Wills and Estates

• You do not understand any of the advice that follows
• You have questions of your own which are not answered below
• You are anticipating divorce.
• You are contemplating remarriage. Once you marry, any will made prior to that marriage becomes void. If you want the will to survive the marriage, a special clause is needed.
• You have children of a previous marriage.
• You hold property as a joint tenant.
• You have significant assets outside of Australia.
• You have a family trust.
• You have prepared your own will, but would like it checked by a lawyer to ensure that it is valid.

It is an essential element of the trust that the trustee is under a personal obligation to deal with the trust property for the benefit of the beneficiaries, an obligation giving correlative rights to the beneficiaries. There is an irreducible core of obligations owed by the trustees to the beneficiaries and enforceable by the beneficiaries which is fundamental to the concept of a trust. If these do not exist, or if the beneficiaries have no rights to enforce them, there is no trust. The minimum duty is the duty to perform the trust honestly and in good faith, for the benefit of the beneficiaries.

1. Property you cannot give by will.

(a) Jointly held property. This passes automatically to the surviving joint owner on death of the other joint owner or owners - it does not form part of your estate. (If you own property with another person you may hold it either as "joint tenants" or as "tenants in common". It is easy to confuse the two, and it is important to be sure what type of tenancy you have in the property. Joint tenancy and tenancy in common are described more fully at the end of this note).

(b) Property held in trust. This passes to or is held for the beneficiaries of the trust according to the terms of the trust.

(c) Shares. Certain shares in private companies cannot be given by will.

(d) Superannuation. Your superannuation arrangements may not entitle you to dispose of your superannuation assets by your will. The rules differ from scheme to scheme - you should discuss the matter with the administrators of your superannuation fund.

(e) The proceeds of life insurance policies. If the owner of the policy has nominated a beneficiary of the policy, the nomination takes precedence over the terms of your will. It follows that, where a nomination is made, the proceeds of the policy do not form part of your estate. If you wish the proceeds of the policy to go to someone other than the nominee, the nomination must be changed. If you are not sure whether you nominated a beneficiary, or who you nominated, consult the insurance company concerned.

(f) Capital guarantee deposits. Some capital guarantee deposits where a beneficiary is nominated (for example, friendly societies, and some banks) cannot be given by your will.

3. Inheritance legislation. Western Australia (and most Australian jurisdictions) have an Inheritance Act. The Act provides that a person leaving property by will must make proper provision for close relatives such as children (even adult children) and one's legal spouse. The Western Australian legislation applies to de facto spouses after two years.

Failure to make proper provision to a spouse or relative may lead to a dissatisfied relative/spouse bringing an Inheritance Act claim in the Supreme Court. If you intend to "cut" such a person out of your will you should obtain professional advice as in many cases the legal costs of all parties to a Supreme Court challenge to a will is paid for by the estate in some instances even if the challenge is unsuccessful. These costs can be considerable. For more information click here

4. Who should be my executor? What does the executor or trustee of your will do? The executor of your will is the person executes your will; the executor stands in your stead after you die to distribute your property to the beneficiaries you have named in your will. Amongst the functions entailed in this role are the preparation of a statement of assets and liabilities, obtaining a grant of probate under seal of the Supreme Court, getting in the assets of the estate (if needed), and arranging auctions and investments (again if required).

With certain exceptions, you may appoint any person or group of persons to be the executor of your will. You may also appoint a trustee of your estate, who is to hold or invest your assets for the benefit of other persons; for example, a guardian who holds money for your infant children.

5. Why choose a professional executor? Being an executor or trustee of a will can be a difficult and technical task. There are various legal requirements that must be adhered to, otherwise the executor can be at risk of incurring personal liability. For these reasons, it may not be wise to appoint a family member as the executor of your will, particularly as they may have to assume this role during a period of grief at your passing. Having said that, the most important quality of an executor is honour. You must trust your executor. An executor can engage professionals to assist them.

If you don't have someone you can trust, appointing a professional executor offers you the benefit of some protection as the professional should be insured against negligence and dishonesty. Appointing a professional executor is a better alternative for many people. A professional executor will be more experienced at administering deceased estates, and also has the benefit of impartiality in dividing your assets between your family and friends. Amongst the professional executors you may consider are lawyers, or the Public Trustee. A professional trustee such as the Public Trustee will take a percentage of the value of your estate as its fee. In contrast, most lawyers will charge for their services on an hourly rate. To be safe it is better to name two executors, and to have an alternative executor in case your first choice cannot or will not act.

6. Updating your will if you marry: Marriage will automatically revoke an existing will unless the will is expressed to be made in contemplation of that marriage. Consult a lawyer about your will if you decide to marry. In Western Australia, a will is not automatically revoked when a marriage is dissolved. If you are contemplating divorce, or have divorced since making your will, we recommend that you consult a lawyer to make a new will. Review the copy of your will every two or three years or whenever a major event occurs in your family, your assets or the taxation laws (to make sure the will is still what you want). In particular, consult a lawyer if:

(a) you change your name, or anybody named in the will changes theirs;

(b) an executor dies or becomes unwilling to act as executor or becomes unsuitable due to age, ill health or for any other reason;

(c) a beneficiary (someone who has been left something in the will) dies; you have specifically left any property which you subsequently sell or give away, or put in trust or into a partnership, or which changes its character. This applies particularly to specifically bequeathed shares in a company which restructures its share capital, or if you create or transfer assets to a family trust;

(d) you marry or divorce;

(e) you have children (including adopted or foster children); or

(f) you enter or end a de facto relationship.

8. Joint tenancy: Joint tenancy is a form of co-ownership in which the following principles apply: There are no shares. In theory each joint tenant has the whole of the property. No party has a specific share in the property while the joint tenancy continues. This means that the joint tenants must have equal interest in the property, and are entitled equally to its rents and profits. There can be two or more joint tenants. The principle of "survivorship" applies. On the death of one joint tenant the surviving joint tenant gets the whole property automatically by operation of law, irrespective of any will made by the joint tenant who died, and irrespective of the intestacy rules. This gives considerable protection to a joint tenant who survives – and none to the one who dies first. It follows that property held in joint tenancy does not form part of the estate of a joint tenant who dies. This is important when deciding whether a grant of probate is needed. A grant is required if the estate contains land - but this does not include property held in joint tenancy, as it does not form part of the estate. The property passes automatically, by operation of law, to the survivor or survivors without forming part of the estate of the one who dies first. A grant of probate is therefore not required to transfer (to the other joint tenant or tenants) property held by the deceased as a joint tenant.

Further, a joint tenant cannot in his or her will deal with property held in joint tenancy, because the property goes automatically to the other joint tenant on the death of the testator. The principle of joint tenancy applies to real as well as personal property - it applies to land as well as to furniture and bank accounts. Joint tenancy is usual in marriage where the spouses want to hold the property equally, and also want the principle of survivorship to apply. It is not common in other situations. In particular, it would not usually be appropriate to register a house in joint names where one partner to a marriage buys the house using only his or her own money or has contributed much more to the house than the other partner. You can sever the joint tenancy. To do so you should consult a lawyer.

9. Tenancy in common: Tenancy in common is a form of co-ownership in which property is held in common with others but where, in contrast with joint tenants, the share of a deceased tenant in common passes to his or her beneficiaries under his or her will or intestacy and does not automatically pass to the surviving tenant or tenants in common. Tenants in common have fixed, undivided shares in the property. Tenants in common can have unequal shares (for example, two-thirds to one and one-third to the other). The share belonging to a tenant in common becomes part of the estate of that tenant in common when he or she dies; that is, a testator who is a tenant in common can leave his or her share by will or, if there is no will, the intestacy rules apply to the share that belonged to the tenant in common. Tenancy in common is frequent in property shared between partners, and, say, in a gift to a testator's children. It is infrequent between husband and wife. However, where there are children of a previous relationship or where the parties have contributed unequally to the asset concerned it is appropriate for a husband and wife to own property as tenants in common - they can leave their shares to their own children, and they can own unequal shares in the property to reflect their respective contributions to the property.

10. Signing your will: It is usually safest for a will to be executed in the presence of a lawyer. Do not attach anything to the original will, not even by paperclips. The original will should be kept safe. Macdonald Rudder will be pleased to keep it for you if we have drafted or checked the will; if not, it may be kept in your bank safe deposit. If it is lodged with us we cannot take the responsibility of informing executors or beneficiaries of its existence or its provisions. If you lodge your will with someone else keep a copy and note on the envelope in which the copy is kept (a) where the original of the will is lodged. It is important that it be easily found when needed; and (b) the date you signed the original will. Keep the copy safe with your important papers. You should now tell your executor and your family where the original will is kept, and when it was deposited there.