What is a Will?
A Will is an official document that contains your instructions as to how your assets are to be dealt with on your death.
The person making the Will is called the “testator”. The persons inheriting under your Will are called the “beneficiaries”. The person or persons who undertake all the work to distribute your assets in accordance with your Will are the “Executor/s” (they are sometime also referred to as “trustees”).
Generally, a valid Will must be in writing, signed by you and witnessed by two adults who have seen you sign the Will.
Why do I need a Will?
When you have a Will, you have a say in how your assets are dealt with on your death. You have a say not only in who your beneficiaries are, but also whether any conditions should apply to the gifts in your Will (for example, you may prefer that children reach a certain age before they receive their inheritance).
If you don’t have a Will, there is legislative formula that determines who is entitled to your estate. Every family situation is different and so the legislative formula will not be appropriate for everyone. If you don’t have a Will it’s possible that some of your loved ones will miss out or that the people ultimately entitled to your estate are not the people you would wish to benefit.
When you have a Will, you can choose your Executor. Without a Will in place you have no say in who will take on that task.
Without a Will, there could be an increased chance of disputes between your beneficiaries regarding a number of matters, including who should be responsible for administering your estate and how your property should be dealt with.
Who will receive my estate if I die without a Will?
If you die without a Will, you are said to die “intestate” and your assets will be dealt with in accordance with the terms of Chapter 4 of the Succession Act 2006. It is important to note that the intestacy laws vary between different states and territories. The table below sets out a summary of who is entitled.
|Relatives left by the deceased||Who is entitled|
|Spouse and no children||The spouse receives the entire estate|
|Spouse and all children are also children of your spouse||The spouse receives the entire estate|
|Spouse and one or more children from a previous relationship||The spouse receives:|
· the personal effects of the deceased
· a statutory legacy which is a an amount of money which increases over time with the CPI. The base amount set by the legislation was $350,000 as at December 2005, but after applying the CPI increases the amount is currently over $450,000
· one half of the remainder of the estate
All of the children of the deceased share equally in the other half of the remainder of the estate.
|Children and no spouse||The children are entitled to the whole estate in equal shares. If a child has predeceased but has a child or children surviving, those children (being grandchildren of the deceased) are entitled to the share their parent would have taken. If any of those grandchildren predeceased leaving a child or children surviving then those children (being great grandchildren of the deceased) are entitled to the share their parent would have taken, and so on.|
|No spouse, children, grandchildren, great grandchildren etc surviving||The parents of the deceased are entitled to the whole estate in equal shares. If only one parent survived, that one parent will receive the whole estate.|
|No spouse, children, grandchildren etc or parents surviving||The brothers and sisters of the deceased are entitled to the whole estate in equal shares. If a brother or sister has predeceased but has a child or children surviving, those children (being nieces and nephews of the deceased) are entitled to the share their parent would have taken. If any of those nieces and nephews predeceased leaving a child or children surviving then those children (being great nieces and nephews of the deceased) are entitled to the share their parent would have taken, and so on.|
|No spouse, children, grandchildren etc, parents, siblings or nieces and nephews||The surviving grandparents are entitled to the whole estate equally. If only one grandparent survives they will receive the whole estate.|
|No spouse, children, grandchildren etc, parents, siblings, nieces and nephews or grandparents||The surviving Aunts and Uncles of the deceased are entitled to the whole estate in equal shares. If an Aunt or Uncle predeceases but has a child or children surviving, those children (being first cousins of the deceased) take the share their parent would have taken.|
|No spouse, children, grandchildren etc, parents, siblings, nieces and nephews, grandparents, Aunts and Uncles or first cousins||The State of NSW (ie. the Government)|
Some important things to note:
- A spouse includes not only a married spouse, but also a defacto spouse. To be entitled as a defacto spouse the relationship must have been in place for at least 2 years up to and including the death, or otherwise must have resulted in a child. A spouse also includes a person who was in a registered relationship with the deceased (that is, a relationship registered under the Relationships Register Act (2010).
- The law recognises that a person may have more than one spouse. As an example, a person may be separated from the person to whom they are married, and they may be in a long term defacto relationship. Where there is more than one spouse entitled to the estate, the spouses share the estate (or that portion of the estate to which the spouses are entitled), although not necessarily in equal shares. The spouses can attempt to reach agreement on how much they each receive, or the Court can decide.
The above is a general overview of what happens if you die without a Will. As you can see, it can become quite complicated. This makes it all the more important to have a Will, to ensure you have a say in who gets what, and to lessen the chance of disputes arising.
Who can make a Will?
A person must be over the age of 18 years to make a Will and they must have capacity to make the Will (known as ‘testamentary capacity’). There is a legal test which sets out the matters a person must be able to comprehend in order to have testamentary capacity. In summary, a person is considered to have testamentary capacity if he or she:
- Can understand the nature and effect of a Will
- Has a general understanding of the extent of the property he or she is disposing of by Will
- Can understand and recognise the people who have a natural claim upon his or her estate (such as spouse, children and other dependants) and this assessment must not be affected by disorders of the mind or insane delusions.
The fact that someone is very old, is of ill health or suffering from dementia does not automatically mean they lack testamentary capacity. Whether or not a person has testamentary capacity must be considered in the context of the test referred to above.
Since 2008, the Court has been able to make, alter or revoke a Will for a person without testamentary capacity, after considering relevant evidence, including any available evidence as to the person’s wishes. These Court made Wills are referred to as ‘statutory wills’, and involve an application to the Supreme Court of New South Wales. For more information about wills for people who lack testamentary capacity, see our information sheet “Statutory Wills”.
Who should I appoint as my executor?
Your executor takes on the responsibility of dealing with your estate after your death. They will need to obtain probate of the Will (depending on your assets), attend to payment of estate liabilities, finalise your taxation affairs, collect assets, possibly sell assets and finally distribute the estate funds. You will need to choose someone who is trustworthy, responsible and comfortable dealing with financial matters.
Before you appoint someone you should be sure that they are willing to take on the role.
There are a number of options available when selecting an executor. You can appoint one or more individuals to be your executor – this could be family or close friends or it could be a professional person such as your Solicitor or Accountant. Another option is a trustee company, or the NSW Trustee and Guardian.
Can I change my mind?
You can revoke (or cancel) your Will at any time so long as you have testamentary capacity. This is best done by way of a preparing a new Will.
How often should I review my Will?
You should review your Will regularly to make sure that it reflects your current circumstances. We recommend that you review your Will at least every 5 years, or otherwise when a significant life event happens.
Some of the circumstances in which you should review your Will in conjunction with your lawyer, and perhaps update your Will, are as follows:
- If there is a change in your relationship status (for example, if you marry, enter into a defacto relationship, separate or divorce)
- If your family grows (for example, if you have more children or grandchildren)
- If any of your beneficiaries pass away or have a change in their circumstances (for example, a change in their relationship status, financial circumstances or health)
- If your executor passes away, or no longer wishes to act as your executor due to poor health or some other reason
- If you’ve disposed of assets or you’ve acquired assets (this could be a business, real estate, or even something as simple as acquiring a piece of jewellery that has sentimental value)
- If your wishes have changed
What happens if I marry or divorce?
Generally, an existing Will is revoked on marriage, although there are some exceptions to this, such as where the Will is made in contemplation of the marriage. Another exception is that, if the marriage occurred on or after 1 March 2008, then any provision in your Will in favour of the person you married and any appointment of them as an executor or trustee will remain in place, but the Will is otherwise revoked. You should always review and update your Will when you marry.
Similarly, certain provisions of your Will become void on your divorce, namely in relation to the naming of your former spouse as a beneficiary and executor. You should prepare a new Will as soon as possible following separation.
A lawyer can assist you in preparing a Will that is valid and advise you generally in relation to the advantages and disadvantages of structuring your Will to optimise the benefit to your beneficiaries.
Information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Advice from our experienced Estate Planning Team (on telephone 4929 3995) should be sought if there is doubt as to the applicability of this information to individual circumstances.