We’ve got our Wills sorted, so that’s it! Right?
Well yes, but there may be other considerations in the Last Will and Testament picture for you. There is a common misconception that everything you own, wholly or in part, automatically comes under the jurisdiction of your Will upon your death.
Not all assets pass directly to an estate, and therefore will not be administered under the terms of the Will by your Executor. A lack of understanding of this crucial fact can mean that the genuine intentions of your Will are not fully realised. That is, part of what you refer to as your Estate will be passed to and dealt with under the terms of your Will, and potentially, some parts will not.
Before you panic, don’t assume that these other assets won’t pass to the person you choose, it may simply be that they pass to that person directly, and not via your Will.
Robbo and the Roller
Some years ago, Fred purchased a beautiful vintage Rolls Royce with his long-time mate, Robbo. In his Will, Fred has left his entire estate to his spouse, Dianna. When Fred dies, Dianna will inherit Fred’s half of the Rolls, won’t she? Well, actually, no. In this case, Robbo, who is the remaining part-owner of the Rolls, will inherit deceased Fred’s share. It will then become the Will of Robbo, the sole remaining owner, that will determine the ultimate destination of the asset.
That said, there are further matters to consider, and these refer to the structure of ownership. With ‘Joint Tenancy’, there is a right of survivorship, that is, when one of the joint tenants dies, the ownership of the asset passes to the surviving owner. This is normally the case with property owned with a spouse/life partner. Whereas, with Tenants in Common, each owner owns a specific share of the asset, and is free to dispose of it, for example, by gifting it as part of their Will.
Life Insurance Policy?
A life insurance policy will have a nominated beneficiary. In Fred’s case, the policy stipulates that Dianna is the beneficiary. This is the binding contract that exists between Fred and the insurance company. Upon Fred’s death, Dianna will receive the appropriate benefit, but it will pass directly to her, not via the jurisdiction of Fred’s Will. A further note on this: In the event Fred’s Will is challenged, the destination of the proceeds of the insurance policy will not be challenged, since they are not part of the Estate being administered by Fred’s Will.
Superannuation?
The considerations here are a little similar to life insurance, but with some added twists. Does your fund allow a Binding Death Nomination? If so, do you have one? Without such an instrument in place, the value of that part of the fund that is yours may pass to a beneficiary, but not via your estate, and therefore, not via your Will. There are many other factors here, and they will vary depending upon the nature of the fund.
These have been but a few examples. There are many such considerations with trusts, business partnerships, shares, and the like.
Key take-away
Get help with your estate plan. You can’t gift something in your Will if it is not entirely yours to gift. Estate Law … don’t delay, get it right. It will be easier with sound legal advice from the experts. Owen Hodge Lawyers. We are here to help. Contact us today on 1800 770 780 for any estate planning questions you may have. We look forward to assisting you.