Wills and Estate Planning
Every adult should have a Will – even if you do not have any assets when you make the Will, it will cover money you accumulate and property you acquire subsequently. Even though legislation exists in case you do not have a Will, the result could be in conflict with your wishes and inappropriate to those left behind.
So why use a lawyer to prepare your Will? Given the complexity of laws governing succession, including taxation issues and claims by family members, you need:
- Information to understand what you need to consider in making your Will
- Assistance to make a Will that will achieve your objectives
- Assistance to ensure your Will is properly signed and witnessed in the manner required by law
Given the complexities of taxation laws, family law disputes and creditor claims, and given that most of us now have, or are likely to acquire, two significant assets, namely the family home and superannuation (including life insurance), a “simple” Will is not always appropriate.
We can assist you in making a plan suitable to you and your family. This involves:
- Identifying and understanding the nature of your assets and liabilities.
- Advising you on options available for the giving away of your assets by Will and, if appropriate, during your life time
- Guiding you as to the impact of taxation laws on your assets when you die and how that impact can be taken account of in your Will
- Structuring a plan that balances the need to protect your wealth and the imposition of taxation laws
- Working in conjunction with your accountant and/or financial advisor to achieve the best outcome for your family.
Enduring Power of Attorney
Your Will has no operation until you die. Your Enduring Power of Attorney provides for you during your lifetime by allowing someone you trust to make decisions as to your financial affairs if you become incapacitated through age, illness or accident.
An Enduring Power of Attorney is a very powerful, as well as potentially dangerous, document. We will assist you to:
- Understand how it can, and should be used
- Tailor it to suit your needs
- Protect against its misuse
Appointment of Enduring Guardian
While the Enduring Power of Attorney allows someone to make decisions as to financial matters on your behalf, an Appointment of Enduring Guardian allows someone to make decisions about you and your needs, when you are unable to do so. These decisions can include:
- Where you should be accommodated
- What medical or dental treatment you need
- What personal care services you need
We can help you by:
- Guiding you as to whether you ought to appoint a Guardian
- Ensuring that you, and the Guardian you appoint, understand the effect of the appointment
Managing Deceased Estates
If you are the Executor of a Will, you need to carry out the intentions of the deceased person according to their Will.
In most cases, you need to obtain a Grant of Probate from the Supreme Court. This gives legal recognition to the Will and empowers you, as Executor, to collect and deal with the assets in the estate.
We can help you by:
- Working with you to identify what the assets and liabilities of the estate are
- Advising you as to how the Will determines the treatment and distribution of those assets
- Preparing the Application to the Court and explaining the process to you
- Assisting you to carry out the intentions of the deceased, whether by converting the assets to cash and distributing the cash, or transferring specific assets to the beneficiaries
- Ensuring that you complete the administration of the estate according to law
- Protecting you, where possible, from claims by creditors or relatives of the deceased
POWER OF ATTORNEY
APPOINTMENT OF ENDURING GUARDIAN
PROBATE OR LETTERS OF ADMINISTRATION
CHALLENGES TO A WILL
Why should I make a Will?
It is important that you have a current Will. If you die without leaving a valid Will you are deemed to have died intestate and it is necessary for a Court to appoint an administrator to deal with your estate. That is a more difficult process than obtaining probate of a Will. Your estate will be distributed according to rules set by Government legislation. These rules vary from State to State, but generally the distribution is to your spouse, children and then other next of kin such as parents, brothers and sisters, uncles and aunts or first cousins. A spouse (including de facto partner) will take the whole estate if the deceased had no children. There is quite likely to be a dispute between relatives and someone claiming, rightly or wrongly, to have been a de facto partner of the deceased.
The way of distributing your estate that is legislated by Parliament may not suit your family needs or accord with your wishes. Thus, it is important to make a Will so you can ensure that your estate is distributed to those you wish to benefit.
What does “Executor” mean?
The Executor is the person or persons whom you appoint to administer your estate. If you appoint only one Executor you should also name a substitute in case the first person dies or for any other reason is unable or unwilling to act.
An Executor should be someone you trust to deal with the assets in your estate in accordance with your wishes.
What should I consider when making my Will?
- When making a Will you should consider the following:
- Who you wish to appoint as your Executor or Executors
- Who you wish to benefit The amount or share of your estate to be given to each beneficiary
- Whether you wish that specific items be given to specific beneficiaries
- If you have children under the age of 18, whom you wish to appoint as their guardian and at what age you want them to receive their share
- Whether you wish to stipulate burial or cremation instructions
When should I revise my Will?
There are a number of instances where you should consider revising your Will. These include:
- If you change your name, or anybody named in the Will changes theirs;
- If an Executor dies or becomes unwilling to act as Executor or becomes unsuitable due to age, ill health, long term absence from Australia or any other reason;
- If a beneficiary dies;
- If a beneficiary goes bankrupt or is under pressure from creditors;
- If a beneficiary has a marriage or de facto relationship breakdown;
- If a child or other dependant becomes disabled or has some other change of circumstances;
- If a beneficiary becomes the recipient of a means tested pension;
- If you have specifically left any property which you subsequently sell or give away or put in trust or into a partnership or which changes its character. This applies particularly to specifically gifted shares in a company that restructures its share capital;
- If you marry or your marriage breaks down;
- If you enter into, or end, a de facto relationship;
- If you have children;
- If there is a major change in your financial circumstances, for example you receive a large inheritance or lottery win.
In any event, remember that your Will should not be thought of as static. You should consider and, if necessary, amend it regularly (say, every 5 or so years).
Can my Will indicate my wishes in respect of cremation or burial?
Yes. However, a funeral or cremation is often organized prior to the Will being read. It is for this reason you should make your family and Executor aware of your wishes in respect of a cremation or burial. An Executor’s duties, especially when no immediate family are available, include the disposal of the remains of the deceased.
Where should I keep my Will?
Once your Will has been signed, it should be kept in a safe place with your important documents, or in a bank safe deposit box. It is most important that your Executor and major beneficiaries be made aware as to where your Will is located.
We hold many hundreds of Wills on behalf of clients for which we charge no fee. We will not disclose the content of your Will to anyone without your permission, except in some circumstances to someone to whom you have given an enduring power of attorney.
Can a child or mentally incapable person make a Will?
Normally a Will cannot be made by a child under the age of 18 years or by anyone who, through dementia or some other disability, lacks legal capacity to make a Will. However in some circumstances the Supreme Court has power to make a Will on behalf of such a person. This could be an elderly person who no longer has sufficient understanding to make or change their Will. Another situation is where a person has suffered brain damage at birth or in an accident and received a large award of compensation.
FAQs- Estate Planning
What is a testamentary trust?
In essence, a testamentary trust is a trust created in your Will, which only comes into existence upon your death.
What are the benefits of a testamentary trust?
The potential benefits of setting up a testamentary trust include:
- Taxation. A person under 18 who is a beneficiary of a testamentary trust will be treated, for income tax purposes, as a normal taxpayer. That means that a person under 18 can receive the tax-free threshold amount as provided for under tax law. This is in contrast to a child under the age of 18 who is the beneficiary of a trust created during your lifetime in which case, distributions of income to such a child under such a trust are heavily taxed for any distribution exceeding a prescribed (and quite low) amount.
- Flexibility of distributions. There is also the benefit in using a discretionary testamentary trust of being able to distribute income to beneficiaries of the trust who are, during a particular financial year, receiving a low income, and, therefore, pay less tax as the recipient of income from the trust. For instance, if a beneficiary is unemployed or currently out of employment (for instance, staying at home to look after children) then a distribution of income to that beneficiary would be very tax effective.
- Wealth Protection. If one of your intended beneficiaries were to become bankrupt before or soon after you die, a gift directly to that beneficiary would end up in the hands of the beneficiary’s trustee in bankruptcy and be available for distribution to unpaid creditors. If the money is held in a trust, then it is normally quarantined from a claim by the trustee in bankruptcy. On a second note on this aspect, a beneficiary who is a businessman or a high risk professional would also appreciate being able to leave assets within a trust rather than hold in their own names. This is because the assets are then normally protected from claims by creditors or from claims for damages.
- Family Law. As assets in a discretionary trust are not the property of a beneficiary of the trust until the trustee makes a determination in their favour, it certainly can be argued that the assets within the trust should not form part of the assets of the marriage. However, the Family Court is a very intrusive Court with a lot of powers and, depending upon circumstances, the Court has intervened in trusts or at least taken account of assets within the trust as a financial resource available to the beneficiary when making a decision as to the splitting of other assets. Although setting up a testamentary trust is not perfect in preventing any claim by a spouse of a beneficiary, there may still be scope to isolate the assets of the trust from any Family Court proceedings by the spouse of a beneficiary.
What are the costs of set up and administration of a testamentary trust?
As a testamentary trust is created by virtue of your Will, it only comes into existence upon your death. Therefore, unlike trusts created during your lifetime, there are no stamp duty consequences nor is there the need to administer a trust during your life time (administration meaning such things as tax returns, appointment of trustees and so on).
What issues should I consider when deciding to set up a testamentary trust?
The critical issues in deciding to set up a testamentary trust are as follows:
- The appointment of trustees. As the trust may remain in existence for up to 80 years after your death, it is important to carefully consider who will be the trustees. However, you would not be expected to appoint someone you believe will survive you for 80 years, since the Trustee Act permits the resignation, retirement and appointment of trustees. It is also likely that the trust will be wound up well within the 80 year timeframe. It is possible to appoint a company as trustee.
- Properly determining the assets to fall into the testamentary trust. Some assets are not appropriate to be dealt with under a testamentary trust, such as household chattels, motor vehicles, original artworks, and so on. You need to carefully consider what assets should fall into a testamentary trust and whether there should be separate testamentary trusts created for different members of the family. In this regard, we need to discuss in detail your financial circumstances and, usually, we need to discuss various issues with regard to the imposition of various taxes (such as Capital Gains Tax, GST and Land Tax).
FAQs- Powers of Attorney
What is a Power of Attorney?
A Power of Attorney is a document whereby you give someone the power to make financial, legal or contractual transactions on your behalf. A Power of Attorney can be either “special” (limited to a particular transaction such as the sale of a particular property), or “general”. A general Power of Attorney is very broad and covers such things as signing cheques, withdrawing money from bank accounts, depositing money into bank accounts, buying or selling shares, buying or selling real estate, entering into legal agreements and so on. If you wish to restrict the use of the Power of Attorney so as to exclude certain transactions, appropriate limitations can be built into the document. The Power of Attorney can be expressed not to operate until you need assistance managing your affairs. The person to whom you give a Power of Attorney is not allowed to use the document to gain a benefit for himself or anyone else other than you, unless expressly permitted in the document.
What is meant by an “Enduring Power of Attorney”?
An enduring Power of Attorney is one that continues to be effective, even though after you have signed it, you might lose mental capacity (such as by being in a coma, suffering memory loss, dementia and so on). For a Power of Attorney to be “enduring” it needs to be witnessed by a legal practitioner who has to certify that the effect of the document has been explained to you. On some occasions the legal practitioner may have a concern regarding the mental capacity of the person to adequately understand the effect of the document especially where the person’s financial affairs are complex. If that is the case, the legal practitioner may require an opinion from the person’s medical practitioner or even an appropriate medical specialist, such as a gerontologist.
Should I register my Power of Attorney?
A Power of Attorney essentially only needs to be registered for the purpose of dealing with real estate (whether buying, selling, leasing, mortgaging or otherwise dealing with the title to property). Where the Power of Attorney is only going to be used for dealing with, say, bank accounts or shares, registration is, generally, not necessary. Registration takes place with the NSW Registrar-General.
Can a Power of Attorney be revoked?
A Power of Attorney can be revoked in three instances:
- Express revocation. This means that you may tell the appointee of your Power of Attorney that the Power of Attorney is revoked and the Power of Attorney will then be immediately revoked. The difficulty of using only a verbal communication to revoke a Power of Attorney is being able to prove it at a later stage if a dispute arose. For this reason revocation should always be in writing and, of course, communicated to the appointee. A written revocation can also be registered.
- Death. The Power of Attorney dies with the principal and cannot be used. From date of death onwards, the financial affairs of the principal are governed principally by the Will of the principal.
- Overriding legislation. There have been many instances where the attorney has abused the authority under the Power of Attorney. Accordingly, legislation exists to enable revocation of the Power of Attorney by the Court or the Guardianship Tribunal where such abuse occurs.
Are there any instances where a Power of Attorney cannot be used?
There are two exceptions to the width of an authority under a Power of Attorney, these being as follows:
- The Power of Attorney will not be effective in delegating to another person any responsibility you may have as a trustee. This includes where you are an Executor of a deceased estate. Separate laws relate to delegation of authority as a Trustee.
- The Power of Attorney equally will not be effective to delegate your authority in your capacity as a director of a company. Delegation of authority by a director is governed by the Corporations Act.
FAQs- Appointment of Enduring Guardian
What is an Appointment of Enduring Guardian?
An Appointment of a Guardian is the appointment of someone to make decisions concerning your wellbeing when you are not in a position to do so. For instance, if you are injured or ill and are unable, due to the injury or illness, to consent to or to make decisions as to what medical treatment or care should be provided to you, then the Appointment of a Guardian will enable that person to make those decisions for you. The document may also contain guidelines as to your wishes regarding treatment in the event of terminal illness, including measures to artificially prolong life.
If I have a Power of Attorney is it necessary to make an Appointment of Enduring Guardian?
A Power of Attorney is limited to dealing with matters of a financial nature. So, when it comes to arranging for a person to, say, take up residence in a nursing home, then the appointee under the Power of Attorney can sign forms that are necessary. But, such attorney is, strictly speaking, not the one authorized to decide which nursing home. This is for the guardian, if any, to determine.
Who should be appointed as Enduring Guardian?
An Appointment of Enduring Guardian is a very important issue and must be considered taking the wishes of the whole family into account. It may be that there should be two Guardians appointed, to act jointly. It is advisable to appoint Guardian(s) who will be in a position to make decisions on an urgent basis. The enduring guardian(s) may be the same persons who hold the Power of Attorney, but not necessarily.
What is the extent of an Appointment of Enduring Guardian?
Usually the Guardianship appointment is limited to making decisions of a lifestyle nature; therefore, the usual provisions as to what the Guardian may determine and do are as follows:
- to decide where you should live
- to decide what health care you should be given
- to decide what personal services you should be provided with
- to decide as to what medical or dental treatment should be carried out on you
- to obtain information from hospitals and health care professionals
How is Appointment of Enduring Guardian made?
The Appointment of Guardian is a standard form of written document which can be tailored to meet your particular requirements. The appointment needs to be signed both by the person making the appointment and the person or persons being appointed. The execution of the document must take place before a legal practitioner so that the terms of the appointment can be explained both to the appointor and the appointees and the legal practitioner signs a certificate which then makes the Appointment of Guardian operative.
Can an Appointment of Enduring Guardian be revoked?
The Appointment of Guardian can be revoked at any time by you provided, of course, that you have the mental capacity at the time to make that revocation. The method of revocation is by written instrument in the form prescribed under the Act.
The Supreme Court and the Guardianship Tribunal also have an overriding power to appoint a Guardian. If a Guardian is appointed by the Court or the Tribunal, then the appointment by written instrument is suspended while the Court or Tribunal Order applies.
What do I need to give you to start the process?
In order for the process to get underway we always request that you provide us with:
- any statements or other written material in respect of the assets and liabilities of the deceased.
- the original Will (if any) (or your advice as to where it is located).
- the original Death Certificate.
I have an account for the funeral. Will the bank release funds to cover it?
Yes, the bank will allow payment of a funeral account after date of death. Simply provide us with the original funeral account and details of the deceased’s bank account and we will make an application to the bank to pay it on your behalf.
Can I access the assets straight away?
No. From the date of death until a Grant of Probate is made by the Supreme Court, all assets of the estate will be frozen. With the exception of obtaining funds from the deceased’s bank account for payment of funeral expenses, no other withdrawal or transfer of funds should occur. It is possible, however, for the estate to continue to receive income during this time. On rare occasions it may be necessary to seek from the Court an urgent grant of Probate on a limited basis, for example to enable the continued operation or urgent sale of a trading business or professional practice or the sale of livestock or some perishable or wasting asset.
As an Executor of the Will, what are my responsibilities?
As an Executor of the Will, it is your responsibility to identify the assets and liabilities held by the deceased as at date of death, to obtain a grant of Probate of the Will and, pursuant to that grant of Probate, proceed to collect the assets, pay the liabilities and distribute the assets to the beneficiaries as provided for in the Will. If there are any claims by persons who seek to have the Will changed by the Court, the Executor also has the responsibility to defend the Will.
What is the grant of Probate?
A grant of Probate is the legal recognition of the Will given by the Court, which allows you to proceed with the administration of the estate. Only once a Grant has been made by the Court, will you be entitled to deal with the assets of the estate by way of redemption, transfer or transmission.
How do I obtain a grant of Probate?
Firstly, we write to all of the various asset holders and investment bodies to verify the assets of the estate. Once we received all of these details from the various institutions, we will prepare the Application for Grant of Probate ready for your execution. Once the Application has been signed it will be filed at the Supreme Court and, subject to any issues raised by the Court, Probate should be granted in around 2 weeks from the date of filing.
Is a grant of Probate required for every deceased estate?
No. There are certain instances where a Grant of Probate is not required.
If all the assets of the deceased are jointly held, then a Grant of Probate will not be required. All assets jointly held, by virtue of survivorship, can be transferred to the surviving joint owner without the requirement of a Grant of Probate. This does not apply to co-ownership of an asset as “tenants in common” in designated shares.
Also, if the assets of the estate do not include real estate and are modest (less than $100,000) then the investment institutions may accept a form of indemnity in lieu of the requirement for a Grant of Probate. We can assist you in applying to the relevant institution to waive the requirement of obtaining a Grant of Probate.
Is there a filing fee payable when the Application for Grant of Probate is filed at the Court?
Yes. The amount of the filing fee payable when the Application for Grant of Probate is filed is dependent upon the gross value of the estate. We can advise you as to the amount of the filing fee once the approximate value of the estate assets is known.
How much will Staunton & Thompson charge?
Our fees in respect of the application for probate are charged in accordance with a scale determined pursuant to the Legal Practitioners Act, depending on the value of the estate. Other work will be charged for on a time basis, which we will detail in a written costs disclosure to you at the time of engagement. Except in the case of very small estates, our total charges in connection with an estate will generally be found to be considerably lower than what would be charged by either the NSW Trustee and Guardian (formerly the Public Trustee) or the trustee companies.
Challenges to a Will
Please refer to our separate article under this title.