Your Last Will And Testament And When To Update It.
A Last Will and Testament (‘Will’) is an important document. Most people know what one is, and why it is useful for loved ones and those closest to you to know that you have one. A valid Will gives instructions for how assets will be dealt with after a person has passed. Wills generally provide for the appointment of a trusted executor/s and the leaving of gifts to chosen beneficiaries. They may also appoint guardians for minor children and give direction for specific funeral and burial arrangements.
When is it time to review your Last Will and Testament?
In truth, many people make a Last Will and Testament, store it safely and then forget about it. However, in many situations reviewing your Will is just as important as preparing it. This is more so when events occur, and your Will no longer reflects your wishes.
You should review your Last Will and Testament when your personal or financial circumstances change. In this regard, the following events might prompt you to do a review.
What is classified as Marriage?
The Succession Act 2006 (NSW) revokes a Last Will and Testament when the testator marries but does not revoke a gift to a person to whom the testator marries, nor the appointment of that person as executor. Marriage, however, may void other parts of the Will.
Wills made ‘in contemplation of marriage’ remain effective when the marriage (to the person nominated in the Will) occurs. This avoids statutory provisions that might otherwise void certain parts of the Will because of marriage.
If you have married since preparing your Last Will and Testament, then it may be time to review it, even if it was made in contemplation of marriage to your present spouse. If some time has passed since preparing it, certain other terms of the Will may no longer be desired.
What is classified as Separation?
The Succession Act 2016 (NSW) provides that gifts to a former spouse upon divorce are revoked as well as the appointment of a former spouse as executor. A Last Will and Testament should always be reviewed on separation from your spouse or de facto partner to take account of new circumstances. Bear in mind also that many partners are separated for some time before finalising their divorce.
The Birth of a child
The birth of a child will warrant revision of a Last Will and Testament. This ensures the child is sufficiently provided and cared for. The document can be drafted to distribute assets equally amongst children. Even those born after the Last Will and Testament has been made.
The Death or ill health of an executor
When preparing your Last Will and Testament, you may have appointed an executor/trustee of your estate who is no longer alive, ageing, mentally or physically unwell, or who has moved away. Consequently, in these circumstances, you might consider appointing a new executor. A Will can provide for a substitute executor if your appointed executor is unable or unwilling to act. There is no limit to the number of executors you may appoint. Your executors should be capable of managing your estate in accordance with your wishes, which is often carried out under the guidance of a solicitor.
The Death of a beneficiary
A gift to a beneficiary who dies before, or within 30 days of the testator, may fail unless a contrary intention is stated in the Will.
If the beneficiary was a child of the deceased, then the Succession Act 2006 (NSW) provides that the deceased child’s children will instead take the gift. Conversely, if the testator has no children and a substitute beneficiary is not nominated, the gift falls to the residuary estate. This can have unintended effects.
A Will that nominates a beneficiary who has passed on should be reviewed to ensure that it still has the desired effect.
The Disposal of a specific gift.
A specific gift is clearly identified and separate to other property of the estate; such as a prestige motor vehicle. If you sell or dispose of such an asset after you make your Last Will and Testament, then that gift will fail. The result is that the intended recipient of the gift may receive nothing at all or a much lesser share of the estate than what you intended. This may have a significant effect, particularly if the asset is of substantial value.
The Acquisition of interests in a company or partnership
Property owned by a company cannot generally be disposed of by Will. However, the shares in a company may be gifted. If you acquire an interest in a partnership you should consider what happens to that interest when you die. Most partnership agreements set out what happens when one partner dies and how that partner’s share of the partnership is distributed. New business interests should always prompt reviewing your Will.
Increased wealth, potential challenges to a Will, vulnerable beneficiaries
Your Last Will and Testament may incorporate a testamentary trust to provide for minors. It can also protect beneficiaries under legal incapacity, safeguard beneficiaries’ assets from creditors or family provision claims and provide certain income tax advantages.
If you would like these protective measures incorporated in your estate planning and the value of your assets warrant the administrative and accounting costs of a testamentary trust, then it is worthwhile discussing this option with your solicitor.
Life is unpredictable and change is inevitable. For better or worse life changes are likely to impact your estate planning. For good measure, you could diarise to review your Last Will and Testament each time your tax return is prepared. Remember that your superannuation, binding death benefit nominations, appointments of power of attorney and enduring guardians also form part of effective life and estate planning. These should also be regularly reviewed.
If you or someone you know wants more information or needs help or advice, please contact us on 02 9955 6692 or email email@example.com.