Many of us are generally aware we should update our will if our current will no longer reflects our circumstances or wishes.
However, there are various circumstances which could make it advisable to review your will, which not everyone is aware of. Let’s explore these in some more detail:
Your will may already provide for your estate to be divided equally among however many children you have (without naming them) on your death, if you survive your spouse/partner. If your will doesn't cover children, or only addresses named children and you have another child, it would of course the advisable to update your will.
Apart from deciding what to leave your children, you should consider your will appointing someone to be their guardian after your death, if you and your spouse/partner die while any child is under 18. This is often a close relative or family friend.
The wills of many couples with children state that upon the death of the last spouse/partner, their property will be divided equally among their children. If a child dies before you, you need to check your will to see whether it remains appropriate. It might just provide that their share goes to their surviving sibling(s), but your child who died might have children of their own. In that case, you may wish to leave their share to the children of your child who died (your grandchildren) instead.
If you leave a substantial inheritance to a child who is separating and you die within a certain period after the separation, the Family Court may award their ex-partner some of the inheritance which you left them. Or (far more likely, but of similar effect) the Family Court might use the fact that your child will receive an inheritance as a reason to give their ex-partner a much larger share of their joint property than they would have received.
It can be difficult to avoid this result, because the Family Court has extensive powers to defeat arrangements intended to protect assets from its Orders. Nevertheless, if this is a real concern to you, please discuss potential solutions with a lawyer.
You will need to appoint someone else (normally a sibling, family friend or advisor) as trustee of that beneficiary’s share of your estate. That trustee will invest it on their behalf, make payments for their care and maintenance and protect them from being taken advantage of or wasting money.
If you leave assets to a beneficiary who is successfully sued, their inheritance may be taken to pay any court judgement against them. You may wish to leave that beneficiary’s share to a trustee instead, who has discretionary powers to pay amounts from your estate to that beneficiary and a class of other related persons, including their (present or future) spouse and children. This will stop your child's creditors taking their inheritance.
You may wish to remove them as a beneficiary or reduce their share. This may entitle them to claim against your estate, however. Various strategies can be explored for managing the risk of such claims against your estate.
Assume you have three adult children and they are all doing well, then one of them has an accident and will be permanently unable to work. You may wish to increase their share of your estate. If a Court considers that you have left an insufficient amount for any close relative, they may be able to claim against your estate after your death to try to get a larger share. If your estate is not modest, and one or more children are doing worse financially than the others, you may actually need to give your children different shares to reduce the risk of one of them making a claim against your estate.
At least in theory, the same will can work for an estate worth $100,000 or $10,000,000. If the value of your estate (plus super) means that each of your children may receive at least say $400,000, it may be appropriate to replace your will with a “testamentary trust” will.
A testamentary trust can deliver the beneficiaries substantial tax savings on income and capital gains made from investing and selling estate assets. It also protects their assets from being taken by their creditors (if they have debts or are exposed to lawsuits through their business).
Many people run a business through a “discretionary” trust. Assets in a discretionary trust do not pass under your will. Your will should contain provisions to pass control of the trust to the persons whom you want to benefit from the assets in the trust.
Money payable from your super fund because of your death does not automatically pass under your will. If you have only a small super balance, the normal way in which a super fund would deal that amount on your death may well be suitable. (The fund trustee will either pay it to your next of kin direct or to your executor.)
Once you have built up a significant super balance, however, you should take advice on how to ensure that it is passed on to the people you wish to receive it, in a way which minimises tax. (Unlike assets left under your will, money paid out of your super fund on your death can be subject to unnecessary tax if it is not structured properly.)
The law states that marriage automatically revokes your will, even if you leave all your property to your fiancé/fiancée then get married to that person. You can avoid your will being revoked in these circumstances, however, if special wording is used.
Divorce automatically revokes your will. Therefore, you should make a new will at that time. Separation does not revoke your will, however. If you have separated, you may wish to make a new will leaving out your ex-partner.
Unlike marriage, starting or ending a de facto relationship does not automatically revoke your will. However, you will almost certainly need a new will in either case.
It is always best to consult an expert when considering changes to your will. The team at Fortuna Legal can assist you to update your wills or discuss your estate planning needs, please contact us to book a consultation today.