Planning for what happens when you pass away or become incapacitated is crucial for protecting your loved ones, sparing them from financial and administrative burdens during their time of grief.
Your Will allows you to dictate how your possessions and investments are distributed. It should also include enduring powers of attorney, guardianship, and an advance healthcare directive in case you are unable to manage your own affairs towards the end of your life.
A valid and up-to-date Will, signed by two witnesses, is at the core of your estate planning Perth. Having only one witness could render your Will invalid.
You need to appoint an executor to carry out your wishes. This can be a family member, friend, solicitor, or the state trustee or guardian.
Remember, the role of an executor can be demanding, especially if the Will is contested, which might influence your choice.
In Australia, around 50% of Wills are contested, and about 75% of these cases result in a settlement.
The executor’s duties also include locating the Will, organizing the funeral, notifying relevant parties of the death, and applying for probate.
Intestate Issues
Writing a Will can be challenging for many. It’s estimated that about 60% of Australians do not have a valid Will.
While it’s understandable—many people avoid thinking about their own death, and some believe they don’t have enough assets to justify a Will—not having one can cause significant problems.
If you die without a valid Will, you are considered to have died intestate, and your estate will be distributed according to a statutory order, which varies slightly between states.
Typically, the estate is first distributed to the surviving spouse. However, if you have children from a previous marriage, the estate may be divided between the spouse and the children.
Is Probate Necessary?
If there is a valid Will, probate may need to be granted by the Supreme Court in certain circumstances. Probate rules vary by state, but generally, if the deceased had assets solely in their name worth more than $50,000, probate is often required.
Probate is a court order that confirms the validity of the Will and grants the executors the right to administer the estate.
For the family home, if it’s owned as ‘joint tenants’ between spouses, your share automatically transfers to your surviving spouse upon death and does not form part of the estate.
However, if the house is solely in your name or owned as ‘tenants in common,’ probate will likely be necessary. This process usually takes about four weeks.
Unless you have specific reasons for choosing ‘tenants in common’ ownership, it might be worth considering a switch to ‘joint tenants’ to avoid probate issues.
Probate is also required if there is a refund on an accommodation bond from an aged care facility.
Super considerations
When planning your affairs, it’s crucial to consider what will happen to your superannuation.
To ensure your superannuation and any associated life insurance are distributed according to your wishes, it’s wise to complete a ‘binding death benefit nomination’ with your super fund. You can nominate one or more dependants to receive your super funds, or you can choose to have the funds paid to your legal representative to be distributed according to your Will.
If a death benefit is paid to a dependant, it can be received as either a lump sum or an income stream. However, if it’s paid to someone who is not a dependant, it must be paid as a lump sum.
If your spouse has predeceased you and you have adult children, they may have to pay up to 32% tax on the taxable component of your super death benefit unless a ‘testamentary trust’ is established by the Will, naming them as beneficiaries.
A testamentary trust, established by a Will and activated upon death, helps protect investments, cash, and other valuable assets for beneficiaries.
Rights of Beneficiaries
Beneficiaries of Wills have certain rights, including the right to be informed of the Will and any potential delays. They are also entitled to contest or challenge the Will and to know if other parties have contested it.
If you want to ensure your estate is handled according to your wishes, feel free to contact us.
Unexpected Outcomes
David passed away in his early 60s, leaving his estate to his wife Sally as per his Will. Initially, this seemed sensible. However, after a few years, Sally remarried, and the marriage did not last. When Sally died 20 years later, her estate was shared not only with her and David’s children but also with her estranged second husband.
A testamentary trust, specifying that the beneficiaries of both David’s and Sally’s estates were to be only blood relatives, could have prevented this issue.
i Success rate of contesting a will | Will & Estate Lawyers
ii If you don’t, who will? 12 million Australians have no estate plans | Finder