We're sure you've been told once or twice before about how important it is to have a will in place, even when you're not planning to 'kick the bucket' anytime soon. Our conveyancing solicitors make sure that at the end of each sale or purchase the client is reminded that they need to put a will in place. Unfortunately there are a great deal of people out there who still don't have a will in place.
But what exactly are the consequences if you die without a will? How will this affect your loved ones?
You should give careful thought to making a valid Will, appointing appropriate executors and keeping your Will updated as your circumstances change.
Have you heard about the man whot had a US$40 million estate and died without a will?
It was recently reported that the state of New York may receive a Holocaust survivor's $40 million fortune after the man died without a will or any apparent survivors.
Roman Blum was a successful real estate developer, who died at the age of 97 without leaving a will.
Give thought to the ultimate distribution of your assets:
If you die without a will, you die intestate. Many Australians die without an appropriate will, which leaves them in a state of intestacy or partial intestacy. In each jurisdiction in Australia there is a rigid statutory scheme to deal with succession in the event of intestacy.
If you die intestate and there are no eligible recipients of your assets, pursuant to the legislation, the state is entitled to keep everything.
No-one wants to think about death while in the prime of life, but it is important to decide what will happen to your assets when you die. Most people spend all their working lives to create assets, but give little thought to the distribution of those assets when they die.
If you have children, if you have a business, if you have any assets, then you should ensure that you have a valid and up to date will and seek estate planning advice.
Implications for a business if an owner dies without a will:
Quite often if a director of a company dies, the surviving directors can continue to manage the company. Equally, if the sole shareholder of a company dies, the directors can continue to manage it until the beneficiaries under the will have the shares transferred to them.
But if you are a sole company director and a sole shareholder and do not have a valid will, all sorts of complications can arise, as the death may leave the company without any person properly authorised to manage the company immediately.
If you are a sole director/shareholder of a company, it is highly recommended that you have a will and that your will clearly provides for who is the beneficiary of your shares.
Five Matters to Consider When Making Your Will:
Your Property:
In your Will, you can only ever gift what is personally yours, in your name. For example, you can't gift something in a Will that is an asset of a trust, because it's not yours.
Assets that can be disposed of by a Will - or "estate" assets – include property held as tenants in common, assets owned by you personally, for example a bank account or a car; and life insurance proceeds (where the estate is specifically mentioned as being the beneficiary).
Superannuation is not an estate asset unless you have stipulated in a nomination that it is to go to your estate.
Providing for Your Loved Ones:
Who do you want to leave your property to? Make sure that you make proper provision for your spouse or partner, children, extended or previous family members and friends.
Do you want to leave some money to a particular charity? Do you want to put any conditions on any of your legacies? Unless you specify an age at which you want your children to receive their inheritance, they will be entitled to receive it when they turn eighteen.
Appointing Executors:
It is the responsibility of the executor to protect the assets of your estate, pay your debts and distribute the estate in accordance with your Will. They may be family or friends, or alternatively experienced professionals such as your solicitor or accountant.
Make sure that you appoint someone who understands financial issues. Don't forget to make sure that they are prepared to take on the role of executor should you die, or you run the risk of them refusing to act as executors and leaving the estate without someone you have chosen to administer it.
Bear in mind that there can be long term responsibilities under the Will – especially if your Will involves the creation of a trust, for example with regard to your children.
Proper Estate Planning:
What would you like to happen to any business interests you may own at your death? Many people make the mistake of assuming that a Will also affects assets which are legally owned by family companies and family trusts.
Assets held in this way are the property of the company or the trust, as the case may be, and the Will-maker can only give away their shares in the company or their units in the unit trust.
It is the provisions of the trust document, and not a Will, which determine what happens to the property of the trust on death. Trusts can be created during your lifetime or separately in your Will. These may provide not only substantial tax advantages, but may protect the assets from claims by "outsiders".
The importance of proper estate planning and the benefit of testamentary trusts to provide for beneficiaries, ensure asset protection and give taxation benefits should all be considered.
Reviewing Your Will Regularly:
Your Will expresses your wishes at a particular point in time. It is advisable that whenever your circumstances change, you should consider reviewing your Will so that it accurately reflects your current wishes.
Situations where you may update your Will include: marriage, separation or divorce, starting a de-facto relationship, having children or grandchildren, death of a spouse and retirement.
Who can contest your Will?
Finally, while you are entitled to leave your assets to anyone you wish, in some circumstances, friends or relatives who believe they have not been sufficiently provided for are entitled to contest your Will. One of the most common ways is through a family provision application.
A family provision application involves a person within a defined relationship to the deceased making an application to the court seeking a share of the estate, or a larger share of the estate, on the basis that the deceased person has failed to make "adequate provision" for his or her proper maintenance, education or advancement in life.
Given that type of claim is available, that is another issue you need to consider when making your Will, particularly if you are seeking to exclude somebody who has been financially dependent on you during your life.
"A Very Smart Man" Who "Died Like an Idiot":
It has been reported that a close friend of Roman Blum's was quoted as saying this about him. Even if Mr Blum did not have any relatives, there still may have been people he cared about who he may have wanted to benefit from his fortune, or alternatively, he may have wanted to make a gift to a charity. Without a Will there is no way his wishes can be legally enforced.