Matters to consider when thinking about your Will
1. Who will be my Executor?
You can appoint anyone you like to be your executor, but the person you select should have most of the characteristics listed at the bullet points.
You should also appoint a substitute Executor in case your Executor passes away before you do, or later on changes their mind about acting as your executor, or can't act as your Executor for reason for example of poor physical or mental health or moving away.
You can appoint a child under 18 in your Will, but note that the child can't act as your Executor until he or she has reached the age of 18.
Ideally, your Executor should possess the following characteristics:
You should also appoint a substitute Executor in case your Executor passes away before you do, or later on changes their mind about acting as your executor, or can't act as your Executor for reason for example of poor physical or mental health or moving away.
You can appoint a child under 18 in your Will, but note that the child can't act as your Executor until he or she has reached the age of 18.
Ideally, your Executor should possess the following characteristics:
- Aged 18 or over. Not older than yourself.
- No mental incapacity and in reasonable physical health.
- Absolutely trustworthy.
- Energetic, efficient and willing to act as Executor.
- Not easily swayed, but open to reason.
- Knowledge of your financial and family affairs.
- Knowledge and understanding of how to deal with private and public institutions, people and money.
- Lives nearby to you.
2. Who do I want to leave my assets to?
It is not entirely true that you can leave your assets to anyone you like.
In New South Wales, Family Provision Laws may prevent this. While you can benefit whomsoever you wish in your Will, if there is an objection to your Will on your death by a member of your family or other dependent, it is possible that your intentions will not be carried out. Society expects spouses and long-term partners to provide for each other and for parents should support their children, and vice versa, particularly where family members are not financially independent of the deceased or are struggling to meet their needs.
If you really feel that a close family member or dependent should not benefit from your Will, steps can be taken to avoid that person taking a benefit, but those steps are not without the risk that they will not work. They may succeed if a court agrees with your position and you have made your reasons clear. Your solicitor can advise you here.
In most Wills, typically, beneficiaries are left a portion of your assets in parts or percentages. It is not advisable to leave specific assets to your beneficiaries unless you are certain those assets will not be sold or otherwise alienated before your death - for example, your house may need to be sold to cover costs of residential care for yourself so leaving your house to a beneficiary might not be a good idea.
Small items of mainly sentimental value may be best listed and divided up outside the Will, but again, it depends on your circumstances whether this is the best course to take.
You should definitely seek legal advice if you intend to leave life interests or rights of occupation or residence to others in your fixed assets upon your death.
If you wish to leave a legacy to a charity, this is entirely possible in a Will. When selecting a charity, you may wish to specify for what purpose your legacy can be used or not used. You may also wish to benefit a particular branch of the charity or the charity as a whole.
In New South Wales, Family Provision Laws may prevent this. While you can benefit whomsoever you wish in your Will, if there is an objection to your Will on your death by a member of your family or other dependent, it is possible that your intentions will not be carried out. Society expects spouses and long-term partners to provide for each other and for parents should support their children, and vice versa, particularly where family members are not financially independent of the deceased or are struggling to meet their needs.
If you really feel that a close family member or dependent should not benefit from your Will, steps can be taken to avoid that person taking a benefit, but those steps are not without the risk that they will not work. They may succeed if a court agrees with your position and you have made your reasons clear. Your solicitor can advise you here.
In most Wills, typically, beneficiaries are left a portion of your assets in parts or percentages. It is not advisable to leave specific assets to your beneficiaries unless you are certain those assets will not be sold or otherwise alienated before your death - for example, your house may need to be sold to cover costs of residential care for yourself so leaving your house to a beneficiary might not be a good idea.
Small items of mainly sentimental value may be best listed and divided up outside the Will, but again, it depends on your circumstances whether this is the best course to take.
You should definitely seek legal advice if you intend to leave life interests or rights of occupation or residence to others in your fixed assets upon your death.
If you wish to leave a legacy to a charity, this is entirely possible in a Will. When selecting a charity, you may wish to specify for what purpose your legacy can be used or not used. You may also wish to benefit a particular branch of the charity or the charity as a whole.
3. What assets can I actually leave in my Will?
It is useful to draw up a list of your assets before instructing your solicitor.
You must distinguish assets:
Only the first category are assets you can validly deal with in your NSW Will. Category 2 assets may be dealt with as well at times under the same Will, but usually this is not recommended.
Non-Estate Assets (generally)
Superannuation and Life Insurance death benefits are normally paid by way of a binding, non-revocable death benefit nomination to the person you appoint in the policy document. If the appointment is non-binding and/or non-revocable, the trustee of the fund has the discretion to elect to whom those benefits will be paid to. It is worthwhile checking your insurance and superannuation policies to make sure who you have nominated and whether the nomination is binding and non-revocable.
It is important to distinguish joint tenants from tenants in common as these mean very different things and consequently have different rights and obligations attached to the property over which these rights are registered. A joint asset can be any asset you own together with another person or persons where you do not own the asset in parts, but each of the owners owns the whole of the asset. An asset held by tenants in common is an asset that effectively has been split into parts with each owner owning a part expressed as a percentage in that asset. For example, three tenants in common may own parts in a single property expressed as 50%+30%+20% = 100%.
Spouses will typically own most of their assets jointly, but need to check this is correct when giving their solicitors instructions. Other assets you own jointly with others such as a joint bank account, or jointly held shares, are joint assets and can't be dealt with without the knowledge and agreement of the other joint owner(s).
Assets you hold (alone or together with others) on behalf of others are trust assets. You cannot be the owner of trust assets even if you are a trustee or a beneficiary. It is the legal vehicle of the trust itself that owns the assets, not the persons involved with it. Trustees and beneficiaries of trust assets cannot normally leave these assets to anyone in a Will.
All trusts have an expiry date and trust deeds should contain directions as to what will happen to remaining trust assets at the expiry date. Until that time, or until the assets of the trust are actually handed over to trust beneficiaries, the trust assets belongs to the trust.
You must distinguish assets:
- You own outright i.e. sole assets or assets held by you as a tenant in common;
- You own outright, but have been dealt with under another Will (for example, assets held in a different country and dealt with under a Will executed in that country).
- Owned together with others i.e assets held by you and others as joint tenants;
- Held either alone or together with others for the benefit of others i.e. trust assets;
- Held by a company of which you may consider yourself to be the owner i.e. company assets.
Only the first category are assets you can validly deal with in your NSW Will. Category 2 assets may be dealt with as well at times under the same Will, but usually this is not recommended.
Non-Estate Assets (generally)
- Assets held as a joint tenant (e.g. with a spouse - typically the family home)
- Superannuation (typically it is a trust asset - there are exceptions)
- Life-insurance death benefits (also typically a trust asset)
- Funeral insurance payouts
- Compensation payouts
- Discretionary Trust Assets (e.g. Family Trust)
- Company Assets
Superannuation and Life Insurance death benefits are normally paid by way of a binding, non-revocable death benefit nomination to the person you appoint in the policy document. If the appointment is non-binding and/or non-revocable, the trustee of the fund has the discretion to elect to whom those benefits will be paid to. It is worthwhile checking your insurance and superannuation policies to make sure who you have nominated and whether the nomination is binding and non-revocable.
It is important to distinguish joint tenants from tenants in common as these mean very different things and consequently have different rights and obligations attached to the property over which these rights are registered. A joint asset can be any asset you own together with another person or persons where you do not own the asset in parts, but each of the owners owns the whole of the asset. An asset held by tenants in common is an asset that effectively has been split into parts with each owner owning a part expressed as a percentage in that asset. For example, three tenants in common may own parts in a single property expressed as 50%+30%+20% = 100%.
Spouses will typically own most of their assets jointly, but need to check this is correct when giving their solicitors instructions. Other assets you own jointly with others such as a joint bank account, or jointly held shares, are joint assets and can't be dealt with without the knowledge and agreement of the other joint owner(s).
Assets you hold (alone or together with others) on behalf of others are trust assets. You cannot be the owner of trust assets even if you are a trustee or a beneficiary. It is the legal vehicle of the trust itself that owns the assets, not the persons involved with it. Trustees and beneficiaries of trust assets cannot normally leave these assets to anyone in a Will.
All trusts have an expiry date and trust deeds should contain directions as to what will happen to remaining trust assets at the expiry date. Until that time, or until the assets of the trust are actually handed over to trust beneficiaries, the trust assets belongs to the trust.
4. Should I create a trust in my Will?
If your Will leaves assets to minor or financially dependent children, or if you believe your beneficiaries will need assistance in dealing with their inheritance for reason of mental or physical handicap, drug, alcohol or gambling addiction, you are probably well placed to think about creating a Trust Will.
With a Trust Will, the Will-maker appoints a Trustee in their Will (who may or may not be the Executor) and gives directions to that Trustee, also in the Will, as to how their assets are to be dealt with for the benefit of the beneficiaries of the so-called testamentary trust. For example, if you were to leave your assets to two minor children, and you appoint a cousin as a trustee, you can direct your cousin, in your Will, to invest the proceeds of your estate should you die while your children are still dependent on you, into particular investments. There are many variations on this type of Will, but the basic idea is that a responsible person (the Trustee) is appointed to oversea the assets of the estate so that they last until the need to stop supporting the beneficiaries from your estate ends - be it for 1 year, 5 years or 30 years or more.
Trust Wills can be complex and are not advised for small or relatively simple estates, but it is possible to incorporate simpler trust provisions into an otherwise simple will, for example, to benefit minor children and where you are fairly certain that the guardian of the children and/or estate trustee will apply the assets of your estate to the sole benefit of your children and you trust the guardian and/or trustee to make decisions about how and where to invest the estate assets on behalf of your children.
When creating a trust Will, it is advisable to also seek financial and tax advice from a financial planner or accountant to make sure it is worthwhile to create trust provisions in your Will. For example, beneficiaries that are not Australian citizens would be taxed at a higher rate on any benefits they receive from a testamentary trust.
With a Trust Will, the Will-maker appoints a Trustee in their Will (who may or may not be the Executor) and gives directions to that Trustee, also in the Will, as to how their assets are to be dealt with for the benefit of the beneficiaries of the so-called testamentary trust. For example, if you were to leave your assets to two minor children, and you appoint a cousin as a trustee, you can direct your cousin, in your Will, to invest the proceeds of your estate should you die while your children are still dependent on you, into particular investments. There are many variations on this type of Will, but the basic idea is that a responsible person (the Trustee) is appointed to oversea the assets of the estate so that they last until the need to stop supporting the beneficiaries from your estate ends - be it for 1 year, 5 years or 30 years or more.
Trust Wills can be complex and are not advised for small or relatively simple estates, but it is possible to incorporate simpler trust provisions into an otherwise simple will, for example, to benefit minor children and where you are fairly certain that the guardian of the children and/or estate trustee will apply the assets of your estate to the sole benefit of your children and you trust the guardian and/or trustee to make decisions about how and where to invest the estate assets on behalf of your children.
When creating a trust Will, it is advisable to also seek financial and tax advice from a financial planner or accountant to make sure it is worthwhile to create trust provisions in your Will. For example, beneficiaries that are not Australian citizens would be taxed at a higher rate on any benefits they receive from a testamentary trust.
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