents will most usually be less than the component prices of each single document.
For example, whilst a Will for an individual including a Testamentary Trust might be $2,000 plus GST, if it is for husband and wife and they are essentially mirroring each other, the combined cost for two may be only $2,500 plus GST. Naturally this is only indicative, because, as above, everyone is different.
You will be able to find law firms who provide the above services more cheaply. You will also find firms that charge far more. Some firms’ services don’t extend to the full range of the above work. It will also come down to the experience and quality of the lawyer drafting it for you and here the old adage often applies in that you get what you pay for.
If you’d like to know more about what our firm can offer, please complete our ‘Estate Planning Online’ questionnaire on our website, or simply give us a call. Once we know a little more about you, we will be in a much better position to evaluate your needs and give you a firm quote.
The simple answer? Somewhere safe. That could be a fireproof safe in your home, or a lockable filing cabinet. It might be a safety deposit box at a bank. Some of our clients choose to store their Wills at the Perth Wills Bank, which is a free service offered by the Public Trustee. You don’t need to prepare your Will with the Public Trustee to use the Wills Bank, but you do need to deposit your Will yourself (take ID with you), or a fee will apply. More information can be found at www.publictrustee.wa.gov.au
There is no register of Wills, no formal list you can go and search to see if someone has one. But wherever you keep your Will, it’s always a good idea to make sure your executor knows where to find it. You don’t need to give anybody access to your Will during your lifetime, or even to show them what it says – and that includes your executor - but they should know you have one, and where to look for it when the time comes.
The Executor and Trustee of your Will is very important. They are a person, or persons, or professional trustee company such as the Public Trustee, who you appoint to carry out your instructions precisely as contained in your Will. They must apply for a Grant of Probate of your Will which means they must prove they are who they say they are, how much the estate is worth and that the Will is valid, and then the Court issues them with their formal seal of approval. At that point, the Executor stands in your shoes, legally speaking and can deal with your assets as if they owned them themselves. Of course, they must use those powers only to give effect to your wishes in your Will but they must also use those powers to pay debts, call in assets, commence claims that need to be commenced, and a thousand other tasks.
It is a big job, even for a simple estate. For large or complex estates it can literally be a full time job that can last for years. Many Executors do it for the love of the deceased, but they can also charge a commission for their work.
The work of the Executor includes liaising with family and business associates, coordination of beneficiary gifts and distributions, opening and closing bank accounts, advertising for creditors, organising insurance, performing an inventory (that alone can take weeks in some cases), protection of assets, preparation of statements, preparation of accounting and instructing accountants to do tax returns, selling shares and real estate, calling in debts, commencing legal action against any outstanding debts, court applications for a grant of probate, and establishment of trusts as contained in the Will.
Having an executor who you trust can also allow you to deal with your digital assets such as your email accounts, passwords and logins to your bank details, online share accounts, social media, frequent flyer programs and the list goes on. Often these accounts hold precious assets or personal information so it’s so important to give proper consideration here.
The role can last decades, particularly if young children are involved. Executors can also be personally liable for incorrect distributions or mishandling of the estate, so as you can see the role is a complex one – and so important you match the right person to the role.
Similar considerations are also appropriate when choosing a Trustee, particularly when there is a trust involving young children or minors. In this scenario you’ll also need to think about who to appoint as Guardian which can be one of the hardest decisions we can help with. Often we find this decision changes over the course of a few years as children get older, their needs change, family relationships and friendships change, another key reason for updating your estate plan every few years.
For example, whilst your best friend may be the perfect guardian today, if he or she marries a person you disapprove of then they might not be the perfect guardian tomorrow. Similarly, your sister may be the perfect Trustee of your young children’s trust today, but if she falls on hard times financially tomorrow or has a significant change to her life such as moving far away from where your children call home, it may no longer be ideal.
When it comes to an Executor, Trustee or Guardian, of course choosing the right person is paramount. Considerations include the skillset, financial and legal acumen of a person, their age, whether you choose one person or two, or more, their relationships with your beneficiaries, any conflicts of interest, and also where they live - as someone living here in WA is ideal when it comes to assisting with administration.
It may be unwise to appoint someone significantly older than you, and sometimes you need to appoint two or more to work jointly - this can help reduce the labour of each person but also allows for a check and a balance on their actions so that neither does anything which is a conflict of interest. This means that sometimes it’s not the best idea to appoint a beneficiary as executor, especially if you suspect that there are going to be fights and which then may put the executor/beneficiary in a difficult position.
You cannot force someone to accept the role as executor, it is voluntary. But once a person starts down the road of dealing with assets, and so starts acting as executor, even if probate is not yet granted, they then are locked in. It is very hard to get out of being an executor once you have started dealing with the assets and you need the approval of the Court- and you can’t just appoint anyone you want in your place.
Once we meet and work through your plan, we can discuss with you who in your circle may be the best fit for the role.
An Enduring Power of Attorney is a very powerful document. It allows another person, nominated by you, to manage your financial affairs on your behalf. This includes things like your bank accounts and real estate. An Enduring Power of Attorney can be lodged at Landgate, but this is only necessary if your attorney needs to deal with any real estate on your behalf.
An Enduring Power of Guardianship, on the other hand, is a document that allows another person, nominated by you, to manage your health and lifestyle decisions on your behalf. These are decisions including where you will live, and what medical treatment you receive.
Both documents are only valid during your lifetime, so your attorneys and guardians will only have decision-making authority up until your death, at which point the executor of your Will steps in.
Enduring Powers of Attorney and Enduring Powers of Guardianship are very important tools, but sadly they are also some of the most exploited documents we see in our line of work. If not prepared properly, they can give someone else the power to quite literally take everything you have. This is particularly true of unrestricted Enduring Powers of Attorney, which can be used even while you still have capacity to make your own decisions.
You certainly can. There is a whole suite of documents involved in estate planning, including Wills, Enduring Powers of Attorney, Enduring Powers of Guardianship and Advance Health Directives. We also frequently prepare Binding Death Benefit Nominations for people with Self-Managed Super Funds, and any number of tailored documents, depending on our clients’ specific estate planning needs. For convenience, these documents are often prepared together, but each are almost always capable of standing alone.
The purpose of a Will is to govern your Estate after your death, while most other documents, including an Enduring Power of Attorney and Enduring Power of Guardianship, operate during your lifetime. An Enduring Power of Attorney operates to give someone else authority over your financial and legal affairs during your lifetime, including your bank accounts, and real estate. On the other hand, an Enduring Power of Guardianship governs lifestyle and health decisions when you have lost the capacity to make those decisions yourself – this includes where you live and what medical treatment you receive. Both an Enduring Power of Attorney and an Enduring Power of Guardianship will expire on your death, and this is where your Will steps in.
A Power of Attorney is a document by which you appoint someone to stand in your shoes, legally speaking, and make financial decisions for you. It is also known as the most abused legal instrument in Australia.
A Power of Attorney, if properly made (and there are strict formalities that must be complied with as dictated by the Guardianship and Administration Act 1990 (WA)for it to be valid) means the person, or persons if you name more than one, can use deal with your assets as if they were you.
That means it is a powerful, and potentially very dangerous document. It is also an extremely useful document, and a very practical one.
It does not allow your attorney (called the donee, as you giving the power are called the donor) to make lifestyle or medical decisions for you though – those powers are contained within separate documents, namely an Enduring Power of Guardianship and an Advance Health Directive.
So that is the essence of a Power of Attorney. But it gets more complex from here. Firstly, there are two basic types – the regular Power of Attorney and the Enduring Power of Attorney.
The difference between them is that a regular Power of Attorney ceases to work immediately you lose mental capacity, for any reason, including dementia or Alzheimer’s but also if you are in an accident and, say, in a coma.
If you lose mental capacity, only an Enduring Power of Attorney will continue to work. At this point, the Enduring Power of Attorney is unable to be revoked, as you, having lost capacity, are stuck with it (unless the Guardianship and Administration Board revoke it for you, say if it is found out the donee is using your assets for their own benefit).
But within those two types there are also variations. You can make either a regular or Enduring Power of Attorney that is unrestricted, that is it applies to anything and everything you have, or it can be conditional. It is not uncommon for someone to make a restricted Power of Attorney for instance that only covers one specifically named bank account, such as if you are travelling overseas and need your spouse or business partner or someone you trust to access it when you can’t.
Another variation is one where it only becomes operable if you are declared incapable due to lack of mental capacity (for which you need a declaration you have lost capacity by the Guardianship and Administration Board).
Unless it is the type that requires a declaration by the Guardianship and Administration Board for it to work, it is a private document; there is no register in WA and no oversight by anyone else or anybody such as the Board. And it is for this reason that it is potentially a very dangerous document.
If you appoint the wrong person, then it is a licence for them to deal with your assets when you are not looking. It can be used to clean out bank accounts, transfer real estate, sell businesses and shares, set up new bank accounts, potentially change your beneficiaries in your Super Fund, and siphon all your assets away.
For this reason, who you appoint is of utmost importance. It is not a document to be given lightly, and those who are given the power need to understand that if they misuse the assets of someone else it is fraud or just plain stealing and potentially criminal sanctions apply.
This risk does not seem to matter, if the amount of abuse of these instruments is anything to go by.
We see, often enough for it to be not unusual, abuse occurring where an elderly person has given the power to one of their children, and then the elderly donor has lost capacity. At this point the Enduring Power of Attorney cannot be revoked.
The temptation of the donee in this case is to start helping themselves to the assets of the elderly parent. It usually starts small, just using mum’s credit card to buy little extras for themselves, or using the key card to take a few hundred dollars extra from the ATM to pay for groceries, fuel and the like.
But it usually doesn’t stop there, and like a bad habit, gets worse until thousands, sometimes hundreds of thousands of dollars have been silently transferred out of the donor’s hands, with no one else knowing. This practice is so disturbingly common that it has even been given its own name - ‘strip mining’.
There many myths that have sprung up around Powers of Attorney.
We often hear people tell me that as they are the donee for example of their elderly mother’s Power of Attorney, that mum’s Will doesn’t matter, and that they will just start carving up mum’s assets now as if mum is already dead. This is the most disturbing myth of all; that just because a person has been entrusted to be the donee that they now have carte blanche to treat the assets as if they were theirs.
This cannot be further from the truth; a donee is entrusted to treat the assets only in the interests of the donor. That does not mean strip mining a vulnerable person of their assets and leaving them destitute, no matter how the donee might rationalise their behaviour.
Another myth is that the donee of the Power of Attorney is also going to be the executor of the donor’s Will. The two do not intersect and there is no relationship between them at all.
A Power of Attorney only works when the donor is alive. The minute they have died the Power of Attorney ceases to be effective, it evaporates, so to speak. It is nothing except a piece of paper at that point. An Enduring Power of Attorney is no different.
A Will is the reverse, in that during a person’s life it is just a piece of paper, that can be changed a thousand times before death if the person wishes, but once they have died it crystallises, and is then set in stone and cannot be varied except by a complex process resulting in an order of the Court.
Whilst sometimes a person makes the same person their Power of Attorney and Executor of their Will (quite usual for spouses, for instance) they are two completely separate and unique documents. Often there is good reason to appoint a different person as your Executor than the donee of your Power of Attorney.
For instance, we once wrote a Will for a client who knew their daughter was a bad donee of her Power of Attorney, and had helped herself to thousands of dollars from her mother’s bank account, but did not have the strength or courage to confront her. Her idea was that on her death, her accountant would be her executor and would then go after her daughter to try and recover the money stolen. A risky strategy, but we understood the incredible emotional difficulty of our elderly client in confronting an overbearing and violent child in her dying days.
Another myth is that once you give a Power of Attorney the donee has effectively given away their rights to make decisions. This is a surprisingly common belief; that once you give a power of attorney you have effectively signed away your own ability to make any decisions yourself. This is nonsense, unless it is an Enduring Power of Attorney and you have lost mental capacity.
A donee must work with you and for you, for your own interests at all times – they do not supplant or overtake you. If you have lost mental capacity, then you can no longer write a new power of attorney, but the Guardianship and Administration Board can review your appointment and replace them if they think they are not operating for your best interests or within the law.
Finally, all of these risks can be accommodated. The big question in making a Power of Attorney, whether it be Enduring or regular, unrestricted or limited, to one person or to three, is who you appoint.
It must be someone you trust implicitly, who will always do the right thing, act only in your best interests and not their own, and who will be ruthlessly honest and upright at all times and be able to resist temptation. Fail to appoint such a person and the risk is high indeed.
If in doubt, talk to us about the sort of Power of Attorney you need, and how it may affect you; and never be bullied into making one to someone you do not trust with your financial welfare.
In WA you can use your Will to appoint a trusted family member or friend to be the guardian of your minor children, but there are limitations. The appointment of a guardian under your Will usually only takes effect where you are the last surviving parent or guardian of the child, and it only lasts until the child reaches 18 years of age - or even younger depending on the maturity of the child.
Where the other parent of your children survives however, in most cases they will naturally assume the role of guardian of your children, even if you were not in a relationship with that other parent at the time of your death, and the children primarily lived with you. This is the case even if you appoint someone else as the guardian of your children in your Will.
What you must remember is that the Family Court has the last word on parenting, and where there is a dispute about the appointment of a guardian, or where there is no guardian appointed, any person with a ‘sufficient interest’ may apply to the Court for a parenting order. Your Will is nonetheless a powerful means of recording your wishes and it is always a good idea to take advantage of the opportunity to make those wishes known. Choosing the right legal guardian for infant children is a decision that if wrong can outweigh everything else. Sadly, we have a few instances where small children are involved where people jostle for control of the trust be appointed as legal guardians for all the wrong (financial) reasons.
When deciding who you would like to appoint as guardian of your minor children, it is important to keep practical things in mind, such as the potential guardian’s relationship to the child, their own personal circumstances (such as where they live, their own family structure and financial position), and the potential guardian’s relationship with the executor of your Will. For example, if the person you would like to nominate as guardian of your children lives overseas, this may mean that either your children or their guardian must relocate which may not be practical or possible. All of these things will need deep consideration before settling on the best candidate for guardianship.
There is no restriction on you who you can nominate as legal guardian for your minor children. But remember this: children are not property, unlike your assets, such as real estate or cash. You cannot dictate who is going to be the guardian, you can nominate people who you endorse, but ultimate it is up to the Family Court to determine if your nomination is valid.
Even if one parent has no contact, then after you die that parent can still make application to the Family Court to have custody, and they are likely to get it, unless there are extreme circumstances. The Family Court always acts in the best interests of the child, so you could set up in your Will a fighting fund to make sure the best case is put to the Family Court around your choice of guardian.
In this case, you may want to ensure that the assets you leave to your children are properly protected and that you have a good Will with a good trust in place, and if you nominate the right trustees of the kids trust then they can ensure that even though the other parent might have custody, they won’t have access to their money. Such a trust is not unusual at all and is very effective at ensuring the kids are well looked after and cared for without them losing their inheritance.
No two Wills are the same - you can write a Will which makes specific provision for a foster child, or a friend, or a charity or a family member or whoever you like.
But to make sure the foster child does not lose their inheritance it must be put into trust - and there are many kinds of trusts.
In this case, it might well be that a testamentary trust is included in a Will which says that the money is to be used for specific purposes only, e.g. education or schooling or holidays or the like, until the child becomes an adult, then they get what’s left in the trust to use themselves. Not only that, but the trust could specifically say that none of the money is to be given to the foster child’s parents or other family, for example. Trusts are capable of being very customised to say whatever you want to happen to the money. It is not unusual for such a trust to say that only a limited amount of money is to be given to the child each year until they turn 21, or 25, or even older.
In this sort of case, who you appoint as trustee of the trust is very important. If you appoint someone who is not easily able to resist the overtures of the foster child’s parents, then they may simply succumb. However, if you appoint good independent trustees who are confident in their role, they will be much more able to say no when someone comes asking for handouts.
It’s a commonly cited statistic that around 4 million Australians live with some form of disability – that’s one in five people. And when we talk disability it’s important to think broadly in that we’re talking physical disability, intellectual disability, cancer, stroke, depression, anxiety, arthritis, respiratory illness, children born on the spectrum, and the list goes on.
If you have a child or other loved one with a disability, they may need special protection after you’ve passed on.
For example, if they are unable to work, they may need more resources than your other children- what is proper and adequate for a disabled child who cannot earn an income is likely very different indeed from that you would leave a child who is earning a very good wage as a carpenter, so how you decided to split your estate between them is a key decision.
Additionally, the share you do leave a child with a disability may need its own form of protection within your Will, in a testamentary trust, to prevent it being squandered or spent unwisely, or if the disabled child is at risk of being victim of scams or predatory behaviour.
Children with severe disabilities can also benefit from the use of what is known as a special disability trust, that allows you to leave them large sums of money that will not affect their pension or disability payments they receive from the government.
There are many types of trusts - and you can customise them very greatly to make specific sorts of provisions, but care needs to be taken in drafting these to ensure they maximise the outcome for the beneficiary.
You can request a DNA test of someone you wish to include (or not include) in your Will. That does not mean the person is compelled to give you their DNA for testing, unless you are talking about paternity issues for a minor in the Family Court which is a whole different thing indeed.
This is a very tricky, and contentious area. If you suspect that a child or a parent may not be your natural relative, you should talk to us first about strategies going forward - sometimes once the cat is out of the bag it can trigger a raft of follow on issues that can balloon into major complexities and can destroy families and relationships. Needless to say - we’ve worked with many families in this situation and we’re more than happy to share our experience on how best to navigate.
Splitting your estate based on contributions is entirely within your rights when drafting your Will. Remember though, that what you leave a partner in a Will may be a very different amount that what you might want them to have if you are divorcing or terminating in the Family Court. The concept of contributions is very much looked at in Family Court proceedings, and less so in Will disputes. When you write your Will there is a presumption that the relationship with your partner is going to last forever - if the relationship is rocky or you are intending to divorce or split, then it calls for a very different approach to writing your Will.
That said, if you had, for example, an inherited beach house that you received from your mother which you wanted to go to your children, and not your partner, that is a very usual consideration to include in a Will.
However, if in doing that you are not leaving enough for your partner to survive, then you can see that even though that beach house may be a family heirloom, you are depriving your partner of the necessary and adequate provision.
You can see that there is never a one size fits all solution in how you write a Will - everyone is unique, so talk to us about how your own particular scenario can be properly dealt with.
This is a very common question and scenario. Blended families are also one of the most challenging areas of modern estate planning because you have to carefully balance provision with new partners, step-children and your own children.
Remember that you are free to leave our estate any way you wish - you can leave everything to the cat home if you want. But the Court says you have a moral obligation to provide for those who are dependent on you or in need.
So, your new partner may be in need and require you to leave them assets to make sure they are housed and fed and such, but then again, dependent on their own financial resources, you may not have to.
Similarly, if you have young children who rely on you, your obligation to provide for them is much higher than if you have adult children who are out in the world making good lives for themselves and are not reliant on you.
But ultimately, the short answer is you can use trusts to make sure you provide for both you new spouse and your own children. The big question however, is how much provision you make, and that really depends on your own personal circumstances. We regularly create Wills for blended families where each spouse leaves assets to each other in a trust, for their lifetime to make sure they are looked after, and when both of the spouses are gone, then assets split down family lines back to children. There is no one size fits all solution here, but we deal with it regularly and we’ll be able to give you the right advice when we know more about your own family dynamic.
This is one of the most misunderstood aspects of estate planning, which is worrying given that for many of us, Superannuation (Super) is one of the most significant assets we have.
We all have Superannuation. Every single one of us who has ever had a job, even a summer job picking grapes in Margaret River or who started out flipping burgers at Hungry Jacks, has Super.
Some of us through decades of hard slog have accumulated hundreds of thousands of dollars, sometimes millions, in super. Some of us have only just started our first job and have only a couple of hundred dollars, and then there are the millions of us in between.
In all cases, no matter how much you have, we are all subject to the same rules and laws that govern how your Super is treated. And the long and short of it is as follows. Your Super is NOT covered in your Will – it sits outside of your Will.
Your Super is governed almost entirely by two things – your particular Super Fund Trust Deed and the SIS Act (Superannuation Industry Supervision Act).
You may be with what is known as a Retail Fund (MLC or GESB or Colonial for example) or an Industry Fund such as Hesta, or you may have a Self Managed Fund (SMSF). Each fund is similar, but different. They are all governed by the SIS Act, but they all have different internal rules. Never assume that what your brother has in place in his fund in Melbourne is the same as what you must have in place with yours in Perth, often they will be different.
Whilst on the surface it looks like you own your Super, you don’t; it is a Trust asset, and you are merely the beneficiary of that Trust. Your Super fund has a Trustee who decides who gets your Super when you die. And that means you must nominate to your Trustee who gets your Super. If you don’t, then your Trustee makes that decision for you, having regard to what family members you leave behind. Your Trustee has quite a limited choice as to who to give it to, however.
The Trustee can only give your Super to a spouse, de facto spouse, child, someone in what is called an ‘interdependency relationship’ and your Legal Personal Representative – that is your Executor if you have a Will and your Administrator if you don’t have a Will.
So your Super is only in your Will if it goes to your Legal Personal Representative, which really only happens when you die without a spouse or defacto spouse or child or someone dependent on you.
To make matters more complex, all Super funds have a system where you can nominate who you want the Trustee to give your super to. But only some of those funds allow Binding Nominations, which effectively force your Trustee to follow your nomination. But some of those funds only allow a Binding Nomination to last for three years before it lapses, and at which point it becomes a normal nomination, which is no more than a suggestion to your Trustee who still makes the choice themselves.
Confused yet? If you have a SMSF, you can even have a non-lapsing Binding Nomination, which doesn’t expire after three years.
But until you go and look at your own fund, your own fund’s Rules and Trust Deed, how are you to know how to control your Super? Well, a good estate planning lawyer can do that for you, and can help you navigate the path through this complexity to make sure your Super is steered to the right person, and not left open to the whims of the Trustee.
Finally, to all of you who think ‘this doesn’t apply to me – I have $200 in Super, it’s not even worth thinking about’, remember this: when you signed all those forms for your first job and became a member of whatever fund/s you are a member of, you may well have also have without even realising it signed up for a life insurance policy, the premium for which comes out of your Super each month and is so small you don’t even notice it.
In this case, your life insurance may easily be worth a quarter of a million dollars, or more. You may be a lot richer (in death) than you think, and that money could be life changing to your loved ones left behind. Worryingly, it also means there is significant pot of money left behind worth fighting over.
You can hold life insurance either through your Super, or through a separate policy taken out by you personally. What happens to that life insurance will depend on how you hold it. If a policy you hold through your Super fund, it will be dealt with in the same way as your Super (see our ‘What happens to my Super?’ FAQ for more information). On the other hand, if you hold life insurance separately to your Super, it all comes down to who you have nominated on your policy.
If the policy is in your own name, the proceeds will likely be paid to your Estate, to be dealt with either according to your Will or, if you don’t have a Will, the intestacy provisions of the Administration Act WA (1903).
If the policy specifies a particular beneficiary, then the proceeds will bypass your Estate and go directly to that person. This can be problematic – for starters, it means those funds are available to any of your beneficiary’s creditors, so if you have a beneficiary who is bankrupt, they might not see a cent of the proceeds. On the other hand, if your children are your nominated beneficiaries and they are under 18 at the time of your death then the funds will be held in trust for them on the very restrictive terms of the Trustees Act WA (1962), and then the bulk of the funds will be given to them outright at 18 years of age – a very young age to come into a significant sum of money. Of course, there is no right or wrong answer but it is always important to consider the particular circumstances of your beneficiaries and think about how it might all play out before making your nomination. This is a good time to consider how a testamentary trust, established within your Will, could help you get these funds to the right people, with strong protections and on your terms.
This can be a very complex area of law. Inheritance laws vary greatly from country to country, and even across the different States within Australia. This is an important consideration when you own assets in multiple jurisdictions and is something we are dealing with more and more frequently when we assist our clients with their estate planning.
In short, the ability of your Will to govern assets held in another State or country will depend on three questions:
- What kind of asset it is
- Where the deceased live at their date of death
- Where the asset is located
An asset is categorised as moveable or immoveable, meaning it can either be transported from place to place (like cash, furniture, and personal effects), or it cannot (like land). If it is a moveable asset, then the law of domicile (where the deceased usually lived) applies. If it is an immoveable asset, the law of the land (where the asset is located) applies.
Here’s an example: Paul was born in Europe but immigrated to Melbourne with his family when he was 25 years old. Five years ago, he moved to Perth, but his parents stayed in Victoria. He has a WA Will. He has a home in Perth, but he also owns some land in Europe and left some personal items in his parents’ care. When Paul dies, his estate consists of moveable property in Melbourne and immoveable property in Perth and in Europe. Paul lives in WA, and so his WA will can cover his moveable property in Melbourne as well as his immoveable property in Perth. It cannot, however, dictate what happens to his land say in Germany. This land is governed by German law.
There is also something called an ‘International Will’ which comes about via an agreement and international treaty between countries around the world. These are unfortunately not the solution they sought to be when they were first floated in the 1970’s. Many countries have not signed up to the treaty, and for those that have, the International Will still is complex and cannot accommodate any of the unique aspects that each country might have around trusts and tax law for example.
There is a lot more to it than this, but just from the brief example above you can see that these matters can quickly become very complicated. Particularly where immoveable property is involved, unless the person drafting the Will has a thorough knowledge of the law of the overseas or even interstate jurisdiction, it is a good idea to engage a legal practitioner local to that jurisdiction to prepare the Will. This is not necessarily the case for moveable property however, which can frequently be dealt with in your WA Will, and so your first port of call where you have assets in multiple jurisdictions should be a WA expert who can give you reliable advice about what your next steps should be.
A Will is revoked by both marriage and divorce. There are ways around this, such as where your Will specifically states that it is made in contemplation of one of those events and that you intend for it to remain valid whether or not the marriage or divorce ultimately occurs.
Don’t make the mistake of putting off your estate planning until after your divorce is finalised! Separation is one of the most important times in your life to have a Will in place. Even if you have already come to a property settlement, if you have not formally divorced and you die without a Will, your former spouse will be entitled to a share of your estate. With the upcoming changes to the Administration Act WA (1903), this could be as much as the first $435,000 of your estate plus a third of what remains, or if you don’t have children, that share can be as high as $650,000 plus half of what remains.
Similarly, if you have already separated and settled up your financial affairs, but not yet divorced, the old Will still applies (and may still say it leaves all to the spouse!)
And of course, it is equally important where you do have a Will in place to consider making a new one shortly after separation rather than waiting until the divorce is finalised, given that it is highly likely that your wishes as to the distribution of your estate will have changed.
Ex-spouses can claim against your estate. But the good news is, they can only do so if they were being maintained by you, or were entitled to be maintained. So if you have settled up your financial affairs in a Family Court property settlement, and you are not paying spousal maintenance, then the ex-spouse should have no claim.
Be careful not to confuse spousal maintenance with child maintenance - they are not the same thing, and just because you are paying child maintenance to the ex-spouse that is not spousal maintenance and does not give rise to a claim by the ex-spouse. Of course, if you don’t make proper provision for the kids who are receiving the maintenance, they may claim against your estate (and will likely be successful in such a claim) and there is every chance that the person who will run that claim on their behalf would be the ex-spouse.
Trusts are an integral part of Wills and estate law. They are used to protect assets but also to grow wealth, and can have tax benefits too.
Essentially a trust is merely when you leave an assert or money to someone to hold for the benefit of another person.
For example, if I leave my house to my children who are only 5 years old, the law says they cannot own property until they are 18. So I must leave the house to them to be held on trust for them by someone else until they turn 18, at which time the trustee of the trust transfer the house to them then.
The trustee’s job is to keep it maintained, and look after it, perhaps rent it out, or let my children live in it, until they turn 18 and make those decisions themselves.
You can see that who you appoint as a trustee in this sort of example is very important. Put the wrong person in the role and the property may be at risk.
There are many kinds and many ways they operate. They can be simple, or devilishly complex; they can run for a short time or for almost a century; they can have companies as trustees or beneficiaries or individuals, and they can be customised to make all kinds of different provisions for different people.
In its simplest terms, a testamentary trust is no more than a trust set up on death. Despite this simplicity though, they are extremely useful and valuable things. Why might you want a testamentary trust? Well the answer to that is not simple - there are a raft of reasons but essentially it is because of either asset protection or tax effectiveness, or both.
The testamentary trust can be used for children, or adults, at even the same time. They are one of the greatest devices for adult children who have high risk behavioural characteristics, such as those with addiction issues.
Another very common use is for children. The law says a child (that is anyone under 18) cannot legally inherit anything. So any inheritance must be held on trust until he or she (or they) turn 18. Bitter experience tells us though that 18 is a very high-risk age to inherit even a modest estate. An inheritance of even $10,000 can be dangerous; it can all be evaporated in a matter of days, if the child is unused to having a lump sum. We have seen young beneficiaries spend hundreds of thousands of dollars in a few short years without actually acquiring any assets by the end of their run. Often what they have acquired though are drug or alcohol habits, gambling problems and a grinding remorse for wasting their inheritance which follows them for the rest of their lives.
Without a testamentary trust set up to mandate that the age of inheritance is 21, or 25, or 40, or 80 or whatever age you might decide is appropriate (and different people mature at different times of course) then 18 it is.
You also get to choose the Trustees of the trust; you might decide that the mother of your children is not the right choice because she has wild spending habits of her own and the risk the trust is used to add to her ever increasing shoe collection is just too high, and you might want to put your sister in charge as she is frugal and takes great joy in meticulous mathematical activities like investing well in property and shares.
It cannot be overstated how important it is to choose the right trustees for a trust. We all know those sorts of people who can resist anything except to temptation, why would you put such a person in charge of the trust? It is like putting the fox in charge of the henhouse. For this reason it is also generally a good idea to appoint two trustees, so that there is a check and a balance on each other; abuse or misuse of trustees powers, or simple laziness, is much less common where a trustee must have another trustee sign off on each and every transaction.
Testamentary trusts are also tax effective. In the case of the two young children, the testamentary trust can distribute approximately $18,000 each per year, without any tax coming out. If it were a normal discretionary (often called a Family Trust) such as is set up during life, only approximately $500 can be distributed to each child per year before tax is assessed. This benefit alone is worth every penny and the costs of setting up a testamentary trust are repaid manyfold in just the first year it operates.
Testamentary trusts can also be used for those with disabilities. A special sort of trust called a protective or special disability trust can be established to look after a disabled person. The Social Security Act allows up to $500,000 to be put into a special disability trust for a person who meets the criteria of disabled and that amount is not factored into any means test when assessing their government benefits. It can also be made so that the money in that trust flows back to other beneficiaries when the disabled person dies, such as the able-bodied brothers and sisters of the disabled.
Testamentary trusts can even be set up for bankrupts. If you worry that your spouse or child is going to be bankrupt or is in a high-risk job where they may be sued, the protection of the trust is vital. It allows a person to inherit the benefit of the money without actually owning it.
In Australia we have what is called ‘testamentary freedom’, which is the ability to give our estate to whomever we wish. However, the law also recognises that we may have some moral obligations to provide for particular people. Consequently, when writing your Will you must go through this analysis and balance your emotional wishes with practical wishes, and you must analyse who you have in your family that morally there may be a duty to provide for. In doing this analysis, it is vital to know who can actually challenge your Will in WA. They are:
- Married spouses
- De facto spouses
- Ex-spouses (if you were maintaining them)
- Grandchildren (if you were maintaining them or if their parent, your child, has died before you)
Stepchildren have a very unusual sort of position - they can challenge like a grandchild if they were being maintained by the deceased, or in another way, unique to stepchildren, if the deceased stepparent had themselves inherited the stepchild’s own parent’s assets.
Notably absent are siblings, cousins, carers, friends and everyone else. If they are not on the above list, they cannot challenge under the Family Provision Act. This is different in some other States in Australia where people outside this circle can challenge. If a person has some sort of other claim, such as you owed them money, then that is to be run in the usual manner as a creditor, it has nothing to do with inheritance or the Will.
It is an unfortunate fact that we’re seeing more and more Wills being challenged and we’re seeing estate litigation well and truly on the rise, with adult children the most common claimants in Will contests, arising from ‘need, greed, or entitlement’.
The Court’s role in a family provision claim is, where appropriate, to apportion the money differently than in the Will, and it cannot heal old wounds or reprimand one family member for past conduct. The purpose of these claims is to rectify situations where the deceased has made an unjust Will, where the deceased was fond and foolish, as opposed to wise and just, which is the legal test applied.
And in doing so, the Court looks at all the factors, including the totality of the relationship of the deceased to the parties, the amount of the estate, the competing claims of all parties and what is adequate and proper in the circumstances of this particular case and this family at this time.
Just because a Will says ‘I leave everything to my two children equally’ and which at the time was well considered and well drafted, does not mean that 10 years later that Will is still just and wise, as in that time one child might have won the national lottery and the other might be living on the streets. The Court is there to redress this deficiency, on the basis that had the deceased known all the facts and done a fresh Will, they surely would have made greater provision for the destitute child over the rich one.
Unfortunately, many claims are not made with such clear-cut moral certainty as the one above. They are made by disaffected beneficiaries who have grudges or long-standing beefs with other beneficiaries. This can manifest in significant and costly fights over things that might not have high material value, but have priceless sentimental value. War medals, grandfather clocks and old wrist watches, diaries, family portraits and jewellery are chief amongst these. Wills can, and should, cover these things if it is known they are of great meaning to certain beneficiaries.
It is also very hard for beneficiaries to understand that a Will might be wise and just and won’t be disturbed by the Court, even though it is unequal. There is no law which says beneficiaries must be equal, and yet there is a strong sense, particularly amongst children of deceased parents, that they should all be equal.
Because of this, there is a strong belief within society at large that unless there are good reasons for making unequal provision to children, it should be equal. The Court does not argue with that - it is up to the challenger to show the Will is not wise and justly made, not up to the defendants show it is.
Having the last word: Will making and contestation in Australia, Op. cit. p3
You can leave your worldly wealth to anyone you like. You can leave it all to a performance artist to heap into a pile and burn it, if you so desire.
But surrounding this freedom is a moral obligation to make sure family and those in need or dependent on you are looked after. So if you have a child for instance who is dependent on you and you leave them nothing, they are very likely to challenge and be successful. However, if you write in your Will that you want nothing to go to your brother, then because they are not able to challenge your Will (see above FAQ ‘Who Can Challenge My Will’) then that provision will be upheld.
The short answer here is you can’t. But your parents can.
They can write Wills that exclude that child, or make only modest provision for them. Importantly, much depends on how wealthy that excluded child is, the nature of the relationship with the parents, how estranged they are, whether this is any disentitling conduct or a host of other reasons that are unique to each family.
In this sort of situation we also often advise the Will writers to create statutory declarations setting out the true story of why they are not leaving anything to that child, so that at least their story can be told when they are gone.
Another strategy is for the parents to consider some asset restructuring, to either give assets away before they die, or transfer them into trusts or other ways to make sure the amount they leave in their Will is less. Superannuation can be an extremely effective tool for such scenarios here.
As each family and the assets they hold are unique, speak to us about developing some strategies here to create the best outcome.
A common request from our clients is to make their Will ‘watertight.’ Unfortunately, no Will can ever be watertight, but what we can do is provide you with a Will that is well written and well considered to meet your circumstances and desired outcomes, and write it in such a way as to significantly minimise the appetite for, and likelihood of a challenge.
When we are writing your Will we will encourage you to be the ‘the wise and just testator,’ not the ‘fond and foolish one’. We’ll help you consider carefully all those potential claimants and make proper provision for them. This is different for everyone and also changes over time.
If you are cutting someone out who you think may challenge, we’ll help you take extra precautions. In these cases some of the Wills we write go in to some detail to set out the reasons why they are an unworthy candidate for your estate. There are also cases where clients have separate statutory declarations drawn up where they swear to the truth of the situation and have those statutory declarations kept with the original Will.
We encourage all our clients to have the discussion with us about updating their Will and estate planning every three years or so, or sooner if there is a material event as an old Will has much less chance of resisting challenge than a fresh one.
Resolve issues if you can during life, rather than leaving them to explode after death. Be open and frank with your beneficiaries, have meaningful adult discussions with them about your intentions and their expectations, often they simply don’t match, but after both sides are able to explain their views, middle ground can often be found to keep everyone satisfied.
Ensure you obtain legal advice from a lawyer with strong knowledge of and experience within this area of the law. Estates law has become increasingly complicated over the last decade or so and it’s important to have someone on your side who specialises in Wills and estates and is up to date with the latest precedents, trends, cases and legislation.
This is a very common request and question, and one for which there is an easy answer.
The answer is trusts. Trusts can be used here to ensure that money leapfrogs a generation and goes down to the next, but who you appoint as trustees is very important as well as making sure that the children themselves are not needy or dependent and so have claims of their own against your Will that might succeed.
This is a balancing act, making sure proper and adequate provision is made for your beneficiaries and it is always a question of evaluating who is in the spectrum of possible claimants.
It is also very common for parents to want to make sure their children, or grandchildren, don’t get inheritances that will end up in the pockets of their spouses, and again the answer is trusts. They can be used to make sure that partners and spouses don’t get access to it, especially via divorces or terminations of relationships.
This is not unusual, but needs some delicate balancing to make sure things even out.
The start is usually to record the existence of the loans or gifts, and whether they are to be repaid, or taken into account in making provision in a Will, or not. Without any good evidence of the gift or loan being made, we often see families fight over this as it comes down to ‘he said/she said’. Good documentation is the key and can be a very effective way to ensure everyone starts on the same page.
As experienced estate planning lawyers, we see, with quite alarming regularity, the same mistakes made over and over again.
Some of them are understandable, but some have their genesis in nothing more than myth, superstition and urban legend. All of them are usually disastrous. Here are our top six:
- Believing you don’t need a Will because you’re married.This one is disarmingly common. We see many people who are genuinely shocked to hear that if they died without a Will, their darling spouse would get only one third of their assets, and their children the rest. The common misconception is that a spouse automatically gets the lot. We think this myth has penetrated so deeply into society because previous generations owned simple assets and held them equally simply with a spouse. But this myth is shattered in our modern society where assets and family landscapes of dependent children and grandchildren, stepchildren and de facto spouses and former spouses are commonplace. The actual consequences of dying intestate (without a Will) are many and complex and stretch well beyond the above scenario.
- Giving someone a nominal amount in your Will defeats their ability to challenge your will.It doesn’t. What matters is whether the amount you have left them is adequate and proper in all the circumstances, which is a very subjective test with many considerations that vary from person to person and change from time to time.
- Believing that you don’t need a Will because you have no assets.Very commonly held belief mainly of young adults, new into the workforce and with little savings. So often the young forget about their Super and life insurance. You may have only just started your first real job and have a few bucks in Superannuation accumulated, but there is a better than fair chance you also have a life insurance policy attached to that super fund you may not have even realised you opted into by ticking a box on the Super forms. $250,000 in life insurance is very common, but it can be much more. Also, if you die unexpectedly because of injuries sustained at work or in an accident then you can probably add a whole lot more into your estate.
- Not understanding estate versus non estate assets. The very common error here is thinking you own something when you don’t, and also not dealing properly with those assets. Classically, these are trust assets, either things in a family trust or superannuation. Whilst to the world at large it appears you own those assets, you don’t, and they have to be dealt with by other means, such as making binding death benefit nominations for your super or changing control of the family trust. A Will simply does not touch them, unless specific and very deliberate action is taken to channel those assets into a Will. Likewise, many of us own our homes and other assets jointly and depending on what sort of joint ownership determines if your half is in or outside the Will.
- Including a clause in your Will that if anyone challenges, they get nothing.If only this worked! it has no weight at all unfortunately. The rationale is that the right to challenge a Will is given to a person by Parliament (via the Family Provision Act 1972) and you cannot take that right away.
- That a $50 DIY Will from the newsagent or a generic online template is perfectly fine.As Master Sanderson of the WA Supreme Court has repeatedly said, that is “the curse of the homemade Will”. They are more often than not ambiguous and inadequate. The legal costs of fixing them up and dealing with the fallout after death are usually orders of magnitude more than the costs of having a good lawyer written Will done in the first place – it is one of the greatest false economies of all time – not only the monetary costs that have to come from the estate (so reducing the amount for the beneficiaries) but the human costs of stress, long drawn out processes and disputes and often Court battles.
There really is no such thing as a ‘traditional family’ anymore, with blended families and stepfamilies more common than not. This has clear implications for estate planning, and in particular we see more and more clients asking us what their obligations are in relation to their stepchildren, and how to protect any inheritance they wish to give their natural children, where there is only a limited relationship with the stepchildren, or alternatively how to protect their stepchildren’s inheritance from the other parent.
As you will see under our heading ‘Who can challenge my Will?’, stepchildren can make a claim against an estate if they were being maintained by the deceased, or if the deceased stepparent had themselves inherited the stepchild’s own parent’s assets. If you have no significant relationship with your stepchildren, and they are not dependent on you, then in most cases you are not restricted from leaving them out of your Will, but you must be careful in how you go about it. What becomes tricky, is where you do want to leave something to your stepchildren, but you also need to ensure that your stepchildren’s’ inheritance is protected from their surviving parent. The best way to do this is via a discretionary testamentary trust.
This really depends on firstly, whether there is a Will, and secondly, what that Will says.
Good Wills make sure they accommodate these sorts of things, but poor Wills can fall well short and leave head scratching ambiguity. That can lead to the parties having to seek the intervention of the Court to interpret the proper meaning of the Will, which can be very expensive indeed.
If there are no Wills, then there could be a very unpleasant outcome, depending on which family members remain alive (see FAQ ‘What happens if I die without a Will).
When a person dies, it will almost always be necessary to obtain either a Grant of Probate or a Grant of Letters of Administration to deal with their estate. Although they are different things, the ultimate effect of both a Grant of Probate and a Grant of Letters of Administration are the same: they are, in essence, a licence to the executor or administrator to deal with the deceased’s assets on the deceased’s behalf.
The key difference is that a Grant of Probate is what you are seeking where the deceased had a Will, and a Grant of Letters of Administration is sought where there is no valid Will.
The person entitled to obtain a Grant of Probate is the person(s) named as Executors in the Will, while the person with the greatest entitlement to obtain a Grant of Letters of Administration where there is no Will is the person who is entitled to the greatest share of the intestate estate.
Preparation of a comprehensive affidavit is essential in these situations, and all the more so where there is no Will in place. The Court’s role is to ensure, as much as is possible, that any Grant they make is to the most appropriate person(s) and in accordance with the genuine last Will and testament of the deceased. There are a lot of hoops to jump through, and any mistake or incomplete information will inevitably lead to a requisition from the Court requiring further information or clarification before they will make the relevant Grant – and this can mean delays, and possible extra costs. It really does pay to have an expert assist you in this, to avoid delays and give you the best chance of a speedy Grant to enable you to get on with your important role as executor or administrator.
Yes you can. You can also decide to service your own car, or build your own house. But if you don’t have the skills and knowledge, your car won’t run and your house will fall down around your ears.
Recent statistics tell us that about 40% of all Australians die without a Will. But at some point, all of us have at least started to consider what a Will is and how to go about getting one done.
And in that thought process most of us have considered, at least for a minute or two, scouring online for a good-looking template, or going down to the newsagent and buying a Will Kit for $40 and doing it yourself. ‘How hard can it be?’ we ask.
The reality is that so many of these homemade Wills end up in Court. The money saved by not getting it done by a lawyer and doing it yourself is mere pocket change compared to the costs of the dispute that quickly eat into the size of the estate.
Sadly too, we have seen precious few of these homemade Wills that actually properly reflect what the Will maker (the testator) actually thought they were achieving.
Ambiguous language, quasi legalistic terms that have doubtful (or worse) meaning, phrases such as ‘next of kin’ or ‘issue’ which mean different things to different people, trying to gift away assets you don’t actually own (the main example being the family home owned as joint tenants with someone else) trying to leave superannuation and life insurance in your Will (reader beware, this is the most common fatal error in Will drafting) and trying to write people out of Wills who ought not be entitled, are just some of the things that go wrong.
If you are in a second marriage or de facto relationship or you and your spouse have children from a former relationship, basically all bets are off – your Will is complex, immediately – just by virtue of how your family is made up. Do not attempt to write your own Will.
To everyone else, it is possible, but risky.
Occasionally one of these homemade Wills actually passes the first test and is able to be admitted to probate. All too often however there are spelling errors or different coloured pens used to sign by different witnesses, amendments and crossings out, sometimes staple marks, changes of date and names, occasionally coffee or red wine stains. Each of these things makes the homemade Will that much harder to get admitted to probate, which invariably means higher legal costs.
But even if there are no drafting errors, the real costs come where disenfranchised family members dispute the Will because it was drafted poorly – accurately, perhaps, but without proper consideration of the law.
These costs are much more than mere money, which can run in the hundreds of thousands of dollars depending on the capacity or appetite of the family to fight. The toll often includes the emotional costs of ruined relationships, families torn apart and disharmony that can never be healed.
Sadly, we see second and third generations of the same family disputing every Will that comes up in an attempt to redress the first badly drafted or careless Will that caused the upset, decades ago. This is something that could have been completely avoided or enormously reduced at least, if only the Will drafter had taken some sound legal advice in the first place.
We can understand the rationale behind wanting to draft your own Will. Firstly, it is a private document and so to divulge your true situation to a lawyer requires great trust and confidence in the lawyer. Secondly, the sense that ‘why pay for something I can do myself’ attitude is prevalent, and it’s dangerous.
Successful and smart estate planning, likewise, needs an expert on side. Unless you are an estate planning lawyer, the subtleties and complexities that are just below the surface that make up the everyday landscape of Wills and estates are something of a mystery. Small changes to Wills can make enormous changes to the result; a good Will is an object of crafted perfection and high precision, which has covered as many of the ‘what if’s’ as possible, and yet is readable and understandable.
This of course does not even take into consideration any of the enormous benefits that you can access in your estate planning by considering things such as testamentary trusts, protective trusts and special provisions to prevent bankrupt beneficiaries or divorcing children losing their inheritance.
Well considered estate planning is the key. Estate planning includes Wills, usually as the starting point (but rarely do it yourself Wills) but includes not only a raft of other legal instruments but includes a holistic approach to working out your affairs and what happens to your assets and who will look after your loved ones when you die.
An estate plan involves a root and branch analysis of your assets, your family commitments, your risks and how to accommodate them all into a plan where what you have can be left to those you leave behind in the right manner, the right amounts and at the right time.
We start with an analysis of your assets, and dividing them into what are called ‘estate’ and ‘non estate assets. They must all be treated carefully.
For example, you might think you own your home, and maybe you do if you don’t have a mortgage over it (which if you do also should be factored into how you deal with that when working out how to deal with the family home).
But many times we see, especially in married couples, that the home is owned as joint tenants. That means the survivor of two automatically gets the home, no questions asked. It does not fall into the Will, until the second of the two dies. This is especially a tricky issue for those on their second marriage or with step-children and children from other relationships.
In these circumstances, you may need to leave your half of the family home first to your new spouse, for them to live in for the rest of their days, and when they have finished with it, only then do your own kids get your half. A ‘Life Interest’ this is often called, but in reality is a form of testamentary trust established in a Will. But if the house is held in joint tenancy then this cannot happen.
In this case, it is not unusual for us to advise clients to change the tenancy of the house, from joint tenants to tenants in common, and when that is done, then half the house can be left in a Will or a life interest created.
Superannuation and life insurance, which we pretty much all have, must be looked at carefully.
Suffice to say, super is not in your Will. It is a trust asset, and can be controlled, but only by taking very particular steps that vary according to what super fund you are a member of, and what family members you leave behind and how dependent they are on you.
Life insurance itself is a common thing to look at, and more specifically, whether you need more life insurance to ensure you leave something other than debts to your dependents. We often refer our clients to financial planners who can arrange better life insurance to make sure spouses and children are properly looked after on death.
There are also touchy and delicate subjects to address in making Wills. It is not uncommon for a person to have a child who has special needs, a disability or high-risk factors such as a gambling or drug problem. More often than not we’re dealing with families with complex rifts between their children and again this is something that has to be considered and accommodated. These beneficiaries cannot just be written out of Wills: careful consideration to each one and their needs must be given, or else the risk of a challenge to the Will, upsetting everything, is likely.
With a good estate planning lawyer by your side, your Will can accomplish miracles; provision for a special needs beneficiary can be made in a way which does not affect their disability pension, or a testamentary trust to protect a spendthrift beneficiary so that they do not burn through their whole inheritance in a heartbeat. Testamentary trusts can also approach the idea of a beneficiary getting divorced, and special provisions can be included to protect an inheritance from so called ‘gold diggers’.
So ultimately, yes, you can make a Will kit or online template type Will. You can also go for the cheap and cheery mobile Wills type legal outfit where a business charges you only a few hundred dollars and can only afford an hour or so to change names on a templated document. We would caution against any of these options. The prospects of your Will actually working as you thought it can be low and the prospects of it costing a lot to fix can be high. Caveat emptor, so goes the famous Latin phrase; buyer beware.
Having the last word: Will making and contestation in Australia, Op. cit. p.2
So, what are the next steps?
No doubt this guide has offered up a number of answers for you, but it has probably provoked a few questions too. The next step from here is to get in touch with us for an initial chat – remembering we offer a free 15 minute phone call to all new clients or on a new matter. Often the phone call is enough to put your mind at ease your Will and estate plan is still up to date, or we can identify the gaps you may have, or what you need to consider if it’s your first Will. When we work with you we’ll clearly outline the steps and the process involved, and be able to provide you with a fixed fee for the work.
We promise to make the process as easy and painless as possible. We’re experts in our field, our job is to know the law inside and out and best apply it to your unique situation. What we also promise is the peace of mind and sense of relief you’ll feel when this is all in place is palpable, it’s what we hear from our clients’ day in and day out.
Getting the right Will and the right estate plan in place is easy with us, and will afford true peace of mind in knowing that what you’ve worked so hard to build up is protected, in the right hands over the generations ahead and that your legacy is in place.
Getting the right advice from the get-go when it comes to an estate challenge or contest is also as important, so if you have any questions on this front just get in touch.
And why choose to work with Solomon Hollett Lawyers? We know our stuff, this is an area we specialise in. We’re highly regarded and recognised in our field amongst our peers; last year alone winning four awards by the highly respected national Doyle’s Guide, finalists in both the Best Law Firm and Best Lawyer categories in Western Australia for Wills and estates. If you’d like to hear from our clients, simply visit our website for a number of scenarios and testimonials on the sorts of work we’ve undertaken and the results we’ve achieved.
We look forward to working with you.
And again – just a reminder – the content here is a guide, and our opinion, and must be treated as just that, a guide. The content is based on Western Australian law only, and as we’ve pointed out, laws differ significantly from state to state within Australia. The content is subject to change, and is general in nature, it may not take into account your particular circumstances. If you are unsure about any of the information within these guides or would like more information, please don’t hesitate to get in touch.