Why Is a Will Necessary?
Having a will is crucial for several reasons.
Control Over Asset Distribution
A Will lets you specify how your assets should be distributed after death. Without a Will, your assets will be distributed according to the laws of intestacy, which might not align with your wishes.
Minimising Disputes Among Family Members
A clear and legally valid Will helps prevent disputes among your family members regarding the distribution of your estate, which can be emotionally and financially taxing.
Providing for Dependents and Loved Ones
A Will ensures that your dependents and loved ones are provided for according to your wishes. This is particularly important if you have young children, as you can also appoint a guardian for them in your Will.
Efficient Estate Administration
A Will can simplify the estate administration process, making it easier for your executor to manage and distribute your assets.
Charitable Donations
If you wish to leave a legacy through charitable donations, a Will allows you to specify the charities and the amounts you want to donate.
To know which charity is the best for you, check out this blog.
Clarity on Funeral Wishes
Although not legally binding, you can express your wishes for your funeral arrangements in your Will, guiding your family during a difficult time.
Reducing Legal Challenges
Being well-prepared will reduce the likelihood of legal challenges against your estate, which can deplete estate resources and delay distribution.
What Cannot be Included in a Will?
Certain assets can’t be included in a Will. Primarily, these are assets that do not form part of your estate, even though you have an interest in them. Here are some assets that fit into this category.
Superannuation Interests
Superannuation interests are held in trust, which is managed by the trustee of your super fund. This means the funds in your super account don’t actually belong to you. Consequently, it isn’t part of your estate and isn’t included in your Will. However, other ways exist to bequeath your superannuation to a beneficiary of your choice.
Depending on the rules of your super fund, you may nominate a beneficiary through a binding or non-binding nomination.
Non-binding nomination
A non-binding nomination for a superannuation (super) beneficiary is a direction you give to your super fund regarding who you would like to receive your super benefits upon death. However, as the name suggests, this nomination is not binding on the super fund's trustees. Here's what it entails:
Available nominees. Anyone can be chosen as a non-binding nominee. You may nominate a family member, friend or other associate.
Simplicity. Non-binding nominations have a straightforward application process. Typically, super funds only require you to fill out an online form. Non-binding nominations also don’t expire and can easily be updated.
Trustee Discretion. With a non-binding nomination, the super fund's trustees have the discretion to consider your nomination, but they are not legally bound to follow it. They will consider it and other factors when deciding who will receive your super benefits.
Consideration of Other Factors. The trustees may consider the relationship between you and the nominated beneficiaries, any dependents you have, and your personal circumstances at the time of your death.
Flexibility for Trustees. This type of nomination allows the trustees to distribute your super benefits in a way that they believe aligns with your intentions and your dependents' needs, especially if circumstances have changed since you made the nomination.
Review and Update. It's important to review and update your non-binding beneficiary nomination periodically, especially after significant life events like marriage, divorce, or childbirth, to ensure it reflects your current wishes.
Legal Implications. Unlike a binding death benefit nomination, which must be followed by the trustees as long as it is valid and in effect, a non-binding nomination does not carry the same legal weight. It's more of a guide for the trustees.
Binding nomination
A binding nomination for a superannuation beneficiary is a formal instruction you give to your super fund, specifying who should receive your super benefits upon your death. This type of nomination has several key characteristics:
Legally Binding on the Trustees. Unlike a non-binding nomination, a binding death benefit nomination is legally binding on the trustees of your super fund. If the nomination is valid, the trustees must distribute your super benefits according to your instructions.
Specific Beneficiaries. There are restrictions on who you may select as a binding nominee. You can nominate one or more dependents or your legal personal representative as beneficiaries. Dependents typically include your spouse, children, and anyone financially dependent on you at the time of your death.
Validity and Expiry. Binding nominations often have an expiry date, typically three years from the date of signing. It's important to review regularly and, if necessary, renew your binding nomination to ensure it remains valid and reflects your current wishes.
Formal Requirements. To be valid, a binding nomination must meet specific legal requirements, such as being in writing, signed and dated by you in the presence of two witnesses who are not beneficiaries, and clearly stating the proportion of benefits to be paid to each beneficiary.
Overrides Will and Non-Binding Nominations. A valid, binding nomination will override any instructions in your will or any non-binding nominations regarding the distribution of your super benefits.
Certainty and Control. This type of nomination provides certainty and control over who will receive your super benefits, which is particularly important for estate planning and ensuring your wishes are fulfilled.
Life insurance
Whether money payable under a life insurance policy can be included in your will depends on whether you have nominated a beneficiary. Having beneficiaries in mind is usually why most people take out life insurance. Therefore, most policies will be ineligible for inclusion in a Will.
The life insurance payout will form part of the testator’s estate if no beneficiary is nominated. Those funds can then be distributed through a Will. However, there are compelling reasons why this may not be advisable.
Family provision claim
If your life insurance forms part of your estate, it may be subject to a family provision claim. If a spouse, child, or dependent feels they haven’t received an adequate benefit, they can contest your will. To avoid this, it’s best to nominate your preferred beneficiary in your insurance policy and prevent the payout from forming part of your estate.
Joint tenancy assets
Joint tenancies cannot be included in a Will due to the legal nature of the joint tenancy arrangement. Here's why:
Right of Survivorship
Joint tenancy comes with a legal principle known as the "right of survivorship." This means that when one joint tenant dies, their interest in the property automatically passes to the surviving joint tenant(s), irrespective of the contents of the deceased's Will.
Bypassing the Will
Because of the right of survivorship, the property held in joint tenancy does not form part of the deceased's estate and is not subject to the terms of their Will. It passes outside the Will directly to the surviving joint tenant(s).
Contrast with Tenants in Common
This differs from a "tenancy in common," where co-owners hold individual shares in a property that can be bequeathed through their Wills. In a tenancy in common, there is no right of survivorship, and each tenant's share forms part of their estate upon death.
Drafting your Will
Creating a Will in Australia involves several key steps to ensure it is legally valid and accurately reflects your wishes. Here's a general overview of the process:
Assess Your Assets and Liabilities
Begin by making a comprehensive list of your assets (such as property, investments, superannuation, and personal items) and liabilities (like mortgages or loans). This will give you a clear picture of what you have to distribute.
Decide on Beneficiaries
Determine who you want to inherit your assets. Beneficiaries can include family members, friends, charities, or organisations.
Choose an Executor
Appoint an executor responsible for carrying out the instructions in your Will. This should be someone you trust, such as a family member, close friend, or a legal or financial professional.
Appoint Guardians for Minor Children
If you have children under 18, consider appointing a guardian to take care of them if both parents pass away.
Draft the Will
You can write your Will, use a Will kit, or seek professional assistance from a solicitor or public trustee. A solicitor or public trustee can provide expert advice, especially if your situation is complex (e.g. you have a blended family, own a business, or have significant assets).
Witnesses
For your Will to be valid, it must be signed in the presence of two witnesses who are both over 18 years old and are not beneficiaries or spouses of beneficiaries in the Will.
Store the Will Safely
Keep your Will in a safe place and inform your executor or a trusted person of its location. Some people store their Will with their solicitor, in a safe deposit box, or with a trustee company.
Regular Reviews and Updates
Review and update your Will regularly, especially after significant life events like marriage, divorce, the birth of a child, or the acquisition or disposal of substantial assets.
Making a charitable bequest
Including a bequest to one or more charities in your Will is an excellent way to support your values in life and leave a lasting legacy. However, there are specific considerations you should make to ensure your bequest remains valid and actionable.
Correct Identification of the Charity
The charity must be properly identified in the Will. This includes using the complete and accurate details of the charity, which can often be found on the charity's website or government records of registered charities. Incorrect identification can lead to the bequest failing unless rectified by a court order.
Our Charity Evaluation Checklist provides you with the necessary steps for informed charitable giving.
Specifying the Charitable Purpose
The bequest should clearly state the charitable purpose of the gift. If the charity conducts both charitable and non-charitable activities, it's necessary to specify that the bequest is for its charitable purposes to avoid ambiguity.
General vs. Specific Charitable Intent
The will should reflect whether you have a general charitable intention or if the bequest is intended for specific charitable activities. This is important in cases where the named charity has changed names or ceased to exist, as the court may redirect the funds to a similar purpose if a general charitable intent is demonstrated.
Professional Legal Assistance
Engaging a solicitor to help draft a charitable bequest can ensure that your intentions are clearly and effectively articulated, reducing the risk of future disputes or legal challenges.
Wishlist Can Help
Wishlist is helping people organise their estate planning during FREE Wills Week, February 5 - 11. This is the perfect time to arrange your first Will or revisit an existing one. Outside of Free Wills week, Safewill and Wishlist can help you draft a Will for $80. Safewill can also assist with an enduring power of attorney for your peace of mind.
