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:

  1. to make the administration of your estate as easy as possible, involving the least amount of time, cost and effort in performing the administration;
  2. to arrange your affairs so that there is the least likelihood of conflict between family members, beneficiaries and legal personal representatives;
  3. to create the most cost-effective method of distributing your estate among beneficiaries;
  4. to avoid creating any unnecessary taxation consequences for the estate or your beneficiaries; and
  5. 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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