Succession - More Information
Wills
Introduction
The answers to some frequently asked questions on Wills and succession planning are listed below. Should you require any further information about your Will or succession planning, please do not hesitate to contact one of Snedden Hall & Gallop’s experienced estate planning lawyers.
Q. What happens if I don't have a Will?
A. If you die without leaving a Will, you are said to die intestate. The law sets out a complicated formula for people who die without leaving a Will and the law varies between the states and territories.
Your spouse would normally receive the bulk of your estate (subject to certain exceptions dependent upon the size of the estate). In some states/territories, the definition of a spouse does not include a same sex partner.
If you die without leaving a spouse, then normally your children would inherit the estate, but, again, the rules vary, depending upon the state/territory.
There are further provisions in the event that you die without leaving a child or spouse but, in an extreme case, your estate may pass to the government. It is for this reason that Snedden Hall & Gallop’s experienced lawyers stress that it is important that you have a legally drafted Will to accurately set out your wishes.
Q. What is an executor?
A. Under the terms of your Will, you will need to appoint somebody called an executor. The executor is the person who would look after your affairs after you have died and ensure that your wishes are complied with. The executor may be anyone over the age of 18 and must be somebody you trust implicitly. You may appoint more than one executor.
If you only wish to have one person as your executor (initial executor), it is always prudent to appoint another person as your alternate executor. This person would look after your affairs if something happened to the initial executor.
If you do not have a family member, friend or relative that you would trust to look after your affairs after you have died, Snedden Hall & Gallop’s lawyers recommend that you appoint a trustee company as your executor. A trustee company is also a good choice as executor if you have small children or long-term provisions in your Will that would require constant administering.
Q. Do I need a Will if my property is jointly owned with my partner?
A. Many people own all of their property jointly with their partner, e.g., bank accounts and real estate, and, as a general rule, that property would pass to the surviving partner. If you own real estate with your partner as joint tenants, the law dictates that that property can only go to the surviving partner. However, if both of you were to pass away at the same time, it would be essential that you have a properly drafted Will to accurately dispose of the real estate. This is another reason why Snedden Hall & Gallop’s lawyers stress that it is important that you have a Will.
A. Generally speaking, superannuation is not disposed of by your Will but is directed in accordance with the terms of the superannuation trust. The trustees of that trust ultimately determine where your superannuation entitlements would be paid in accordance with the terms of the trust. You would normally be required to nominate beneficiaries at the time you set up the superannuation policy. It is important to update the names of beneficiaries if you separate or divorce from a partner or if any of the nominated beneficiaries predecease you.
The superannuation trust would normally determine the appropriate beneficiaries by establishing who is dependent upon you at the time of death. If no dependants can be established, then it is possible that your superannuation entitlements would form part of your estate and be left in accordance with your Will.
A. If you own a share or shares in a private company, it is important that you consult a solicitor to determine what will happen to that share upon your death. The share will normally form part of your estate, but it is recommended that you check the company records carefully to determine what happens upon the death of a shareholder. If you are looking at establishing a company for any reason, it would be wise to consult a solicitor to determine whether or not it might affect your Will.
A. Normally, the terms of a life insurance policy require you to nominate a beneficiary or beneficiaries and therefore the proceeds from that policy would not form part of your estate. It is important to consider this when looking at provisions for various people under the terms of your Will.
Q. What do I do if I want to leave somebody out of a Will?
A. The law requires people making Wills to be fair and just when deciding whom their beneficiaries will be. An example is, if you support somebody, such as a child or a partner, and you elect to leave that person out of your Will, that person may have a claim upon your estate under various pieces of legislation. For this reason, it is important that you consult an experienced estate lawyer for advice on potential claimants and your obligations to those that you support.
Q. Where should I keep my Will?
A. It is unwise to retain the original of your Will with your own papers unless they are stored in a safe or in a safe custody packet with a bank. Snedden Hall & Gallop can provide clients with a service whereby their Wills are kept in safe custody in a secure environment.
Snedden Hall & Gallop will also provide you with copies of your Will and recommends that you provide your executors with copies and advise them where the originals are being held.
Q. What is a guardian, and should I have one?
A. A guardian is somebody you appoint to care for your infant children should you and your partner (if any) die. Your Will is the appropriate means of appointing a guardian and you should choose the guardian carefully. Bear in mind that by appointing a person as a guardian, you may be placing a substantial financial hardship on that person, which may need to be compensated by way of a gift to the guardian under the terms of the Will. As a general rule, the guardian cannot use the beneficiaries’ interest in the Will for his/her personal benefit, e.g., buying a larger car or putting an extension on his/her house to accommodate the children.
Q. How much will a Will cost me?
A. Snedden Hall & Gallop’s fees for Wills vary depending upon the complexity of the drafting. Basic Wills for a couple, where there are no complicated assets, previous marriages or children from a previous relationship, will cost in the vicinity of $660.00 (including GST). However, the reality is that often people's affairs are not that easily categorised and, therefore, Snedden Hall & Gallop’s lawyers would normally charge an hourly rate for any complex drafting of Wills.
Q. If I have an interest in a trust, can I pass it by Will?
A. Often people are nominated as beneficiaries in family trusts. This entitles them to receive income from the trust for the lifetime of that legal entity. A beneficiary under a trust is not able to leave his/her interest in that trust to somebody else under a Will. The beneficiary’s interest in the trust passes according to the terms of the trust.
Q. Why can't I use a Will kit and do my own Will?
A. You will appreciate from the above information that the considerations in making a Will are complex. Therefore, it is important that your Will is properly drafted to avoid your wishes being overturned or considerable costs being incurred by your estate to sort out issues that could have been easily resolved had the Will been properly drafted. There are also rules about the signing of Wills that need to be complied with.
Q. If I want to make a simple change to my Will, how do I go about it?
A. It is important not to alter or add to the original Will in any way that may result in the Will being declared invalid. The proper way to make a minor amendment to a Will is by way of a Codicil. A Codicil is a short additional document evidencing the change to the original Will. It is often easier to prepare a new Will to ensure that your wishes are properly documented.
Q. What happens if I marry after making the Will?
A. If you marry after making a Will, the Will will be revoked (or cancelled) by the marriage unless it is expressed in the Will that it is being made in contemplation of your marriage. It is, therefore, important that you make a new Will if you plan to marry.
Q. What happens if I divorce after making a Will?
A. The law relating to divorce and its impact on Wills is complex and not uniform throughout Australia. You should consult a solicitor if you are contemplating divorce, or have been divorced since making your Will.
Q. How often should I review my Will?
A. Your Will should be reviewed every 2 - 3 years, whenever a major event occurs in your family, or whenever there are significant changes in your assets or the taxation law. You should consult your solicitor if:
- you change your name or anyone in the Will changes their name;
- an executor dies or becomes unwilling to accept an appointment;
- a beneficiary to the Will dies;
- you have specifically left property that you subsequently give away or put into trust or partnership;
- you marry or divorce;
- you have children;
- you enter into a de facto or a same sex relationship.
Q. Do I have to tell my partner if I wish to make a new Will?
A. You are free to change your Will or revoke it at any time without informing your partner. However, this does not apply if you and your partner have made mutual Wills (i.e., you have agreed not to change your Wills without the agreement of the other partner). Mutual Wills are occasionally used to protect children of earlier relationships where couples have entered into second or subsequent relationships.
Q. Can I leave specific items of property to particular people?
A. There is no difficulty with leaving particular items to certain people and it is quite common for pieces of jewellery or items of sentimental value to be left to partners or children. These wishes can be accommodated in your Will.
Q. If I come to see a lawyer, what do I need to bring with me?
A. If you have an appointment to see one of Snedden Hall & Gallop’s experienced lawyers, you should bring:
- details of your full names and address and the full names and addresses of any proposed beneficiaries;
- details of your assets, including any interests in companies, superannuation entitlements and life insurance policies;
- the name and address of your proposed executor(s); and the name(s) and address of the proposed guardian(s) of your infant children.
Powers of Attorney
Introduction
A Power of Attorney is a legal document that allows you to appoint another person (known as an attorney) to manage your affairs and make legally binding decisions on your behalf.
There are two types of Powers of Attorney:
- General Power of Attorney; and
- Enduring Power of Attorney (EPA).
Some frequently asked questions about Powers of Attorney are answered below.
Q. What is the difference between a General Power of Attorney and an Enduring Power of Attorney?
A. A General Power of Attorney is only valid while you are mentally competent. Examples of when you would use this form of Power of Attorney are if you were going away on holiday or being admitted to hospital for an extended period.
An EPA appoints an attorney for the long-term and remains valid even if you should become mentally incapacitated. It allows your attorney to make financial, property, personal and medical decisions on your behalf.
In both forms of Power of Attorney, you can restrict the types of decisions that your attorney can make on your behalf by including conditions or limitations in the document.
Both types of Power of Attorney cease to have effect upon your death.
Q. Who should be my attorney?
A. Any person over the age of eighteen can be your attorney. However, Snedden Hall & Gallop’s lawyers recommend that the person you choose to be your attorney is a person whom you trust absolutely and without question.
Q. What is an alternate attorney?
A. An alternate attorney is someone appointed by you to act in place of your attorney should your attorney die or be unable or unwilling to continue.
Q. What powers does my attorney have?
A. Your attorney will look after your property and financial affairs.
If you have given your attorney the power to deal with your personal care matters, the attorney may deal with where you live; who you live with; whether, where and how you work; what education or training you receive; whether you apply for a licence or permit; your daily dress and diet; whether to consent to forensic examination of you; whether and where you will go on holiday; and legal matters relating to your personal care.
If your attorney’s power extends to healthcare matters, this means that he/she will look after your healthcare needs except for special healthcare matters (see next question).
Q. What are the powers that I cannot give to my attorney?
A. You cannot give powers to an attorney for special personal matters (i.e. making or revoking your will; making or revoking a General Power of Attorney or EPA; voting in an election or referendum; consenting to the adoption of your child under 18; or consenting to your marriage), and special healthcare matters (i.e. removal of non-regenerative tissue from you for donation; sterilisation if you are, or are reasonably likely to be, fertile; termination of pregnancy; participation in medical research or experimental healthcare; treatment of mental illness; electroconvulsive therapy or psychiatric surgery; or prescribed healthcare.
Q. When can I make an EPA?
A. You can only make, or revoke (cancel), an EPA while you are mentally competent. This means that if you have had a stroke, have Alzheimer's, dementia, or brain damage, and you cannot make your own decisions, you cannot make or revoke an EPA. For this reason, Snedden Hall & Gallop’s lawyers recommend that you make and sign your EPA now but delay when your attorney can commence to act. This gives the person you have chosen to look after your affairs the power to do so should an unforeseen event, such as an accident or serious illness, occur.
Q. What happens if I don’t have an EPA?
A. If you do not have an EPA and you become mentally incapacitated, any person may apply to the Civil & Administrative Tribunal to be appointed as your guardian. In these circumstances, you do not have control over who this person is.
In addition, if you do not have an EPA, or a legally appointed guardian, no person can make decisions for you while you are mentally incapacitated. This could mean that you are left in limbo medically, financially and personally.
Q. Won’t my Will cover my wishes if I become mentally incapacitated?
A. No, your Will is a document that expresses your wishes after your death; it does not allow a person to make decisions for you while you are alive and physically or mentally incapacitated.
Q. Why do I need a Power of Attorney, I have my family?
A. If you do not have an EPA, your family members do not automatically have the right to make financial, property, personal or medical decisions for you while you are mentally incapacitated.
If you require any further information, please contact one of the members of Snedden Hall & Gallop’s experienced team of lawyers on (02) 6285 8000
Estate and Family Provisions
Introduction
The following questions and answers may help you with any queries that you have about your estate matter. Should you have any further questions, Snedden Hall & Gallop’s two experienced estate lawyers, Bill Andrews and Tanya Herbertson, would be very happy to answer them for you.
Q. What happens to a person's assets after death?
A. A person's assets will normally be distributed in accordance with his/her Will. If a person dies without leaving a Will, the law sets out criteria to determine who will inherit from the deceased person. If no eligible persons fall within the criteria, then it is possible a person's estate may be left to the government.
Q. What is Probate?
A. A Grant of Probate is a document, issued by the Supreme Court, that establishes that a person's Will is in order and that the executor named in that Will has the power to look after the deceased person's affairs. Before Probate can be obtained, it is necessary to advertise your intention to apply for the Grant of Probate(normally in a local newspaper) to give potential creditors of the deceased person an opportunity to come forward and make a claim upon the estate.
Q. What are Letters of Administration?
A. When a person dies intestate (without leaving a Will), it is necessary for an administrator to be appointed (the administrator performs a similar function to the executor of a deceased person's Will). Letters of Administration is the document granted by the Supreme Court to provide the administrator with the authority to look after the deceased's affairs. The deceased's assets would be distributed in accordance with the laws that specifically deal with a person dying without leaving a will (i.e. the laws of intestacy).
Q. What does it cost to obtain Probate or Letters of Administration?
A. In both New South Wales and the ACT, the costs of obtaining Probate or Letters of Administration are determined by scales set down by the relevant Supreme Courts. The scales are based upon the size of an estate.
Q. What happens if I feel I have been left out of a Will?
A. Certain people are eligible to challenge a Will, depending upon their relationship with the deceased person. The law in this area is complex and varies between each state and territory.
In the ACT, if you wish to challenge a Will, you may do so under the provisions of the Family Provision Act. You may be eligible to make a challenge if you are a spouse, domestic partner or a child of the deceased. Parents, stepchildren and grandchildren of a deceased person may also be entitled to make an application provided they meet certain criteria.
A similar set of rules applies in New South Wales, but the law is too complex to summarise briefly. One of Snedden Hall & Gallop’s experienced estate lawyers would be able to advise you once specific details were known.
Q. Are there any other ways I can challenge (contest) a Will?
A. The law requires a person making a Will to be sound of mind and mentally capable to do so. If it can be established that, at the time of making his or her Will, the deceased person lacked the mental capacity to do so, then the Will may be overturned. In addition, if it can be established that the deceased person was under pressure to make his or her Will in a particular fashion, then this may also be grounds for setting aside the Will. Once again, the law in this area is complex and each case needs to be considered individually.
Q. What is the" administration" of an estate?
A. Once Probate or Letters of Administration have been obtained, your lawyer can begin to administer the estate. This includes closing any bank accounts, selling shares and properties owned by the deceased, and finalising any taxation issues. This work would generally be charged at an hourly rate, as set out in a fees agreement and agreed with you at the time your lawyer took your initial instructions.
If you require Snedden Hall & Gallop’s assistance to administer an estate, you would need to provide your lawyer with the following details:
- the whereabouts of the deceased’s original Will (the original Will will be required, particularly if a Grant of Probate needs to be obtained);
- a copy of the Will if the original is not provided;
- the original death certificate;
- full details of all of the deceased person's assets, including real estate, shares, investments, bank accounts, any interests in companies or trusts;
- The name of the deceased person's accountant, together with a recent history of tax returns;
- full details of beneficiaries, including addresses;
- details of any possible claims upon the estate, including creditors and potential disgruntled beneficiaries.
Q. If I wish to challenge (contest) a Will, what information is required?
A. You will need full details of your relationship with the deceased person, including any details of financial dependency and assistance provided to you by the deceased person.