What is a Will and do I need one?
A Will is a written legal document outlining what happens to your estate when you pass away. An Estate comprises your personal property, which may include large items such as a house or smaller items of lesser value, such as the contents of the house. Your Will nominates an executor of your estate, who is the individual responsible for distributing your estate and ensuring each of your beneficiaries (the people who you are handing your estate to) receives what has been instructed to be left for them. Beneficiaries will either be named as a group or individually in your Will. For example, this means that you may mention each of your children by name or may simply state ‘my children in equal in shares.
A Will can be simple, such as leaving your estate to your partner or spouse and vice versa, or the Will may have more complexities. For example, a complex Will might factor in
- Family members that are not part of your immediate family,
- Leaving specific gifts to people or charity,
- Establishing structures such as a testamentary trust, or;
- An estate that contains a lot of assets such as companies and shares.
Each state in Australia has specific laws regarding what will happen to an estate if a will is not left. However, this may mean that your estate is not distributed the way you had wished. The primary reason to make a Will is to ensure your estate is distributed to the people you want to receive it, who will be able to access what has been left to them quickly. It avoids a situation, for example, where an estranged relative would receive part of your estate. Having a Will also helps to alleviate stress and prevent disputes amongst your surviving family. This is particularly important where, as is increasingly the case, if you are a part of a blended family, same-sex family, have been divorced and have children from a previous relationship, or have step-children. In these situations, an already emotionally-charged and stressful situation may become even more hostile and costly. A lawyer’s skill and expertise in estate law and Will-drafting will become invaluable to avoid nasty and expensive estate disputes. Our lawyers operate with a high level of sensitivity when handling such matters and can help you navigate the general hardship and issues that often arise at these traumatising times.
Another advantage to having a Will is if you have a lot of assets, and different types of assets such as a company or shares, and you wish these to be dealt with in a very specific manner upon your death. One way to account for complex estates is to include a testamentary discretionary trust in your Will. This is a trust that is established upon your death. The trust holds all the assets of your estate. The trustee can then make distributions and spread income across a class of beneficiaries, such as your children, that are more financially favourable to your beneficiaries. It can allow income from your rental property, for example, to be distributed to beneficiaries who are on lower marginal tax rates.
Our lawyers at SGM Legal are highly skilled at both simple and complex Wills and will be able to advise you on the best course of action to ensure your estate is handled according to your wishes upon your death. Doing so will also reduce the likelihood of costly litigation should someone attempt to contest your Will. If you believe your Will may be contested, our experienced team can take further steps to mitigate the potential of the Will being contested. Such steps include inserting additional provisions into your Will and preparing affidavits to confirm your wishes. This can reduce the likelihood of your Will being successfully contested and will usually result in your beneficiaries receiving as much money as possible when you pass away. This, therefore, ensures that your money is not going to be consumed in legal fees. The team at SGM legal aims to ensure clients have peace of mind that their Will represents their wishes and intentions.
Can I update my will, or do I need to make a new one if I want to change something?
It is essential that your Will is kept up to date, and therefore, your Will may need to be changed at certain intervals in your life. It is important to note that a Will never expires, and therefore, there is a responsibility to ensure that it is continually updated to reflect your wishes. Updating your Will, after changes in life events ensures that beneficiaries will receive what you wish and therefore aims to decrease the likelihood of individuals contesting the Will.
Whether you update your Will or need to make a new one will depend on the types of changes, you wish to make. A codicil is a formal legal document that allows you to make small changes to your Will without revoking your Will. A codicil acts as a separate legal document which is then read alongside your Will, ensuring such amendments are accounted for. A codicil is a very specific legal document that needs to conform to the laws in your state and thus should be written by a lawyer.
Minor changes to your Will may include
- Who will be your representative or executor,
- Change specific gifts to beneficiaries, or
- Change a beneficiary’s name in the Will because they got married.
If you wish to make major changes to your Will, it is best to get a new will. This is because changes in circumstances will invalidate your Will, and therefore intestacy laws will apply.
Major changes to look out for include
- Adding, changing, or removing a beneficiary
- Getting married or divorced
- Having children, or your children becoming older then 18
- If one of your beneficiaries has died, such as a partner
- If you now have stepchildren or grandchildren
- Significant changes in your assets or liabilities
- Your executor has indicated she does not wish to accept the role
- Changes in your business structure or superannuation
I have stepchildren. If I don’t leave a Will, will they get a share of my estate?
Under recent amendments to intestacy laws in Victoria, if you die without a Will, your stepchildren will not receive a share of your estate. However, they may indirectly receive a share as the majority of your assets will automatically pass to your spouse. When your spouse dies, their share of the inheritance from your estate will then form part of their estate. For example, John and Mary are married and Mary has two children from a previous relationship. John and Mary do not have children together. If John dies without a Will, his assets will pass to Mary. If Mary dies, her own assets, as well as anything she received from John’s estate, will pass to her two children.
It should also be noted that while the intestacy provisions exclude stepchildren, it does not prevent stepchildren from bringing a claim against the estate if they believe they should have been adequately provided for, or the deceased had a moral obligation to provide for them. This may be the case if the stepchildren lived with their stepparent, for example.
What if there is no will?
The other situation where it may be better to do a new Will is where you have already made a number of amendments to your existing Will. For example, if you have attached a few Codicils to your Will, it would be better to consolidate all of these changes into one new Will. This will also make it easier for your personal representative or executor to administer and distribute your estate according to your wishes. Further it is important to remember that updating your Will may be less expensive then the expense beneficiaries spend contesting your will that is no longer reflective of current circumstances.
When a person dies without leaving a will, the deceased person is described as being ‘intestate’. The laws governing a deceased person’s estate where there is no will are known as ‘intestacy’ laws. Each state in Australia has different laws about how an intestate’s estate must be distributed. In Victoria, intestacy is governed by the Administration and Probate Act 1958. There are very specific provisions as to what happens when someone dies without a Will.
Your personal representative will apply for Letters of Administration to authorise them to administer and distribute your estate. Normally, your personal representative will be decided by who is deemed to be the ‘most appropriate person’. This usually is in a hierarchical order with your partner deemed to be the most appropriate person, followed by your children (in order from oldest to youngest), siblings, or parents. Anyone can nominate to be your personal representative if you die without a will, as long as no one else objects. For example, if Mary dies without a will, and does not have a partner or children, her niece is able to apply to be the personal representative of her estate if no one else, such as other family members or close friends, objects.
In general, the deceased’s spouse or partner and children will be beneficiaries of the estate. The exact distribution will be dependent on each individual circumstance. Therefore the best way to ensure that family members are not position is to ensure that you have a valid will and to have a specified executor. The law considers a number of scenarios for when people die intestate. Ultimately these laws are inflexible, and therefore may not accurately reflect your wishes, and how you want your estate to be distributed. You may not want you brother or sister to receive anything from your estate. You might want to gift your best friend, or carer, or someone else, your estate over any relatives you might have outside of your nuclear family. It is therefore important that you have an up to date will that reflects your wishes.