Wills

Each Will must contain an executor. An executor is the person who will essentially put into effect the actions you have requested happen on your death, such as selling or transferring your home and dividing your estate among your beneficiaries.

You should give careful consideration as to who you would like to appoint as executor to your Will, for instance:

1. The appointment needs to be given to a person of suitable character. It is usual for persons to appoint a family member or a friend. Regardless of who you appoint you should consider the suitability of the person and whether they would be willing to act for you in this capacity;
2. You should consider the age of your executor, for instance if they are considerably older than you it is more likely that you will outlive them, or in the alternative if you appoint a young person, and you die before that person reaches the age of 18, the Court will not grant them power to act as your executor.
3. You should also consider their character/ability, for instance are they capable of carrying out your wishes, is your estate complex? Would your executor have the ability to manage it, in the event of your death.
4. You should also consider whether the person has any psychological issues or addictions, such as gambling addiction or alcoholism, that may interfere with their ability to carry out the onerous task of acting as executor.

You should also consider a substitute executor in the event that your executor dies before you.

Often testators will appoint their spouse as executor, however, you could suffer a fatal accident together, then you have an invalid Will without an executor.

You should also give consideration to the location of your executor. It is clearly more beneficial to have a person living close to you, or at least in the same state/country. Otherwise your executor may need to appoint a Power of Attorney to another person in order carry out your wishes.

Usually the executor and trustee are the same person, but they can be very different roles and can have different responsibilities.

An executor is appointed by you in your Will to obtain Grant of Probate and administer the estate i.e. pay the debts, and collect and distribute assets.

However, quite often, especially in the case of a family with children under the age of 18, the Will may include a ‘Testamentary Trust’. A Testamentary Trust is a Trust set out in your Will and established after your death. It is used in the event that your beneficiaries are children at the time you draft your Will and are too young to inherit. The Testamentary Trust will only come into operation if you die before your children reach a certain age and it will have the effect of directing your executor to establish a Trust for your Children, whereby your children do not inherit until they reach a certain age such as 21 or 25. The Testamentary Trust will require a person be appointed as Trustee, i.e. the person who will manage the Trust. In such instance you may wish to appoint your executor as Trustee, or you may wish to appoint another person as Trustee of the Trust, as such the executor and the trustee will be two different appointments.

If you die before your children reach the age of 18 it is obvious that someone will need to care for them. When a parent dies the other parent automatically becomes guardian of the children, however, if the worst were to happen and you and your spouse were to pass away at the same time or a time close together, someone needs to care for the children.

It is important therefore to name a guardian for the children in your Will. If you fail to appoint a guardian in your Will the Court can make that decision for you. The Court doesn’t look in any detail into the suitability of such a guardian and may appoint anyone who applies for the job. In addition, failing to appoint a guardian could lead to arguments between your respective families as to who would care for the children.

If you have children under the age of 18 you should speak to whoever you would like to appoint as Guardian should the worst happen. You should then name that person in your Will. It is best to choose a backup of Guardian, should your original appointed Guardian die before you.

There is nothing to stop you choosing the same person as executor, trustee and guardian, but again you should think of the age of the person you are choosing, their suitability and their location.

A testamentary trust is a trust that is established by your Will. There is no separate trust deed. There is nothing to prevent one of beneficiaries also being a trustee, however, for many reasons it may be better to appoint an independent Trustee.

The trust will only come into existence if you die in circumstance as set out in your Will. For instance, if you provide in your Will that your children will only inherit once they turn 25 and you die before your children reach the age of 25, then the trust will be established. However, if your children have already surpassed 25 at the time of your death then there is no reason for the Trust to be created upon your death.

Testamentary trusts are a useful tool for persons with beneficiaries under a certain age of maturity, or indeed a beneficiary suffering from an affliction which leads you to believe that were they to inherit at a certain point they may squander the inheritance, or a beneficiary who may not be able to manage an inheritance due to a disability.

Appropriate powers must be given to Trustees to carry out the terms of the trust created by the Will, and it is quite common to request in the Will that the Trustee obtain independent financial advice in order to manage the Trust fund.

The length of time required to draft a Will varies on the size of your estate and the number of beneficiaries. A simple Will can be drafted relatively quickly. It will consist of a one-hour consultation during which we will take your instructions and provide you with advice in relation to the options open to you. Often during this consultation we raise points that our clients had not previously thought of, and it may change their decisions in relation to how the Will should be drafted. Usually the whole process from start to finish, including any amendments you’d like to make can be done within the week. However, we can draft an instant Will for you, which can be done within 2-4 hours.

Who you chose as your beneficiaries is your decision. However, you should be aware that if a certain family member expected to inherit and does not, they may make a Family Provision Claim to the Court. Persons who can make a family provision claim include a spouse, child or other Dependants. If you specifically wish to exclude someone from the Will you need to state the reasons for that exclusion in the Will.

If you own a property which is occupied by yourself and your partner, but your partner has no legal right to it, you can leave a direction in your Will that your partner can stay there for as long as he or she wants to after your death, but they cannot sell the property, and if they leave the property or pass away the executor of your Will must sell the property and divide the profits between your children. This is called a grant of a life interest.

A Mutual Will is essentially the making of separate Wills by two persons (usually spouses or partners) providing for reciprocal benefits for each other.

However, a Mutual Will does not necessarily create a contractual right, and there is little to prevent a change of the Will at any stage.

However, a “Mutual Will Contract”, once entered into, means that neither party may alter or revoke their Will during their mutual lifetimes without notice to the other party, and they cannot change their Will at all after the death of the first party.

If either party to the Mutual Will Contract was to breach the agreement, the new Will would still be valid but the beneficiaries of the original Will would have rights of action in law and in equity.

When you take out Superannuation you may be asked to make a ‘Binding Death Nomination’. This has the effect that when you die your Superannuation benefit is provided to a Beneficiary of your choosing.

It is important to note that this benefit does not automatically fall into your estate and on your death, the Trustee of the Superfund will pay any benefit due to the Beneficiary you nominated (provided they fall into the legislated category of ‘Dependents’… there are special rules relating to who is a Dependant). The Trustee does not need to wait for Probate to be granted and will immediately make the payment upon your death. This may be advantageous for married couples as it may provide a much-needed source of income to your spouse whilst waiting for the estate to be dealt with.

You should also be aware that for many funds, a Binding Death Nomination has to be renewed every 3 years as the notice ceases to have effect 3 years (or a shorter period as determined by the governing rules of the fund) after the nomination was first signed. It is important therefore to keep your Binding Death Nomination updated.

If the Binding Death Nomination has expired, it is the decision of your Trustee whether to pay the benefit to the last person nominated or to pay it to your estate. In the event that it is paid to your estate, your Beneficiaries will need to wait until Probate has been granted before any death benefit can be distributed with the remainder of your assets.

It is also important for you to note that not every person is entitled to be listed as your Beneficiary for the purposes of your superfund. The Trustee is only permitted to pay any death benefit to a spouse, your children, any person financially dependent on you and any person you were having an interdependent relationship with at the time of your death (i.e. any person that lived with you and supported you or received support from you). If you wish your superfund to be provided to a friend, or anyone outside this category, you must instruct your superfund to pay any benefit to your estate and you must draft a Will, naming that person as a Beneficiary.

If you have a self-managed superfund, it is very likely that you are also a Trustee of the fund. With a self-managed superfund, there must be two Trustees at any one time. This means that on your death another Trustee must be appointed. Unless the trust has a Corporate Trustee.

In the event of your death (if you are a Trustee) the fund must appoint a new Trustee within 6 months. The continuing Trustee (which would usually be your spouse) would normally appoint the new Trustee.

In the absence of a Binding Death Benefit Nomination, the Trustee has the sole discretion as to whom the death benefit is paid, provided it is paid to one of your Dependants or to your estate. This is important as your Spouse could essentially pay all the monies to a Dependant of their choosing or indeed to themselves.

It is important that the control of the superannuation fund is passed on to persons who will carry out the deceased member’s wishes.