Wills

Wills FAQ


MAKING A WILL

What is a Will ?

A Will is a legal document that directs how your assets are be distributed after you die.

A Will may include the appointment of a guardian for children who are under 18 years of age or who have special needs. It may also include instructions for funeral arrangements.

Why should I make a Will ?

Everyone over the age of 18 years who has family responsibilities or assets or investments should have a Will. That way you can be sure that should something unfortunate happen, your property will be given to the beneficiaries, and your children will be looked after by the guardians, you want rather than those chosen for you by the government and the courts.

        See ‘What happens if I die without a valid Will?’

What happens if I die without a valid Will ?
Lawyers refer to this as “dying intestate”. Your property will be distributed according to the laws of the State or Territory in which you lived at the time of your death. That may not be the way you would have wanted your property distributed.

Also, dependent children who are left without a parent will have a guardian appointed for them under the laws of the State or Territory in which they live. Again, that may not be the person who you would have chosen to bring up your children.

The laws governing intestate distributions vary between the different States and Territories and how your property is distributed will depend on whether you die leaving:

* a spouse/partner and no children;

* a spouse/partner and children;

* children but no spouse/partner; or

* no spouse/partner and no children.

In some States and Territories, if you die leaving a spouse/partner, they will get your whole estate. In other States and Territories, they may only get a share of it and the balance will go to your children or, if you have no children, other relatives.

Who can make a Will ?

Anyone who is 18 years or older and has legal capacity can and should make a Will. A person who is under 18 years of age can make a Will in certain very limited circumstances: see ‘I am under 18 years of age. Can I make a Will?’

          A person who does not have legal capacity cannot make a valid Will.

What is legal capacity ?
This means the capacity to make and be bound by legal decisions. A person has legal capacity if they understand the nature and effect of their decisions and are able to communicate them to others

In the context of making a Will, lawyers sometimes also refer to this as “testamentary capacity”.

Examples of things that might cause a lack of legal capacity include:

* brain damage or unconsciousness caused by an accident or trauma;

* genetic conditions (such as Down’s Syndrome);

* mental illness or other psychiatric conditions;

* degenerative diseases (such as Alzheimer’s Disease);

* the effects of a severe stroke;

* the effects of drugs (medicinal or otherwise); and

* the effects of advanced age.

I am under 18 years of age. Can I make a Will ?

Not in most cases. However, depending on where you live, there are some limited circumstances where you may be able to make a Will. These include:

* if you’re married or about to be married;

* if you’re serving with the armed forces;

* if you’re a mariner or seaman at sea;

* if you’re a prisoner of war; or

* if you have court approval.

I can speak and read English but I can’t sign my name. Can I make a Will ? How do I go about it ?
You can make a Will. If you are able to, you can sign your Will by making a mark rather than signing it with your normal signature. Alternatively, or if you are not able to make a mark, you can have someone else sign the Will on your behalf. This can be one of the two witnesses to your Will or a third party.

If you have a third party sign the Will on your behalf, you must state to them and to the two witnesses that you know and approve the contents of the Will and specifically direct the person, in the presence of the witnesses, to sign the Will on your behalf. The person and the two witnesses must sign the Will in each other’s presence.Corresponding procedures apply where one of the witnesses signs the Will on your behalf.

The person who signs the Will on your behalf should not be a beneficiary of your Will or the spouse of a beneficiary (depending on the circumstances, this could disentitle the beneficiary and/or cause problems or delays in getting probate of the Will).

Special language needs to be included in the Will to record the process followed and, in most cases, it is advisable to have the parties swear an affidavit confirming that it was properly signed that can be produced at the time an application for probate is made.

I have a relative who can speak English but has never learnt to read it. Can he make a Will ? How does he do it ?
He can make a Will. He will need to have someone read the Will to him before he signs it. This can be one of the two witnesses to his Will or a third party. If it is a third party, they must read the Will to him in the presence of two witnesses. He must specifically tell the witnesses that he approves the contents of the Will.

Corresponding procedures apply where one of the witnesses reads the Will to him. Special language needs to be included in the Will to record the process followed and, in most cases, it is advisable to have the parties swear an affidavit confirming that it was properly signed that can be produced at the time an application for probate is made.

My parents don’t speak or read English. Do their Wills have to be in English or can they make them in their native language ? If they make them in English, how do they do that ?
Their Wills do not have to be written in English. However, if their Wills are written in a foreign language they will have to be translated into English after your parents’ death and the court will need to be satisfied that the translated versions are accurate and properly reflect their intentions before it will grant probate of the Wills.

For this reason, it is generally better if they write their Wills in English.

To do this, they will need to have someone translate their requirements into English and write, or pass them on to someone who can write, their Wills for them. When each comes to sign their Will, a translator will need to read it back to them in their native language and ask them to confirm that they understand and approve its contents. This can be one of the two witnesses to their Will or a third party. If it is a third party, the translation must happen in the presence of two witnesses. If the witnesses don’t speak the language in question, the translator will have to confirm to the witnesses that they have said that they have said that they understand and approve the contents of the Will. They and the two witnesses must then sign the Will in each other’s presence and in the presence of the translator.

Corresponding procedures apply where one of the witnesses translates the Will.

The translator should not be a beneficiary of the Will or the spouse of a beneficiary (depending on the circumstances, this could disentitle the beneficiary and/or cause problems or delays in getting probate of the Will).

Special language needs to be included in the Will to record the process followed and, in most cases, it is advisable to have the parties swear an affidavit confirming that it was properly signed that can be produced at the time an application for probate is made.

I have a relative who is blind. Can she make a Will ? How does she do it ?
She can make a Will. She will need to have a person read the Will to her in the presence of two witnesses and make sure that she is happy with it before getting that person to sign the Will on her behalf. This can be one of the two witnesses to their Will or a third party. If it is a third party, she must state to the person signing the Will on her behalf and to the witnesses that she knows and approves the contents of the Will and specifically direct the person, in the presence of the witnesses, to sign the Will on her behalf. The person and the two witnesses must sign the Will in each other’s presence.

Corresponding procedures apply where one of the witnesses signs the Will on her behalf.

The person who signs the Will on her behalf should not be a beneficiary of her Will or the spouse of a beneficiary (depending on the circumstances, this could disentitle the beneficiary and/or cause problems or delays in getting probate of the Will).

Special language needs to be included in the Will to record the process followed and, in most cases, it is advisable to have the parties swear an affidavit confirming that it was properly signed that can be produced at the time an application for probate is made.

Can I have more than one Will ?
Any valid Will you make will normally revoke any earlier Will you have made. This happens automatically by operation of law.

However, if you have assets outside of Australia, it is possible to have a Will dealing with your assets in Australia and another Will dealing with your assets outside of Australia (or one Will dealing with your assets in a particular country and the other with your assets outside that country, including those in Australia). In some countries there can be death duty or inheritance tax advantages in splitting Wills in this way.

How often should I review/update my Will ?
You should review your Will whenever there is a significant change in your personal circumstances. This includes if:

* you marry or intend to marry;

* you have a child or grandchild;

* you separate from your spouse/partner; or

* there is a major change in your assets or in your financial circumstances.

You should also review your Will if an executor or guardian nominated in your Will dies or becomes legally incapacitated or if a beneficiary of your Will dies.

We generally recommend that you review your Will in any event every 4 to 5 years.

APPOINTING AN EXECUTOR

What is an executor ?
An executor is a person who a Will maker appoints in their Will to carry out the instructions in the Will (‘executrix’ is sometimes used to refer to a female executor).

What are the duties of an executor ?
The duties of an executor include:

* obtaining probate of the Will;

* gathering the assets of the Will maker and, if necessary, selling them off to convert them into money;

* paying off the Will maker’s debts; and

* distributing the assets of the Will maker in the manner provided in the Will.

Do I have to appoint an executor ?
Someone has to be given the responsibility to carry out the instructions in your Will. If you don’t appoint someone as the executor in your Will, or if the person you nominate dies before you do, it will be necessary for someone who has an interest in your estate to apply to the court for the appointment of an administrator (the practical equivalent of an executor). That will take time and money and you could end up having the distribution of your estate controlled by someone that you might not have chosen yourself.

Who can be an executor ?
Anyone over 18 years old and who has legal capacity can be an executor of a Will. This includes someone who is a beneficiary of the Will. A company which is not an authorised trustee company cannot be an executor.

Who should I appoint as my executor ?
That’s up to you. It should be someone you trust and who is familiar with your affairs. Couples will often appoint their spouse/partner as their first choice and, if they have one, an adult child or another close relative as a back-up or reserve.

Can I appoint more than one executor in the same Will ?
We recommend that you appoint at least one back-up executor in case the main person you appoint as executor dies before you or is unable or unwilling to act. It is also possible to appoint two or more people to act jointly as your executor. If you do this, you should think very carefully about whether they will be able to work together to make decisions and act in the best interests of your estate. If they are not able to reach agreement, that can lead to a stalemate or, worse still, the need to apply to the Court for an order to resolve the disagreement.

Can someone who I wish to appoint as my executor refuse to take on that role ?
For that reason, we recommend that you speak to the person who you propose to appoint as your executor before you appoint them and get their agreement to act.

If someone has agreed to act as my executor, can they later refuse to act ? If this happens before I die, what should I do ?
You can’t force someone to act as your executor if they don’t want to, even if they initially agreed to take on the role. In these circumstances, you should do a new Will or a Codicil naming a replacement executor.

Do I have to pay someone to act as my executor?
If you appoint a professional person (such as a lawyer, accountant, the Public Trustee or an authorised trustee company) to act as your executor, they will generally expect to be paid for their services. Usually, they will only take on the role if your Will includes a provision allowing them to charge their normal professional fees and a commission.

Relatives and friends will often take on the role of executor free of charge. However, the responsibilities of an executor are significant and any executor is entitled to apply to the court to receive a commission for acting in that role. Whether or not they charge a fee for their services, if your executor incurs any out of pocket expenses while acting as your executor, they are entitled to be reimbursed from your estate for those expenses.

MAKING A GIFT TO A BENEFICIARY

What is a beneficiary ?
In this context, “beneficiary” means any person to whom you have left a gift in your Will.

Who can be a beneficiary ?
Virtually anyone can be a beneficiary of a Will. The only real constraint here is you can’t leave gifts that are contrary to the law or to public policy (eg to support a terrorist organisation).

Depending on their age and circumstances, the types of beneficiaries to whom people would typically consider leaving gifts in their Will include:

* a spouse or partner;

* a child;

* a grandchild;

* a parent;

* a relative;

* a friend;

* a business partner;

* a school or university; and

* a charity or other non-profit organisation.

What sorts of gifts can I leave to a beneficiary ?
You can make a gift to a beneficiary in many ways. For example, you can leave someone:

* the whole of your estate;

* a certain sum of money;

* a specific item of property such as a house, car, jewellery or a work of art; or

* the residue of your estate (what is left over after other gifts have been made)

You can make a conditional or contingent gift – a gift that depends on some event or occurrence before the beneficiary gets it. For example, you can make a gift conditional on the beneficiary reaching a certain age. You can also make gifts that only operate for a specified period. For example, you can give a person a right to occupy a residence during their lifetime and make a gift of the residence to another person or organisation when they die. You can also leave someone a life interest in a fund so that the income is paid to them during their life, and then the capital of the fund is distributed to someone else when they die.

Can I make a conditional gift to a beneficiary (eg a gift to my spouse on condition that they use it to look after our children or a gift to a child on condition that they use it to buy a house) ?
This is a difficult area of the law and you need to seek specific legal advice. Some conditions are permissible and may be enforced by a court. A common condition that is perfectly acceptable is a gift that is conditional upon a person reaching a certain age.

Other conditions, such as a gift that is conditional upon a spouse not re-marrying or a child maintaining a particular religious faith, will not be enforced by a court because they are contrary to public policy.

Sometimes it is possible to achieve your intention in another way instead of making a conditional gift. For example, the courts generally will not recognise a condition attaching to a gift of a house that the beneficiary not sell it. However, you can achieve something similar by providing for the beneficiary to live in the house for their lifetime and, on their death, for the house to be transferred to someone else or sold and the proceeds distributed to someone else.

Leaving to one side the question of whether you can make a conditional gift, there is also the question of whether you should. For example, if you were to leave a gift to your spouse on condition that they use the money to look after your children, what would happen in the tragic event of your children dying in a car accident? Your spouse would no longer be able to meet the condition and the status of their gift would be in jeopardy.

If you were to leave a gift to a child on condition that he or she use it to buy a house, what would happen if they had a sudden medical emergency or needed the money to meet their educational expenses? And even if they use the money to buy a house, that won’t stop them at some point in the future selling the house if they need to raise cash.

Conditional gifts have to be clearly and carefully worded.

EXCLUDING A SPOUSE, CHILD OR DEPENDANT

Can I exclude my spouse/partner or a child or other dependant from being a beneficiary under my Will ?

You need to be wary of certain legal issues when you do so. If you exclude your spouse/partner or a child or other dependant from your Will, they may be able to bring a claim under family provision laws (sometimes also called testator family maintenance laws). These are State and Territory laws that empower a court to make an order that further provision be made out of the estate of a deceased person if, in the opinion of the court, their Will (or where they have died without a valid Will, the law relating to intestacy) does not make adequate provision for the proper maintenance or support of certain eligible people. This includes a spouse, de facto partner, same sex partner, former spouse, child and certain other dependants.

If you are going to exclude your spouse or a child or other dependant from your Will, you should take specific legal advice before doing so and include in your Will or in an accompanying document an explanation of why you have done so.

APPOINTING A GUARDIAN FOR YOUR CHILDREN

What is a guardian ?
A guardian is someone appointed to exercise parental responsibility for a child who is under the age of 18 years or who has special needs.

A guardian can be appointed by a parent in their Will or by a court.

What are the duties of a guardian ?
The guardian of a child effectively stands in the shoes of the parent who appointed them and has the same responsibilities for their care, control, maintenance and education as the parent.

I have a child under the age of 18 years or with special needs. Do I have to appoint a guardian for them in my Will ?
Legally, you don’t have to appoint a guardian, but it is advisable..

If you don’t appoint a guardian and the other parent of your child is no longer alive or able to look after them, it will be up to the Family Court to determine who should look after them. The court will take into account the best interests of the child but its choice of guardian may not coincide with your wishes. This could also lead to messy legal proceedings if you have relatives or friends who want to contest who should be appointed as guardian.

In the worst case, if no-one suitable applies to the court to be appointed as guardian, your child could end up a ward of the State.

If I appoint a guardian for my child and their other parent survives me, what happens ?
This depends on the State or Territory in which you live.

If you die before the other parent of your child, they retain parental responsibility for the child. This is of course subject to any Family Court order that may limit their parental powers.

In most States and in the Northern Territory, the rights of the surviving parent will prevail over those of any guardian appointed in your Will. The surviving parent can effectively ignore the appointment of the guardian and raise the child as a sole parent. If your guardian objects to this (eg because they don’t believe the other parent is fit for that role), they will have to apply to the court for an order that they be appointed joint guardian with the other parent and convince a court why it should make such an order. In the absence of such an order, your guardian will only be able to act as the guardian of the child if the other parent agrees or when the other parent dies.

In Western Australia, the appointment of a guardian in a Will is legally ineffective if there is a surviving parent.

Should I make the appointment of a guardian for my child only operational if their other parent has died or is unable to look after them ?
The only time you would consider appointing a guardian in your Will to act jointly with the other parent would be if you have reason to doubt the capacity of the other parent to care for your children after your death. This raises some tricky legal issues and you need to seek specific legal advice.

See also ‘If I appoint a guardian of my children in my Will and their other parent survives me, what happens?’

If I appoint a guardian of my children in my Will and their other parent appoints a different guardian and we both die, what happens ?
In this situation, both guardians will act jointly as guardians of the children. This can lead to problems if they are not able to reach agreement on a particular matter affecting your children.

You should discuss with the other parent of your children who you want to raise them in the unfortunate event that you both die. This is so, even if you no longer live together as a couple. If you can reach agreement on who should be guardian of your children, and each appoint them as guardian in your respective Wills, that will likely be a better outcome for your children than appointing separate guardians who may not get along.

Who can be a guardian ?
Anyone over 18 years old and who has legal capacity can be a guardian. Typically a person will appoint a close relative or friend who has similar life values and who they are confident will raise their children with similar love and care to what they would have given them.

Can I appoint more than one guardian in the same Will ?
We recommend that you appoint a back-up or reserve guardian in case the main person you appoint as guardian dies before you or is unable or unwilling to act. It is possible to appoint two or more people to act together as the guardian of your children. However, we generally recommend that you do not do this. If they are not able to reach agreement, that can lead to a stalemate or, worse still, the need to apply to the Court for an order to resolve the disagreement.

We also recommend that you do not appoint a married couple or domestic partners as joint guardians, just in case their relationship breaks down and your children end up under the joint care of two people no longer living together and perhaps no longer even speaking to each other. If you want your children to live with and be raised by a married couple or domestic partners after your death it is usually better to choose one of them (the one with whom you have the closest affinity and with whom you would want your children to live if that couple broke up) as the legal guardian.

Can someone who I wish to appoint as the guardian of my children refuse to take on that role ?
We recommend that you speak to the person you propose to appoint as the guardian of your children before you appoint them and get their agreement to act.

If someone has agreed to act as the guardian of my children, can they later refuse to act ? If this happens before I die, what should I do ?
You can’t force someone to act as a guardian of your children if they don’t want to, even if they initially agreed to take on the role. In these circumstances, you should do a new Will naming a new guardian.

SIGNING AND OTHER FORMALITIES

How must a Will be signed ?
For a Will to be valid, it must be:

* in writing;

* signed by the Will maker in the presence of 2 qualified witnesses (see below); and

* both witnesses must also sign the Will in the Will maker’s presence and in the presence of each other.

To avoid any questions being raised as to whether the witnesses signed in the presence of the Will maker and each other, it is best if the Will maker and both witnesses use the same pen to sign the Will.

You should not use a pencil to sign a Will or use liquid paper to correct an error in the Will, as this can cause problems in getting probate of the Will down the track.

While it is not strictly necessary as a legal matter, to avoid any questions being raised about whether a page in a Will may have been substituted after it was signed, it is best for the Will maker and both witnesses to sign or initial at the bottom of each page of the Will.

Who can be a witness to a Will ?
Anyone who is over 18 years of age and has legal capacity can witness a Will as long as they are not:

* a beneficiary named in the Will or the spouse/partner of a beneficiary; or

* blind.

Does a witness need to read the Will ?
A witness does not need to read or know what is written in the Will. They only need to watch the Will maker and the other witness sign the Will.

When does a Will take effect ?
A Will takes effect – in the sense that it becomes your ‘last Will and Testament’ – as soon as it has been properly signed and witnessed. However, it does not actually become legally operational until after your death and a grant of probate has been obtained from the Probate Office.

Your executor is responsible for obtaining the grant of probate.

What do I do with my Will after it has been signed ?
You should keep the signed original of your Will in a safe place and let your executor know where it is kept. If you don’t have a home safe, a Commonwealth Bank safe custody box would be a good place to store your Will.

When you store your Will, you should not staple or clip anything to it. If it has staple marks or indentations from clips, a court will need to be satisfied that it did not have a Codicil attached that has since been removed and that could delay the grant of probate.

ALTERING OR REVOKING A WILL

Can I alter my Will after it is signed and witnessed ?
Yes, but you need to be very careful. Technically, you could alter the original Will by handwriting the alteration on the Will, signing it and having it witnessed in the same manner as the original Will – ie the alteration would have to be signed in the presence of 2 witnesses who also sign in the presence of each other and yourself. The signing should either be:

* in the margin, opposite or near the marked alteration, and

* at the foot or end of the Will with a note that refers to the marked alteration.

However, this is messy and could possibly result in a mistake leading to a costly court case and uncertainties. If you want to change your Will, it is generally easier and safer to do a brand new Will or a Codicil rather than hand write alterations in the original Will.

Can I revoke my Will after it is signed ?
Yes. You can revoke a Will at any time by:

* making another Will in which you formally revoke all earlier Wills;

* signing a document revoking the Will (this must be signed and witnessed in the same way as a Will); or

* burning, tearing or otherwise destroying it with the intention of revoking it.

What should I do with my old Will if I make a new one ?
While making a new Will automatically revokes any older Will, it is generally not a good idea to keep an outdated Will. If your executor happens to find the outdated Will and doesn’t know about the new Will, they may seek a grant of probate for the wrong Will.

Once you have properly signed and witnessed your new Will, it is best to destroy any old Will or, if you feel you must keep it, to mark them it as having been revoked by a later Will (eg by writing on it something like ‘replaced by Will dated xx/xx/xxxx’).

PARTICULAR ASSETS AND LIABILITIES

I own a house in joint names with my spouse/partner. What happens to our house when I die ?
That depends. If you own the house with your spouse/partner as joint tenants and they survive you, your share of the property will automatically pass to them on your death. It won’t form part of your estate and can’t be dealt with under your Will.

If you own the house as tenants in common, your share of the property will pass to your estate and can be dealt with under your Will.

To find out whether you own your house as joint tenants or tenants in common, you may need to have a look at the legal documentation from when you purchased the house or do a title search at the Land Titles Office.

If you own real estate with your spouse/partner as joint tenants but want to be able to deal with it in your Will, it is possible to change the ownership to tenancy in common. However, that requires the agreement of your spouse/partner and the signing and registration of legal documentation to effect the change in ownership. It may also have tax or stamp duty ramifications. You should seek specific legal advice if you want to pursue this course of action.

See also ‘What happens if a beneficiary of my Will dies at the same time as I do?’

I own company shares in joint names with my spouse/partner. What happens to the shares when I die ?
You will need to check the constitution of the company to see what it provides in these circumstances. Most company constitutions in Australia provide that shares held by 2 or more people jointly are held as joint tenants. If that applies to the company in question, your interest in the shares will automatically pass to your spouse/partner on your death. It won’t form part of your estate and can’t be dealt with under your Will.

I have a life insurance policy. What happens to my life insurance pay-out when I die ?
When you took out the life insurance policy, you would have been asked to nominate the beneficiary of the policy. Any pay-out under the policy will be paid directly to the nominated beneficiary. If you nominated yourself or your legal personal representative as the beneficiary, the pay-out on your policy will be made to your executor and will form part of your estate. If you nominated someone else as the beneficiary, the pay-out will go straight to them and won’t form part of your estate.

I am a member of a superannuation fund. What happens to my super benefits when I die ?
That depends on whether your super fund accepts “binding death benefit nominations” (not all do) and, if so, whether you have made such a nomination. Some super funds allow you to do a binding death benefit nomination, which as the name implies directs how you want your death benefit paid and is binding on the trustee of your super fund. The only persons who can be nominated to receive your death benefit in a binding death benefit nomination are your spouse, dependants or your legal personal representative (ie the executor of your Will or, if you die intestate, the administrator of your estate). A binding death benefit nomination lapses every 3 years and has to be renewed.

If you nominate your legal personal representative, the death benefit will form part of your estate and will be dealt with in accordance with your Will.

If you nominate your spouse or dependants, the death benefit will be paid directly to them and will not form part of your estate.

If your super fund does not accept binding death benefit nominations or if you haven’t done one, then the rules of the super fund will govern how your super benefits will be paid at your death. In most cases, the trustee of the super fund will be required to pay your death benefit to such of your spouse, dependants or legal personal representatives, and in such proportions, as it chooses in its discretion.

Sometimes, you may be asked to indicate your preferred beneficiary and the trustee will have regard to your preference in making a decision but will not be bound to do so (unless it is done by way of a binding death benefit nomination).You should ask the trustee of your super fund to find out whether you can make abinding death benefit nomination. If so, you should talk to your financial planner about how best to complete the nomination. In some cases, it may be better to leave your entitlement to your spouse or dependents in defined shares and in other cases it may be better to leave it to your estate.

PLEASE NOTE: You should only specify your estate in a binding death benefit nomination after having taken specific advice from your financial planner, tax adviser or accountant, since this can have tax and other consequences.

What happens to my debts when I die ?
Your executor has to pay them, if necessary by selling your assets. After you die, your executor is required to publish a notice of your death and invite creditors and other people who may have a claim on your estate to stake their claim. This is why it is important that you plan for paying out your liabilities on your death through life insurance and/or superannuation. For example, you might own a house in your own name that you want to leave to your spouse/partner. If you don’t have enough other assets to pay out your debts, your executor may have to sell the house to cover your debts and your spouse/partner will be left without a home.

If your debts exceed the value of the assets in your estate, your estate will be administered as a bankrupt estate. In most cases, your creditors will be paid out proportionately. Your next of kin generally will not be responsible for your debts, unless they have guaranteed them.

What happens to my tax liabilities when I die ?
After your death, your executor is required to lodge all of your outstanding tax returns up to the date of your death. This will include a final ‘date of death’ personal tax return. To the extent that there is any tax payable under those returns, the executor will have to pay it out of your estate, just like any other debt.

Who pays tax on my estate after I die ?
Your estate will be treated as a trust for tax purposes. The executor will need to apply for a trust tax file number and, if the estate earns income in any tax year, the executor will have to lodge a trust tax return for that year. The net income of the estate will be taxed either in the hands of:

* any beneficiaries who are presently entitled to the income, to the extent they are so entitled; or

* the executor (although he will not be personally liable and the tax will have to be paid out of your estate).

Will there be any death duties or capital gains tax payable on my estate ?
There are no death duties in Australia. However capital gains tax (CGT) may be payable as a consequence of your death. If in realising the assets of your estate, your executor sells an asset that would have given rise to a CGT liability for you if you had sold it during your lifetime, your executor will have essentially the same CGT liability on the proceeds of sale. Any CGT payable will be payable out of your estate.

If an asset is transferred under your Will to a non-resident of Australia for tax purposes or to a non-taxpayer (such as a charity), that will be treated as if it were a sale at the fair market value of the asset at the time of your death. If you would have had a CGT liability on such a sale if it had happened during your lifetime, your executor will have essentially the same CGT liability on the deemed proceeds of sale. Any CGT payable will be payable out of your estate.

However, if an asset is transferred to an Australian resident taxpayer under your Will rather than sold, generally no CGT will be payable at that point. The beneficiary will get a cost base in the asset equal to:

* your cost base, if the asset was acquired by you after 19 September 1985 (the start date for CGT date); or

* the value of the asset at the time of your death, if the property was acquired by you before that date, and will only pay CGT if and when they dispose of the asset.

Special CGT rules apply to a sale of your principal residence, where certain exemptions and concessions may be available. This is a complex area and the description above is necessarily general. You should seek advice from your accountant or tax adviser if this is of concern.

CHANGE IN CIRCUMSTANCES

What happens if I marry after making a Will ?
Marriage automatically revokes any Will you have made except for one that was made just prior to the marriage and expressly stated to be made “in contemplation of marriage”. Apart from that one exception, if you marry, you will need to make a new Will.

What happens if I separate or divorce after making a Will ?
You should review your Will to make sure it is still appropriate in light of your changed circumstances and make a new one if necessary. Separation from your spouse, of itself, has no effect on your Will. If you have left property to your spouse in your Will and you die, they will still get that property even though you have separated. Similarly, if you have appointed your spouse as your executor, they will still be entitled to take up that role (although they may not want to).

If these are not outcomes you want, you will need to make a new Will.

Divorcing your spouse, on the other hand, does affect your Will. Unlike marriage, divorce does not automatically revoke your whole Will but it can change the way it operates.

If you make a Will and then get divorced after it is made, any appointment of your former spouse as your executor and any gift you have left to your former spouse in your Will is automatically revoked unless:

* a court is satisfied that was not your intention; or

* you re-publish the Will or do a Codicil to the Will after the divorce without

changing the appointment/gift.

Rather than leave these matters open to dispute, it is much better for you to do a new Will after you have divorced that makes your intentions concerning your former spouse crystal clear.

What happens if I have a child after making a Will ?
This has no effect on the validity of your Will but you should review your Will to make sure it is still appropriate in light of your changed circumstances and make a new one if necessary.

In this regard, if you have said in your Will that you leave property to your “children” without specifically naming them, then the new child will participate in the gift and you may not need to alter your Will. However, if you have named your children in your Will, you will need to do a new Will including your new child, assuming that is your intention.

You should note that if your new child is not included in your Will before you die, they may be able to bring a claim against your estate under family provision laws (see ‘Can I specifically exclude my spouse/partner or a child or other dependant from being a beneficiary under my Will?’)

What happens if I adopt or foster a child or gain a step-child after making a Will ?
This has no effect on the validity of your Will but you should review your Will to make sure it is still appropriate in light of your changed circumstances and make a new one if necessary.

Any child you legally adopt is regarded as your child. If you leave a gift in your Will to “your children”, that will include an adopted child.

The same is not true, however, of fostered children or step-children. They are not “your children” unless and until you legally adopt them. If you want to leave a gift to a fostered child or a step-child in your Will, you will need to make specific provision for that in your Will.

I am a male and I have left all or part of my estate to my children in my Will. What happens if someone emerges who is or claims to be a child of mine who I didn’t know I had fathered ?
That depends on how your Will is worded.

If you have said in your Will that you leave property to your “children” without specifically naming them, then someone who can prove that you fathered them will be entitled to a share in your property. Legally, they will be your “child” even though they may have been borne out of wedlock and you did not know about them.

On the other hand, if you have said in your Will that you leave property to:

* specifically named children; or

* children who are described in a way that does not include other potential children

(eg “any children I have with my wife Mary”),then the new child who emerges won’t be entitled to share in the gift (although they may have other legal claims against your estate).

This means you need to think carefully in terms of how you refer to your children in your Will. On the one hand, it is tempting not to name them and simply to talk about “my children” so that you don’t have to re-write your Will every time you have another child. However, that can lead to the issues this question is designed to highlight.

What happens if a beneficiary of my Will dies before I do ?
Ordinarily, any specific gift you have made in your Will to a beneficiary who dies before you do will lapse upon their death. The gift will be taken to form part of the residue of your estate and will go to whichever “reserve beneficiaries” you have nominated in your Will to receive this (lawyers call these your residuary beneficiaries and the interest they get your residuary estate).

If the beneficiary who died was the sole residuary beneficiary, then your residuary estate will go to the person or persons who would have been entitled to receive it if you had died intestate.

This is one of the reasons we recommend that you review your Will if a beneficiary dies.

However, special rules apply if the beneficiary who has died is a child or grandchild of yours and they have been survived by a child or children of their own. Those rules vary between the different States and Territories.

If your Will was made in the Australian Capital Territory, Northern Territory, Queensland, Tasmania, Victoria or Western Australia, unless your Will specifically states otherwise, the law provides that the deceased beneficiary’s share in your Will passes to their child or children.

If your Will was made in New South Wales or South Australia, however, unless your Will specifically states otherwise, the law provides that the deceased beneficiary’s share in your Will passes to their estate as if they had survived you. This won’t necessarily mean that their share in your Will goes to their child or children (for example, the deceased beneficiary may have left their estate to their spouse).

To ensure that a gift goes to their grandchildren rather than someone else who may have been nominated in their child’s Will, it is common for most Will makers (whether they live in New South Wales or South Australia or elsewhere) to provide in their Will that if a child dies before the Will maker leaving any children – ie the Will maker’s grandchildren – those grandchildren take the share that their parent would otherwise have taken in equal shares. Our Wills can include such a provision.

What happens if a beneficiary of my Will dies after I do but before the gift I left is paid to them by my executor ?
The gift is still valid and will be paid by your executor to the executor or administrator of the deceased beneficiary’s estate.

What happens if a beneficiary of my Will dies at the same time as I do ?
There is a presumption at law, called the presumption of survivorship. Where two people die around the same time and it can’t be proved who died first, it is presumed that the older of the two died first.

Hence, if you are older than your beneficiary, you will be presumed to have died first. Any gift you have made in your Will to the beneficiary will pass to their estate (see ‘What happens if a beneficiary of my Will dies after I do but before a gift is made to them by my executor?’). However, any gift the beneficiary has made in their Will to you will lapse.

On the other hand, if you are younger than the beneficiary, you will be presumed to have survived the beneficiary. Any gift you have made in your Will to the beneficiary will lapse (see ‘What happens if a beneficiary of my Will dies before I do?’). However, any gift the beneficiary has made in their Will to you will pass to your estate.

This presumption may operate unfairly, especially as between spouses/partners who nominate different beneficiaries in their Wills. If both spouses/partners die at the same time (eg in a car accident), the older will find that any gift they have left to their spouse/partner will ultimately go to the beneficiaries nominated in their spouse/partner’s Will. However, any gift their spouse/partner has made to them will fail and will not go to the beneficiaries nominated in their Will. The consequence is likely to be that the beneficiaries nominated in the spouse/partner’s Will will share disproportionately in the assets of the relationship.

To help address this issue, it is common for Will makers to provide that a gift to their spouse/partner is conditional on the spouse/partner surviving the Will maker by a certain period (usually 30 days). That way the presumption of survivorship does not come into play.

You should note that the presumption of survivorship also applies to property held as joint tenants. For example, you might own your house as joint tenant with your spouse/partner. If the two of you die at the same time and you are older than your spouse/partner, you will be presumed to have died first. Your interest in the house will pass to them and will then be dealt with in accordance with their Will.

If you are younger than your spouse/partner, you will be presumed to have survived your spouse. Their interest in the house will pass to you and will then be dealt with in accordance with your Will.

I have left a gift of particular property to a beneficiary. What happens if I dispose of that property or if it is lost or destroyed before I die ?
Your Will can only speak at the time of your death. If you purport to leave property in your Will that you no longer own at your death then the gift fails.

For this reason, you should be careful how you describe your property in your Will. For example, if you say “I leave my Holden motor car to my brother” and you have since sold that car and bought a Ford, your brother will miss out.

If you want to leave specific gifts of property to a beneficiary and are concerned about how they should be described, please take the option to have your Will checked by one of our paralegals or discuss with us during planning.

In any event, whenever there is a major change in the make-up of your assets (eg you buy or sell a house), you should review your Will to make sure it is still appropriate in light of your changed circumstances and make a new one if necessary.

What happens if my executor dies or is otherwise unable to perform their duties as executor ?
This has no effect on the validity of your Will.

If you have catered for this in your Will – eg by appointing a back-up executor to act if the main executor dies or multiple executors – the back-up or remaining executor(s) will simply take over the role from the person who has died or who is no longer able to act.

If you appointed only one executor in your Will or if all of the executors you have appointed are no longer able to act and this happens:

* before you die, you should do a new Will naming a new executor;

* after you die but before probate of your Will is granted, one or more of your beneficiaries will need to apply to the court for letters of administration appointing an administrator to carry out the instructions in your Will. The other beneficiaries will have to consent. If there is a dispute as to who should be appointed as administrator, the court will usually appoint the Public Trustee to take on the role; or

* if the last surviving executor of your Will dies after probate of your Will has been granted, the executor of the deceased executor will take over the administration of both your estate and the last surviving deceased executor’s estate. That might be a person you have never met.

What happens if the person I have appointed as the guardian of my children dies or is otherwise unable to perform their duties as guardian ?
If this happens before you die, you should do a new Will.

If this happens after you die and the other parent of the children is no longer living or able to look after the children, a court will have to determine who looks after them as their guardian.

What happens if a witness dies ?
This has no effect on the validity of your Will. The only practical effect is that the witness won’t be able to give evidence about the signing of the Will. This will only be an issue if there is a dispute over the signing of the Will.

CROSS-BORDER ISSUES

If I make a Will in the State or Territory where I live, will it be recognised in other States or Territories where I have property ?
Yes. There are laws in each State and Territory that recognise the validity of a Will that is properly executed under the law where the Will maker lives, even if that law is different from the State or Territory in question.

If I make a Will in Australia, will it be recognised in other countries where I have property ?
Most likely yes, but you should check with lawyers in the particular country in question whether it will be recognised there and also whether there are any particular local law formalities that need to be followed (eg does it have to be signed or witnessed in a particular way, does it have to be notarised, does it have to be registered under local law etc).

I am an Australian citizen living overseas and I have property in Australia? Which law should I make a Will under – Australian law or the law where I live ?
You can do either and it will be treated as a valid Will under Australian law.

However, before you do a Will under Australian law, you should check with lawyers in the country where you live whether it will be recognised there and also whether there are any particular local law formalities that need to be followed (eg does it have to be signed or witnessed in a particular way, does it have to be notarised, does it have to be registered under local law etc).

OTHER MATTERS

I want to make my organs available for transplant after I die. What should I do ?
You can provide for this in your Will. However, that may not be all that effective if, say, you die in a car accident and no-one is around at the time who knows what is in your Will and can pass on your wishes to the hospital.

In addition to making your intentions clear in your Will, you should have a note included on your driver’s licence indicating which organs you wish to donate (you have the option to do this each time you renew your driver’s licence). You should also register your name on the Australian Organ Donor Register.

You can do this online at:

https://www2.medicareaustralia.gov.au/pext/aodr/Pages/DonorRegistration.jsp

For more information about the Australian Organ Donor Register, go to:

http://www.medicareaustralia.gov.au/yourhealth/our_services/aaodr.htm

What are “mutual Wills”? When should I consider having mutual Wills ?
Mutual Wills are Wills made between two people under which each they agree to make gifts to certain beneficiaries and not to alter their Wills without the agreement of the other.

Mutual Wills are sometimes used by married couples wanting to ensure that if one of them dies and the other remarries or forms a de facto relationship, their property will go to their children rather than to the new spouse/partner.

They are also sometimes used by couples who are in a second or subsequent relationship and who each have children from a former relationship, to ensure that appropriate provision is made for those children.

Mutual Wills need to be carefully structured to ensure they meet the objectives and cater for the individual circumstances of each of the Will makers. They have to be documented in a legally binding agreement that clearly evidences each party’s intention not to alter their Wills without the agreement of the other.

What else should I consider when I make a Will ?
In addition to thinking about what should happen when you die and making appropriate provision for that in your Will, you should also think about what would happen if you were to become legally incapacitated but did not actually die.

For example, who would look after you and your family and affairs if you were left in a coma following an accident?

Depending on where you live, you should think about putting in place an Enduring Power of Attorney and/or an Appointment of Enduring Guardian.

For more information, see our FAQs on Powers of Attorney and Guardianship.

For professional assistance with Enforcement of Agreements, please contact James Legal Consultants using the Contact Us link above.