Drafting a valid Will is not just important, it can be crucial in ensuring that your estate is distributed according to your wishes. But did you know that a Will, on its own, might not allow you to achieve all of your estate planning objectives?
If you die without a valid Will, your estate assets will be distributed by a Court appointed administrator, according to a strict formula contained in the intestacy laws.
While the intestacy laws vary between the different States and Territories in Australia, they generally only cater for certain family members and are unlikely to reflect all your wishes.
Preparing a valid Will can help ensure your estate is distributed efficiently (and tax-effectively) among your chosen beneficiaries.
What are the shortcomings of a Will?
What many people don't realise is a Will might not cover all their assets. For example:
- The proceeds from life insurance policies and superannuation funds do not necessarily form part of your estate and may be passed directly to certain beneficiaries.
- If an asset is held in joint names, ownership usually passes automatically to the surviving owner and the terms of the Will do not apply, unless there is a charge (eg a debt) over the asset.
- Assets held in a family trust are owned by the Trustees (not the individual) and are distributed according to the rules in the Trust Deed.
- Assets held in a family company are owned by the company, not the shareholders. However, the shares in the company can form part of an Estate and be transferred according to the Will.
You should ensure that appropriate strategies are in place to address all of your assets – not just those owned personally.
Estate planning is a complex arrangement and unless managed carefully can result in a range of legal and other issues. If you want to discuss any of the issues raised in this article, please contact us on 02 9299 7044.