Wills & Estates

Wills & Estates

Wills and estates can be a confusing topic for many people. However, it is crucial to understand what a will is, how it works, and why you should have one. In this blog article, we cover the common questions related to wills and estates.

What is a Will?

A Will is a document that sets out what a person would like to happen with their assets when they die. Assets may include tangible property – such as houses or cars – or intangible property, such as superannuation or savings. When you pass away, the executor of your estate (someone you have appointed) distributes your will, and gives the assets you have allocated to each person.

Why should I have a Will?

  • To ensure your family’s needs are met according to your wishes when you die
  • To avoid leaving confusion behind
  • To set out plans beyond the distribution of your wealth and assets. For example, a Will can include other requests such as:
  • How children will be cared for
  • The exclusion of particular family members
  • The distribution of assets that do not form part of your estate (e.g. family trust assets)
  • Charitable objectives (e.g. if there is any money left over after distributing to family members, you may donate the rest of your estate to a particular charity or cause)
  • Who will be the executor of your estate. If you die without picking your executor, your closest family member will become the executor. You may also request that the public Trustee & Guardian (a government agency) administer your estate.

When should you review or update a Will?

Your Will should always reflect your current circumstances and intentions. It is therefore necessary to update your Will if you have any major life changes, such as:

  • Marriage, separation, divorce or entering into a new relationship
  • The birth or death of children, grandchildren or other close relatives
  • Significant changes to the value of your assets
  • Substantial changes in the way you own assets, such as the creation of a family trust or a self managed superannuation fund
  • If you enter a new business or change the structure of your current business
  • Changes in the residency status of you or your intended beneficiaries.
  • Retirement from full time employment
  • Significant changes to taxation, superannuation and social security laws which may impact upon your Will and estate

How can I challenge a Will?

If you believe you have been unfairly left out of someone’s Will, there are avenues to rectify this.

Family members, spouses, partners and anyone else who can show that they were financially dependent on the deceased person may be able to challenge a Will. However, there are strict time deadlines to challenge a Will, so it is crucial to seek legal advice immediately if you are contemplating this process.

There are different claims that can be made in relation to a Will. These include:

  • Family maintenance
  • Lack of testamentary capacity
  • Undue influence
  • Breach of trust
  • Power of attorney
  • Guardianship
  • Administration

If you have been appointed or named as executor of a deceased person’s estate and you receive notice that someone is challenging the Will, it is necessary to receive prompt legal advice.

How to administer an estate?

An executor is responsible for protecting the assets of a deceased’s estate, dealing with any necessary administration (such as unpaid debts or incomplete business transactions) and distributing the estate according to the Will.

There are a number of things an executor should do upon being named:

  • Notify government agencies and other institutions about the death so liabilities do not continue and any necessary income (such as pensions) is stopped
  • Confirm all of the assets and liabilities of the estate. This involves writing to financial institutions, government agencies, relevant companies, searching records (Land Titles Office) and preparing an inventory of household furniture and personal effects.
  • Apply for a Grant of Probate from the Supreme Court to administer the estate. This document legally authorises the executor to deal with all matters relating to the estate.

When probate has been granted, the executor must lodge a final tax return on the behalf of the deceased, redeem bank accounts and investments, sell or transfer any real estate and motor vehicles and pay any liabilities.

Once these matters have been finalised, the executor can distribute the estate to the beneficiaries as outlined in the Will.

Get Legal Advice

Wills and Estates can be a complex area of law. If you or someone you know wants more information or needs help or advice, please contact us on (02) 9963 9800 or contact us via our form. If you would like to prepare your will with us, please fill out the Will Instruction Form and we will contact you.

Why Do I Need a Will?

Why Do I Need a Will?

Around 40% of Australians do not have a will, with the majority of that group citing procrastination as the main reason for not having made a will. But when unexpected events occur, a valid will ensures your children are taken care of, tax is minimized and your estate is distributed in the way you prefer. Luckily, wills are inexpensive and easy to write with the help of a lawyer.

So, do you need a will? Here are 4 reasons why making a will should be a priority:

1. Minor children are taken care of

If you have children under the age of 18, a will can be used to nominate guardians for those children in the event that you pass away. A will can also detail how you would like your children’s education and maintenance to be managed, such as if you would like them to attend a particular school. Additionally, you can designate the assets you intend to leave in trust for your children, and nominate the trustees who will manage these assets.

2. Limit stress for family

The distribution of one’s estate can be a stressful and difficult time for family members. To ease this burden on your relative, a will allows you to specifically decide who will receive what possessions. This minimizes the chance that your will will be contested, and helps prevent conflict between family members.

3. Protects assets for unmarried couples

Assets are not automatically transferred between couples who are cohabitating if they are not in a defacto relationship or married. If you would like your assets to be transferred to your partner upon your death, it is important to specifically state this in your will.

4. Nominate an executor 

A will can be used to nominate a trusted friend or family member to act as the executor of your estate. The executor distributes the assets in the estate, helps settle your debts and attempts to fulfill the requests you have made in your will.

How Etheringtons Solicitors can help  

If you or someone you know wants more information or needs help or advice, please contact us on (02) 9963 9800 or contact us via our contact form. If you would like to prepare your will with us, please fill out the Will Instruction Form and we will contact you.

Wills vs SMSF Superannuation – Who Wins?

Wills vs SMSF Superannuation – Who Wins?

Superannuation benefits are not automatically assets that fall within the estate of a person after their death. Without additional and proper written directions, what happens to a person’s super after death is decided by the Trustee of that person’s super fund.

What is a Self-Managed Super Fund (SMSF)?

A self-managed super fund is a body that helps provide for individuals retirement. Members of an SMSF are typically the trustees of the fund, or they may be the directors. Essentially, the members of the fund run the fund for their own benefit.

With well over half a million SMSFs now registered in Australia, more and more people have direct control over their superannuation as trustees of their own funds. However, without careful consideration and planning, your superannuation funds may not end up where you want them to after your death, as was recently the case in Western Australia.

Case Study

In a recent WA case, Ioppola v Conti, a husband and wife were the only members of a SMSF. In her Will, the wife explicitly stated that her substantial superannuation funds were to be divided between her children and not her husband.

However, she did not have the proper written documentation prepared in her SMSF to reflect this choice. Upon her death, her husband, despite the Will paid all his wife’s funds to himself. This power was given to the husband under the SMSF’s trust deed, which granted all trustees broad discretion.

Outcome

The children challenged the actions of the husband in the Supreme Court of Western Australia, arguing that as executors they should be appointed as joint trustees of the SMSF along with their father, to have some measure of control over the distribution of their mother’s funds. This argument was rejected on the grounds that while superannuation legislation does allow for such an appointment, it is not mandatory.

The children also argued that the trustee did not act in a bona fide manner as required by the SMSF’s trust deed. This argument was also rejected on the basis that the trustee was entitled to ignore the directions of the Will when making their decision.

The court held that the husband was able to retain the superannuation.

How to Avoid Similar Situations

This situation could have been avoided if the wife had a binding death nomination or a death benefit agreement in place at the time of her death.

  • A binding death nomination is a written direction from a member to their superannuation trustee setting out how they want their superannuation benefits to be distributed on death.
  • A death benefit agreement is an agreement between an SMSF member and the trustee, which specifies how the member’s benefits are to be paid after their death.

A binding death nomination must be renewed every 3 years while a death benefit agreement is permanent until revoked.

A solicitor who is preparing a Will for you can identify issues that may arise and ensure that your true intentions are properly documented.

The above illustrates why it is best not to use DIY Will kits and to get proper advice, as it gives your loved ones proper protection and gives you peace of mind.

Contesting a Will

Contesting a Will

Can You Put Anything You Like in Your Will?

When it comes to writing your own will, you may think you should be able to divide your assets however you like.

However, the law takes into account moral responsibilities owed to family members. Although they are your assets to divide, these laws protect your family from being unfairly disadvantaged.

Contesting a Will

If you feel the assets in a family member’s or close friends will have been unfairly allocated, you can contest the will. The law recognises that sometimes you might need to make a claim against a deceased person’s estate, and the court can make orders to allow you to have more than what is specified in the will.

The court will determine how much more is appropriate, by considering factors such as:

  • Whether the person making a claim is an eligible person (as defined by the law);
  • Whether there are circumstances which justify the making of orders allowing a claim; and
  • Whether there has been adequate provision made in the will for the proper maintenance, education or advancement in life of that person.

Factors for Consideration

The court will also consider several discretionary factors when making orders to allow a portion of a deceased’s estate to be given to the claimant:

  • The nature and quality of the relationship between the person making the claim and the deceased;
  • The means and needs of the person making the claim compared with the size of the estate;
  • and Other factors such as:
    • Whether and to what extent the person making the claim contributed to the property and welfare of the deceased person;
    • The character and conduct of the person making the claim before and after the death of the deceased;
    • Circumstances before and after the deceased person’s death; and
    • Any other matters the court considers relevant including things which were in existence before or after the deceased person’s death.

It is clear that the law prioritises fairness in the distribution of an estate. However, what the court considers ‘fair’ will vary, depending on your individual circumstances. Please get in touch if you have any questions about your will and estate.

Choosing a Power of Attorney

Choosing a Power of Attorney

What is a Power of Attorney?

An attorney is someone who has the legal power to make decisions on your behalf. A Power of Attorney is a legal document that appoints someone to act on your behalf in particular financial or health related matters. This document can be prepared by a wills and estates solicitor, who can also provide advice on choosing a Power of Attorney.

What You Need to Consider when Choosing a Power of Attorney 

Having a Power of Attorney means someone else can make several types of life-changing decisions on your behalf. Therefore you should make sure you consider the following things.

1.  Choosing the Right Person

Your first instinct when nominating an attorney may be a close relative or friend. However, it is important to consider that they may have to make very tough decisions in the future. Choose someone who is mature and responsible. You should select someone you trust to put your own interests above their own.

2.  General Power of Attorney 

A general Power of Attorney is typically created for a specific task and/or with a specific expiry date. This Power of Attorney lasts while you have capacity (i.e. you are capable of making sound medical and/or financial decisions on your own behalf). It also lasts for the duration of the specific purpose/task for which the power was created. A common example of this is when a company appoints one director to sign all documents on the company’s behalf. Likewise if you appoint your solicitor to sign a contract on your behalf, you are appointing the solicitor as an attorney.

3.  Enduring Power of Attorney 

There may come a time in your life where you no longer have the mental capacity to make decisions. An Enduring Power of Attorney appoints someone to attend to your personal financial and property related affairs once you lose mental capacity. The document must be prepared before you lose capacity, and can include things like selling your properties and managing your finances. An Enduring Power of Attorney is not used until you lose capacity.

To discuss your specific needs when choosing a Power of Attorney, and to prepare the documents that best suit you, please get in touch.

Top 6 Power of Attorney Questions

Top 6 Power of Attorney Questions

A Power of Attorney is a legal document that gives a trusted person the legal authority to act for you and to make legally binding decisions on your behalf if you are unable to make these decisions yourself, such as in the case of serious illness. If you do not have a Power of Attorney then you should contact us and find out more.

Below are 6 common Power of Attorney questions that you should know the answers to.

1. In what circumstances is a Power of Attorney important? 

  • To relieve yourself of the day-to-day demands of financial paperwork and record keeping;
  • As a safety net when travelling or to allow someone to handle your affairs in your absence;
  • To avoid burdening family or friends with the responsibility of looking after your affairs; or
  • If you are unable to manage your prosperity or financial affairs.

2. Does the Attorney need to be a lawyer?

The person appointed does not need to have legal qualifications – you can appoint anyone. Deciding on the person to be appointed should be done with careful thought and consideration as you are providing them with significant power.

An ideal attorney should:

  • Have integrity;
  • Be willing to act in that capacity;
  • Have competence in areas of relevance;
  • Be able to act in a business-like manner;
  • Be able to spare the time necessary for the task;
  • Live in the locality in which they are to act;
  • Be agreeable to respecting the confidentiality of the donor’s (the person giving the Power of Attorney) affairs; and
  • Be impartial and have no known conflict of interest.

3. Are there different types of Powers of Attorney?

There are two types of Powers of Attorney.

A General Power of Attorney is:

  • Only valid while the donor has legal capacity;
  • Useful if you are going away for an extended period and you do not want the authority to continue should you lose legal capacity; and
  • Usually drawn up for a specific purpose.

An Enduring Power of Attorney (EPA) which:

  • Continues to be valid even if the donor loses legal capacity due to disability or illness;
  • May empower your attorney to make financial, property, lifestyle and health decisions;
  • May be activated when required or upon loss of legal capacity; and
  • Allows your attorney to commence or to continue to manage your affairs even if you have become unable to give lawful instructions.

4. Is it better to have more than one attorney?

We recommend that you do have more than one attorney, or a substitute attorney. Therefore if the appointed attorney cannot act or continue to act, as it gives you more flexibility. Common instances where more than one attorney is appointed include:

  • When siblings are appointed together
  • A spouse and a child are appointed together

You can appoint attorneys to act “jointly” (this means they must agree on everything) or “severally” (this means one of the appointed persons can make decisions alone).

5. Should I pay my attorney?

This is not necessary to give legal effect to the power, and would normally only be considered if the attorney is a professional.

6. How do I know if the donor has sufficient mental capacity to make a power of attorney?

There is no simple formula, but in general terms they must be able to:

  • Understand the major consequences of a decision;
  • Take responsibility for making that choice; and
  • Make a choice based on the risks and benefits that are important to them.

If there is any doubt about capacity, it’s best to get in touch with a medical professional and ask for a written opinion. Remember, different powers require different levels of understanding. If a medical opinion about capacity is sought, it is wise to have the Power of Attorney signed on the same day as you get the medical report so there can be no subsequent claim that the appointment was invalid.

To find out more about Powers of Attorney and their benefits call us on (02) 9963 9800 or via our contact form here.