Effective succession planning ensures your assets are protected and distributed to the right people according to your wishes. Your Will is the most vital document in this process.
What is a Will and why you need one?
A Will is a legal document which sets out how you wish your estate to distribute when you pass away. Your Will appoints an executor of your choice to oversee this process and to usually liaise with lawyers during the administration of your estate if necessary.
If you pass away and do not leave a valid Will you are deemed to have died ‘intestate.’ Your estate is then distributed in accordance with the laws of intestacy in force at the date of your death. These strict rules dictated by legislation operate without any regard to what your personal preference may have been. The beneficiaries of your estate will depend on whether you are married, in a de facto relationship or have children at the date of your passing.
It might be surprising to hear that if a husband dies without a Will leaving a wife and three children not all of his estate passes to his wife.
His wife will receive the first $150,000 of his estate plus the household chattels. She will also receive a 1/3 share of the rest of his estate. His children will inherit the remaining 2/3 share of his estate. This law applies irrespective of the age of the deceased’s children.
Administering an Estate
Administering an estate without a Will can often be a complex task for your family to contend with at an especially difficult time. It can also increase the amount of legal costs in the estate administration process.
Quite often young people do not make a Will because they think that they “don’t have much”. What most young people forget is that people who are working are contributing to superannuation. In addition to your contributions there can be a life insurance or death benefit payable when you pass away.
Superannuation funds can only make payments to limited categories of people – generally dependents or your executor. If you die without a dependent the superannuation payment forms part of your estate.
Quite commonly young people nominate their parents, siblings, nieces and nephews as beneficiaries of their superannuation. Trustees of superannuation funds will not be able to pay your benefit to these nominees unless the nominee is able to establish a degree of financial dependency.
Nominate an executor
Young people should consider nominating their executor as a beneficiary of superannuation payments. They should then ensure they have an up-to-date Will that lists their nominated beneficiaries of their superannuation.
Individuals who have family trusts, companies, self-managed superannuation funds and business succession plans need their Wills carefully drafted to ensure their estate plan is comprehensive and cogent.
Revising a Will
Once you have made a Will you should revise it at least every three to five years, or when your personal and financial circumstances change.
Turner Freeman Lawyers Wills & Estates department
To develop an effective Succession Plan for you, please contact us on 1800 683 928 or via our online enquiry form.