The Basics
What is a
Will?
A Will is a document that allocates someone's possessions after
death. In Western Australia, the document has effect by virtue
of the Wills Act (1970).
A Will is a powerful thing - it can influence other people's
lives for good or for bad.
A Will is the last opportunity to make decisions affecting other
people. You can do it cleverly for the benefit of loved ones
or it can be the final act of irresponsibility.
A Will is probably the most important document that you
ever do.
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Everyone
should have an effective Will and Estate Plan
For something that is relatively easy to do, the consequences of
not doing your Will well can be substantial.
Wills and Estate Plans can be easy and straightforward; they can
also be complicated. However, whatever complication or
expense might be involved, it is not nearly as complicated and
expensive as the problems that follow from not having a Will and
Estate Plan that effectively deals with matters that result from
your death. If people knew the problems that they were
leaving their loved ones to deal with, everyone would take the time
and effort to do a proper Will and a properly work out an Estate
Plan. Also, if the people who have to deal with problems knew
in advance what was going to happen, they would make every effort
to ensure that their family members had adequately worked through
the issues.
Wills and Estate Plans provide opportunities to
ensure that your wishes are carried out. Also, they provide
the opportunity to give substantial benefits to beneficiaries by
making appropriate decisions about the management and distribution
of your assets.
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How does a
Will differ from an Estate Plan?
The Estate Plan is the overall plan for dealing with the
consequences of death. A Will partially puts into effect that
plan.
A Will primarily deals with your estate and matters that the law
permits a Will to deal with. A Will does not deal with all of
the financial consequences of your death. Your Will does
not:
- deal with assets that are jointly owned;
- does not necessarily deal with superannuation death benefits
and insurance proceeds; and
- deal with assets of associated entities such as family
companies and family trusts. However, your Will may affect
indirectly the control of such entities.
An Estate Plan, however, looks at all
matters that arise as a consequence of your death whether they are
dealt with by the Will or not and how best to achieve your overall
objectives. Just how much the Will can deal with depends upon
individual circumstances.
An Estate Plan also takes account of the financial issues to
ensure disposal of your estate in the most effective way. The
taxation effects of disposals of assets and the particular rules
for the taxation of deceased estates needs to be understood to
insure a financially effective plan.
Superannuation is important to consider. It may be
appropriate to a binding death benefit
nomination.
Everyone should look carefully at all the financial consequences
and ensure that their overall objectives are in fact met.
The more assets that there are which are outside control of the
Will, perhaps the more important the development of a Estate Plan
becomes. It becomes essential if family companies and trusts
are involved.
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What should be your aims in making your Will or Estate
Plan?
In preparing a Will or Estate Plan your aims should be:
- to make the administration of your estate as easy as possible,
involving the least amount of time, cost and effort in performing
the administration;
- to arrange your affairs so that there is the least likelihood
of conflict between family members, beneficiaries and legal
personal representatives;
- to create the most cost-effective method of distributing your
estate among beneficiaries;
- to avoid creating any unnecessary taxation consequences for the
estate or your beneficiaries; and
- to create to the best possible, most tax effective,
solution for your beneficiaries.
A well constructed Will and Estate Plan can produce substantial
advantages for beneficiaries.
These aims should be kept in mind when making decisions about
the contents of your Will and the arranging of an Estate
Plan. Professional advice can assist greatly in achieving
these aims.
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Wills of other family
members
If you are likely to be the executor or beneficiary of the
estate of a family member, you should ensure that they prepare
their Will with the above aims in mind and truly have an effective
Will. If family members do not do so, it is you (along with
other family members) who will have to deal with the resulting
problems. You may also have missed out on opportunities
that may have been available that would have been of substantial
advantage to you.
Most often, family members are willing to engage in
collaborative planning in relation to such matters even if it
may not been initiated by them.
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What should and
Estate Plan consist of?
An Estate Plan should identify what beneficiaries are to receive
what assets and how they are received - whether by Will or
otherwise. It should also deal with control of associated
entities such as family companies and trusts.
It is helpful if it contains the value is of these assets as it
helps to insure an appropriate proportional distribution.
The next level is to identify the tax effect on asset
disposals and on administration of the estate. Any
proposal for distribution should take account of the effects of
taxation. There are special taxation rules applicable
to deceased estates.
Professional advice is essential. With the your overall
objectives, your financial and family circumstances known,
recommendations can be made about how best to carry
out your requirements. It is not just about managing
finance and taxation issues, but also ensuring the preservation of
harmonious family relationships.
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Superannuation and
Estate Planning
Superannuation can be a complicated matter, not the least of
which is the taxation issues associated with it.
Superannuation death benefits can be an asset of your estate
but it is not necessarily the case. It is important to
understand how superannuation death benefits will be dealt with in
your particular circumstances and to take appropriate action to
ensure that these benefits are directed as you wish them to be.
Usually, the trustee of your superannuation fund (including
self-managed superannuation funds) will have discretion as to whom
to pay superannuation death benefits. This is the case even
if you may have nominated beneficiaries. This is where it is
necessary to consider the use of a binding death benefit
nomination.
It is often the case of that there are benefits in having
superannuation death benefits dealt with by your Will.
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Can I do a Will without an Estate Plan?
You can do a Will without doing an Estate Plan. It is,
however, recommended that an Estate Plan be done. This is so
even if it is very simple.
It is difficult for professional advisers to provide valuable
assistance and advice in the preparation of a Will, if all of the
family and financial issues are not well understood. If you
go to the trouble of setting it all out, it makes sense that a
permanent record should be made of this for future reference and
use.
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Can I do a
Will and Estate Plan in stages?
In some circumstances, it may be appropriate to at least do a
Will that deals with the important issues and then continue over a
period of time to develop a more comprehensive Estate Plan.
With full information about your circumstances, a professional
adviser is able to make recommendations about options available to
you, of which you are likely to be unaware. This can
substantially improve the outcomes of your Will or Estate
Plan. In considering the situation, a professional adviser is
able to make recommendations about your existing affairs which may
need to be considered. Because of the great diversity of
circumstances and the complexity of the law in these areas, you are
unlikely to be aware of all of the available options and their
ramifications. It highlights the need for professional
assistance.
In this way, the development of an Estate Plan can
be broken up into stages. The first stage is to at least get
a workable Will in place. The second stage is to develop a
more sophisticated and beneficial Estate Plan. The third
stage is to review the initial Will and make changes as
required. Professional assistance should be sought at each of
these stages. In particular, professional assistance will be
required in devising an appropriate Estate Plan, particularly one
that is to maximize the opportunities that exist.
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Why do you need professional assistance with an Estate
Plan?
There is a wide variety of areas of law that need
to be understood in order to make an Estate Plan. It is
important to understand the details of what will be required in the
administration of the estate. Further, it is important to
understand the revenue consequences associated with the
administration and distribution of assets. There are specific
taxation rules applicable to deceased estates and it is important
to take account of these in developing a successful Estate
Plan.
It is important that your adviser be properly
briefed on all relevant material and be provided with all relevant
information. It is of great assistance if you can compile the
relevant information to present to your adviser.
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How long does
a Will or Estate Plan last?
Your Will and Estate Plan should be reviewed
periodically. They should be reviewed at least every two or
three years and certainly if there are any material changes to your
circumstances concerning financial matters or family
relationships.
Reviewing your Will and Estate Plan does not
necessarily mean that the documentation will need to change.
It is about ensuring that the scheme provided for in your Will and
Estate Plan still is effective given your present
circumstances. If the existing scheme does not implement your
requirements, then it may be necessary to make changes to the
documentation.
Read about Wills and Estate Planning through different
phases of life.
Professional assistance should also be sought from
time to time as there will be changes to the law (whether by
statute or decisions of the courts) which may affect your Will or
Estate Plan.
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