This article is Part 1 of 5 articles related to Life Planning. We’ll be covering Wills, Enduring Power of Attorney, Superannuation and what happens when these are not structured correctly. Should you need to make a Will or Enduring Power of Attorney, please contact our Estate Planning team on 4638 1133.
Making a Will is not as simple as “who inherits your assets when you die”. A Will is only a small cog in the greater wheel that is estate planning. Getting a DIY Kit or dirt cheap will is unlikely to cover all necessary areas of your estate planning.
Are DIY Will kits legal?
They can be, but only if:
- Documents are properly signed and witnessed; and
- The testamentary intentions are expressed in a sufficiently clear way.
While this may sound simple, without expert advice from an Estate Planning Lawyer, we regularly see Wills that do not meet the minimum requirements for a valid Will. As shown in the Supreme Court decision of “In the will of Ethel Florence Panigas”, Post Office or Newsagent Will kits can be rejected.
Many “cheap and nasty” or DIY Will kits don’t cover:
- How Superannuation is to be claimed or distributed;
- Taxes payable on death;
- Donations to charities;
- Who is to control companies or family trusts; and
- Administration Costs of the Estate, and any Trusts created by a Will.
So, who gets your Super when you die?
Superannuation death benefit payments are distributed in accordance with strict legal rules. These decisions are typically based on the preferential form you filled in when you first registered with your super fund and may not go to the people you’ve nominated – as it’s preferential, not binding.
However, if you complete a Binding Death Benefit Nomination, it’s binding on your super fund to pay it to the spouse, child, financially dependent person or to your estate in the proportions you assign. Setting this up when making your Will is important, especially since a Binding Nomination is not contestable in any way, so long as you have cognitive capacity at the time you sign it.
What Taxes need to be paid at the time of death?
A variety of taxes, like Capital Gains Tax, could be due on the sale of some assets. However, if you inherit a house and sell the property you may be exempt (or partially exempt).
Similarly, if you leave your super to anyone who is not financially dependent on you, the beneficiaries can be required to pay a significant proportion of the super inheritance in tax. They could lose between 15%-30% in tax.
To discuss ways to minimise the tax payable on your death, please talk to one of our Estate team members.
Is the donations in your Will ineffective?
We often see DIY Wills where people seek to leave gifts to charities, but their wishes are ineffective without their estate going to considerable expense.
While many people try, it’s not legal to leave a gift to “fight cancer”, for “animal welfare” or “to create a new phonetic alphabet” (We didn’t make that up, it’s a real case!). A ‘gift’ needs to be made to a person or legal entity. If a beneficiary of a gift is unclear, your Estate could spend thousands trying to work out what you meant and if a Court can’t work it out either, your ‘gift’ may be paid to someone else entirely.
Who pays the costs to administering Probate?
Probate is the legal process of applying to the Supreme Court to have a person’s Will certified as their last and valid Will. It’s to avoid Executors administering previous Wills. People remove beneficiaries from their new Wills for a reason.
Commissions can be paid to Executors or Administrators of a Will from the Estate’s proceeds. However, unless the Will specifies this payment, parties need to obtain permission from the beneficiaries or the Court.
Get the right wording in your Will
As much as a DIY Will Kit or Dirt Cheap Will, sounds the most economical way of managing the distribution of your assets. Speaking with an Estate Planning solicitor will ensure that your Will is clear, valid and distributed in compliance with the requirements of the Succession Act 1981.
We wouldn’t want your beneficiaries to miss out on thousands in unnecessary estate administration costs trying to give effect to what you meant. When setting up a Will, it’s first and foremost responsibility is to ensure that your family is provided for as you intend.
So, if you’d like to have your ensure you Will is set up correctly, please contact one of our Estate Planning team on 4638 1133.
Need to learn more about Power of Attorney, Enduring Power of Attorney and what’ll happen if you don’t have these documents in place? Please tune in next week for Part 2 of 5 in our Life Planning series or subscribe to our newsletter and we’ll let you know know when the next article is on the site.
About the Author:
Troy Krahenbring is Wonderley & Hall’s Oakey Lawyer who is specialises in conducting matters before all Commissions, Tribunals and Courts. He assists clients with Criminal, Business, Property Law and Estate matters. When Troy‘s not in the court room, he’s making custom timber furniture.