Wills & Estates
An effective estate plan may require more than preparing a valid Will and it is important to consider various aspects of your life, financial and personal circumstances when planning estate documents.
A valid Will determines who should benefit from your estate when you die and who will be responsible for administering it – those chosen as your executors / trustees. A Will can be simple or complex and can also appoint guardians for minor children and provide directions for funeral arrangements.
A testamentary trust is a more complex Will that creates a trust or trusts after the testator dies. The trust assists in safeguarding assets from third-party creditors, protects at-risk beneficiaries and provides potential tax advantages.
A power of attorney appoints a trusted family member or friend to look after your legal and financial affairs should you be unable to do so yourself. The power of attorney can specify the extent of powers an attorney is authorised to exercise. It can operate for a limited time, such as while you are travelling overseas, for a one-off transaction or take effect indefinitely from the time you lose mental capacity. This is known as an enduring power of attorney.
An appointment of enduring guardian appoints a person to make lifestyle, health and medical decisions on your behalf if you lack capacity to make those decisions yourself. A guardian acts as a substitute decision-maker and may consent to medical and dental treatment and living arrangements. The appointment also authorises health care professionals to share your personal information with your guardian.
Probate is a grant made by a Court that proves the Will of a deceased person, vests title to estate assets in the executor and authorises the executor to deal with the estate. The executor is responsible to pay estate liabilities, distribute gifts, sell and transfer property, arrange estate returns and generally finalise the estate in accordance with the Will.
There is no legal requirement to obtain probate and applying for a grant may not be necessary for small estates or where property was held jointly with a sole beneficiary. In such cases, the deceased’s share of jointly held property can be transferred to the surviving owner by completing the required documents with the relevant authority or institution.
Dying without a Will is referred to as dying intestate. In such cases the deceased person’s estate is distributed in accordance with a statutory formula. The rules of intestacy provide for a specific order of distribution to the deceased person’s next of kin designed to reflect society’s expectations as to who should benefit from the estate. However, they may not consider the real wishes of the deceased nor his or her unique circumstances. This can result in undesired consequences such as:
- family members or friends missing out from an inheritance;
- a disproportionate distribution of assets between family members or leaving out more needy beneficiaries;
- a distribution to a family member with whom the deceased shared no significant or meaningful relationship.
An application for Letters of Administration is made by an interested person when a person dies intestate or the executors named in a valid Will are no longer alive or are unable to fulfil the role.
A grant of Letters of Administration will appoint the applicant as administrator of the estate, allowing him or her to deal with the estate assets and liabilities in the same manner as an executor.
Dealing with a deceased estate can be distressing and often involves complex issues at a time of grief and loss. Executors and administrators may need to liaise with a range of stakeholders to ensure the terms of the Will are upheld.
Disputes involving deceased estates arise for various reasons. Resolving such disputes may result in the terms of a Will or the statutory distribution of an intestate estate being altered through mediation, negotiation and agreement, or by Court order.
A family provision claim may be made by an eligible person seeking a share or greater share from an estate if it can be shown that the deceased failed to make adequate provision for the applicant’s proper maintenance, education and advancement in life.
Generally, an eligible person includes a spouse, former spouse, de facto partner or child of the deceased or certain individuals in a close personal relationship with the deceased or who were dependent on the deceased at the time of his or her death.
Occasionally, an executor may need to defend a family provision claim made against the estate. In such cases, the executor has a primary duty to uphold the terms of the Will and to preserve estate assets. However, an executor may need to consider a justified claim that would otherwise be likely to succeed in Court and negotiate a settlement to avoid excessive legal fees which would usually be payable by the estate if the claim was successful.
Challenging the validity of a Will refers to claims made that a Will is void for lack of formality (not correctly signed / witnessed), lack of mental capacity (the testator was not of sound mind when the Will was made) or because the Will was made by the testator under duress or fraudulent circumstances.
Persons eligible to challenge the validity of a Will include the beneficiaries named in the current or a previous Will and those who would be entitled to the estate if the deceased died intestate (without a Will).