Why have a Will and Testament ?
There is a lot to consider when looking at estate planning apart from the disbursement of assets; there are considerations such as organ donation, permission to perform of medical procedures, power of attorneys and enduring guardianship – it really is a mine field – however we all should have a will – here is a basic look at what a will can do for you and a brief explanation of its role within your estate.
As with all important matters due care must be applied and professional advise should be sought when preparing important documents and making important decisions
A will is a written document that sets out how the will-maker wants their property and possessions (their estate) divided after their death. Many people first come across the law relating to wills when they have to make a will of their own. For others, it is when they are appointed executors or trustees of an estate and have to manage the affairs of someone who has died.
It is a positive process of creating a legal document in which you formally specify:
§ the people who matter to you and how you want to provide for them when you die (the beneficiaries)
§ any specific items you wish to give
§ the person you trust to carry out the instructions in your will (the executor)
§ any other instructions you may have (for example, specifying whether you would like to be buried or cremated).
There are many formal requirements to be aware of when you are making, changing or contesting a will.
WHY MAKE A WILL?
Everyone over 18 should have a will. It is the only way to make sure your estate is distributed in the way you wish. A will may also make life easier for family and friends after your death. When someone dies, all existing arrangements with or on behalf of that person – for example withdrawals from accounts or transactions carried out under a Power of Attorney usually cease. Accounts in a sole name are usually frozen on death except for payment of funeral expenses. Having a will may make it easier for beneficiaries to gain access to funds, particularly in a small estate where probate may not be required.
WHO CAN MAKE A WILL?
Anyone over 18 years of age can make a will, and everyone should have one. A will made by a minor (a person under 18) is not valid unless it is made in contemplation of a marriage that takes place, the minor is married or the court has approved the will under the relevant Act.
DOES A LAWYER HAVE TO DRAFT A WILL?
There are no formal requirements about who can draft a will. You can write one yourself. However, your will must be signed and witnessed formally, otherwise it may be considered invalid. In practice, most people use a lawyer, the Public Trustee or a private trustee company to draw up their wills. Unless your will is very simple, it is best not to write your own will. It is too late to correct a mistake after you have died.
There is no fixed fee for the preparation of a will. The price varies with the size of the organization that draws it up and the complexity of the will.
The State Trustee and Guardian or a private trustee company can also prepare a will for you.
For instance thestate trustee in NSW will draft free of charge if they are appointed executor of it. They then charge a fee or a commission to cover the legal work involved in administering the estate after the will-maker dies.
It is important to remember that, if your will is incorrectly worded, no-one may know until it is too late – after you have died. For the relatively low cost of having a will prepared professionally, you may save your estate a much higher cost: the legal fees if your will has to be interpreted or if it is contested.
MAKING A VALID WILL
A will should comply with the legal requirements of executing. Unless each and every one of the requirements below is met when making a will, the court may not consider the will to be valid and the estate will be dealt with as if there were no will (as an intestate estate). The requirements for making a valid will are:
§ it must be in writing, either typed or handwritten
§ it must be signed by the will-maker or by some other person in the presence of and at the direction of the will-maker
§ the will-maker's signature must be made or acknowledged in the presence of two or more witnesses, present at the same time
§ at least two of those witnesses attest (witness) and sign the will in the presence of the will-maker (but not necessarily in the presence of each other)
§ the signature of the will-maker or person signing at the direction of, and in the presence of the will-maker must be made with the intention of executing the will.
THINGS TO CONSIDER
Before you start making your own will, or go to see a lawyer, you need to consider the following points:
§ What do you own (your estate)?
§ Who do you want to leave your estate to?
§ Who will be the executor of your will?
§ Do you want to leave directions about the payment of debts and funeral expenses?
§ Should you set up a trust or leave gifts directly?
§ Do you have any concerns about who will be a guardian for your children?
§ What sort of burial or cremation arrangements do you want?
WHAT IS IN YOUR ESTATE?
Your estate may include things such as your house, land, car, bank accounts, jewellery, clothes, household goods and investments. Proceeds from life insurance policies and superannuation may be assets in your estate, but that will depend on the wording of the policy or superannuation trust deed. Remember, where the deceased and another person own property as joint tenants, the surviving co-owner automatically owns the deceased's share regardless of a will
WHO DO YOU WANT TO LEAVE YOUR ESTATE TO?
Beneficiaries can be individuals or organisations such as charities.
WHO SHOULD BE YOUR EXECUTOR?
It is important to appoint someone you trust because they will be responsible for seeing that your wishes are carried out and that your body is disposed of in the manner you wish. Usually a major beneficiary is nominated unless the beneficiary is under 18 years of age or mentally incapable of acting.
It is a good idea to also name an alternative executor to take responsibility in case your first executor dies before you or shortly afterwards, or is incapable mentally or physically of acting as your executor
APPOINTING A GUARDIAN OF YOUR INFANT CHILDREN
You may wish to appoint a guardian if the other parent is deceased. If there is a dispute about who will be guardian, the court will make the appointment. Whatever you write in your will may be taken into consideration by the court.
THE EXECUTOR'S ROLE IN ADMINISTERING THE ESTATE
An executor is responsible for:
§ finding the will
§ arranging for disposal of the body
§ getting the death certificate from the Registry of Births, Deaths and Marriages
§ ascertaining the deceased's assets and liabilities
§ assessing the value of the deceased's assets
§ obtaining probate if required
§ paying the deceased's debts, income tax, duties and funeral expenses
§ distributing the assets according to the terms of the will.
A grant of probate can only be made if there is a will. However, often the family does not know whether the deceased left a will or where it can be found.
Before an executor applies for probate, they will have to carry out some basic investigation work such as locating the deceased's assets and liabilities, assessing the value of their assets, and finding out what asset-holding institutions require before they will release funds.
WHAT IS PROBATE?
Probate is an order from the Supreme Court stating that the will has been proved to be the last valid will of the deceased, and allowing an executor to collect and distribute the estate in accordance with the terms of the will.
Probate will always be necessary if the deceased died owning real estate except if it is owned as joint tenants. Generally, when an estate is very small (less than $15,000) and uncomplicated, or when all assets are held as joint tenancies, there is no need to obtain probate or letters of administration. The need for a grant of probate also depends on the form in which the assets are held. Some asset holders will require you to produce a grant of probate before they will release assets above a certain value.
IF THERE IS NO WILL
If no will is found, it is usually presumed the deceased died intestate, that is, without a will.
If you do die without a will (known as 'intestate'), your estate does not automatically pass to the State as is often assumed. The Succession Act 2006) sets out the order in which your eligible relatives will inherit your estate. It is only if you die without eligible relatives that your estate will pass to the State.
It is always better to make a will – that way you make your own decisions about who will inherit your estate, rather than having the intestacy rules apply. You can choose to benefit your favourite charity, a friend or a remote relative who may not be included under the intestacy rules. In addition, you will save your family and loved ones a great deal of administrative work, anxiety and pain if you have left a clear will, rather than making them go through the process of establishing themselves as eligible relatives.
Any advice provided in this publication should be considered General Advice as it does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate for you and whether you should act upon it.