Estate Planning and Writing a Will
Estate Planning is the process of arranging for the management of your assets and legal affairs in the event of your death, or your incapacitation in life. A Will is the most well-known part of an Estate Plan, however, there can be other components depending upon your desires and circumstances.
The Key Components of an Estate Plan
As Estate Planning involves many or all aspects of your affairs beyond the simple distribution of financial assets. An Estate Plan is a wider strategy that can include numerous components. These components that can help you clearly and legally articulate your wishes across a broad scope of matters.
Common components of an Estate Plan are;
- Will. A will is a legal document that specifies how your financial assets, property and personal belongings should be distributed or dealt with upon your death.
- Enduring Power of Attorney. An Enduring Power of Attorney designates a person to take control of financial and legal matters on your behalf should you suffer a “loss of capacity”,
- Enduring Power of Guardianship. An Enduring Power of Guardianship is similar to the Power of Attorney, except that you designate a person to take control of medical and personal lifestyle decisions.
- Advanced Care Directives. Otherwise known as a “living will”. An Advanced Care Directive formalises ideas about how an individual wants to live the rest of their life should they no longer be able to make such decisions directly. A living will is similar in many ways to an Enduring Power of Guardianship. The difference is that you are providing direction to medical staff directly rather than designating a person to act on your behalf.
- Testamentary Trust. Creating a testamentary trust allows you to appoint a trustee to manage assets on behalf of the final beneficiaries (normally, your children). The funds or assets can be released under conditions that you specify, such as age-based or other milestones. A testamentary trust can also include protections, such as preventing assets from diverting to a new spouse with a remarriage.
Another aspect of estate planning that is commonly overlooked is when the person owns or is a partner in a business. In these circumstances, it can be vital to include a Business Succession Plan as part of your Estate Plan. The Succession Plan outlines who business ownership will transfer to, buy-sell agreements for other partners, and other aspects to protect your beneficiaries or yourself in the event of loss of capacity.
Writing a Will
Writing a will can be a confronting and challenging task, but a vital one if you are to ensure your estate is properly dealt with according to your wishes upon your passing.
A properly written will;
- Ensures your wishes are enacted smoothly and promptly after your death.
- Protects your children’s inheritance, or otherwise distributes your assets according to your direction.
- Protects yourself in cases of lost capacity.
Ensuring that you receive custom legal advice specific to your situation can help avoid future conflict. Speak with a wills lawyer about your wishes.
DIY Will Kits
When making a will, there may be a temptation to use a cheap or free will kit. A DIY will kit, such as those available at the post office or available online are potentially better than nothing, but come with inherent risks.
Most of the issues with Do-It-Yourself will kits derive from the lack of legal advice specific to your circumstances. Also, DIY will kits do not cover the wider aspects of estate planning.
- Complex Situations. DIY will kits have difficulty addressing complex family situations or complex asset ownership.
- Misinterpretation. Some DIY or free will kits may not properly guide you in outlining your wishes clearly. This can lead to ambiguity and confusion with the potential for costly family disputes.
- Lack of Awareness of Tax Implications. You may be missing out on strategies that save your heirs money. As noted previously, DIY kits don’t offer the level of sophistication to manage complex situations.
- Conflicting Wills. You may have other legal documents or a previously existing will that unintentionally conflicts with or creates confusion with regard to your wishes.
- Storage. If your will is not stored properly, it may be lost or damaged and therefore be accessible when required.
Seeking an estate planning lawyer when writing your will can save considerable conflict, stress, time and money later on. Their expertise and support helps avoid mistakes that may invalidate your will or cause it to be ambiguous.
Components of a Will
For a Will to be considered valid and legal, it must contain certain components. There are additional components that you may also wish to add to ensure your specific wishes are followed.
Furthermore, a Will must be in writing (either handwritten or typed) and be created without pressure from others.
Testator Identification
The Testator is the person writing the will. There should be full identification and a declaration that they are over 18 and of sound mind.
Revocation Clause
This clause specifies that all previous wills are revoked, ensuring that only the current document is valid.
Contemplation of Marriage
Marriage automatically revokes any previous wills. This clause ensures the will remains valid should you marry (or remarry). This would be especially important for someone entering a second marriage where children of the first marriage were intended beneficiaries.
Appointment of Executors
The Executors of a Will are the individuals or professionals who are entrusted to look after your estate following your passing.
Appointment of Guardians
If you have minor (under-18 children) or dependents, you appoint a guardian to ensure their care and welfare.
Distribution of Assets
This is the main part of writing a will that most people know about. It provides detailed instructions on how, and to whom (your beneficiaries) your assets should be distributed. This includes both property (such as land and buildings) and personal assets (cash, jewellery, care, household items).
On often overlooked element is declaring backup beneficiaries in case a primary beneficiary dies before the Testator.
Specific Bequests
These are specific instructions detailing gifts of money or specific items to particular people, charities or other organisations.
Funeral and Burial Wishes
Any specific wishes you have for your funeral and burial/cremation.
Signatures and Witnessing
To be legally valid, the Will must be signed by the Testator in the presence of two witnesses, who must also sign the document. Part of the role of a Will lawyer is ensuring that you have capacity to make legal decisions and that you are not being pressured by others.
Executing a Will
When the will’s owner (the Testator) passes away, “Executing a Will” refers to the responsibilities of the executor of that will. This involves carrying out (executing) all the instructions listed in the will document. This may also be known as “administering a will”.
Note that “executing a will” also has another meaning related to the initial creation of the will. At this stage, “executing” refers to the completion of all legal steps required to make the will valid. Once written, signed and witnessed, the will is said to have been executed.
Before the execution (administering) of a will can occur, most wills will need to be granted probate. The will’s executor is generally the person who applies for probate.
What is Probate?
Probate is a legal process where the state’s Supreme Court confirms that a deceased person’s will is valid. Because a deceased person’s assets are all still legally held in their name, even after death, probate is required to officially transfer these assets to the executor. The executor is then legally bound by the will to carry out the steps and asset distributions contained within.
The process of probate has a number of primary stages;
- Gathering required documents. These documents are the original will and the official death certificate.
- Advertising intent. A public notice must be published online declaring the intention to apply for probate.
- Waiting period. A 14-day waiting period after advertising allow creditors or contesting parties to come forward.
- Estate valuation. The total value of all the deceased assets and liabilities are assessed.
- Lodgement of probate application. The required documents plus the statement of assets and liabilities are submitted to the state Supreme Court.
- Wait for Grant. After reviewing the documents, typically taking 4-8 weeks, the court issues a Grant of Probate.
- Administer the Estate. Once legal authority has been established (through the Grant of Probate) the will’s executor must carry out the instructions it contains. This involves settling debts and paying taxes before distributing remaining assets to the beneficiaries. The executor is also responsible for providing a clear and full financial record of all transactions.
If there is no will or there is no Executor either available or willing to act, the Supreme Court will appoint an Administrator to deal with the estate. This can cause long delays and unnecessary expense in dealing with the estate.
The most straightforward way of applying for probate is to have your legal representative do it. As GP Legal are based in Sydney, the large majority of our applications for probate happen with the NSW Supreme Court.
Contesting a Will
People sometimes feel like they have been left out or unfairly provided for in a will. In Australia, contesting a will typically involves making a “Family Provision Claim”. To contest a will, you must be an eligible family member. You must also file your claim in the state’s Supreme Court with strict timeframes. In NSW, this is within 12 months from the date of death.
Eligibility to Contest a Will
Generally, an eligible family member is one of the following;
- Spouse or de facto partner at the time of death. This can include same sex partners.
- Child. This includes adopted children and in NSW, dependent or cohabiting step-children.
- Former spouse. Unlike a current spouse or partner, and ex-spouse does not automatically receive a share of the estate and must navigate strict legal rules to make a claim.
- Grandchildren. Grandchildren must prove that they were partially or wholly dependent upon the deceased grandparent at some point during their lifetime.
How to Contest a Will
To contest a will, you should first seek legal advice in your state. Contact an estate and will dispute lawyer such as GP Legal to determine your eligibility, size of the estate, and your financial need.
If you are eligible, the estate dispute lawyer can carry out various steps on your behalf;
- Notifying the executor of the will. The initial step is to notify the executor of the estate, requested that they pause distribution of the estate until the matter is settled.
- Assisting with mediation. Most will disputes are resolved outside of court, through mediation. This is highly preferred, and typically beneficial to all parties in terms of time, cost, and stress.
- Court action. Should a mediated settlement fail to be decided, a formal claim is filed with the state Supreme Court and a judge will decide the outcome.
Estate law is very complex and it is highly recommended that you speak with a qualified legal professional for advice before contesting a will.
GP Legal – Northern Beaches Will and Estate Lawyers
GP Legal are estate planning solicitors based in Dee Why on Sydney’s Northern Beaches. Highly experienced with Estate Law, we can provide pertinent advice for your circumstances. Whether you want to create a will or content a will, GP Legal can assist. Contact us today to start a discussion.