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What you should know about Wills and Estates

Succession Law News | Annette Fontana

What are the consequences of not having a Will?

The job of sorting out your estate will fall on those closest to you, be it friends or relatives or other interested parties. The reason that a person may be required to sort out your affairs will be to take account of any funds in your bank account, or your entitlements to a pension, or the transfer of any land or personal property you own, the claiming of superannuation or shares or other funds held on your account and the payment of outstanding bills. The other job that has to be attended to is the arrangement of your funeral.

If there is no Will, then an interested party may apply to the Supreme Court for Letters of Administration, quite an involved and time-consuming process. The applicant must complete numerous affidavits and forms asserting their relationship to the deceased, the death of the deceased, the details of the deceased’s assets and liabilities and the details of likely other interested parties. The tracking down of likely other interested parties who could be potential beneficiaries of the deceased’s estate can be very time consuming and difficult for the applicant.

In assessing an Application for Letters of Administration the Court will refer to a “hierarchy” of relationships to work out who gets what from the estate. This “hierarchy” is prescribed in the Succession Act.

On the other hand, if you do take the time to prepare a Will, the process of administering your estate is more “streamlined” and you will have the control over who administers your estate, arranges for your funeral and pays your bills and expenses. You can stipulate who gets what and when they are to receive their gift. For example you can make provisions for children who are minors, children with special needs, you may wish to ensure that certain in-laws or de-facto partners of your children do not receive a gift.

Advances made to beneficiaries can be taken into account in a Will

At Forum Law we are receiving an increasing number of enquiries from older clients who have advanced money to children and their children’s spouses during their lifetime, and the client wishes to ensure that these advances are taken into account in their Will. Often these advances are not documented anywhere and there is no record of the amount advanced, and the terms of repayment or of a gift being advanced in preference to other children. A foreseeable consequence of this scenario is that disputes often arise between the children regarding these “unfair” advances and the question arises of the fair distribution of the estate to take into account the advances made during the parent’s lifetime.

Testamentary trusts preserve gifts from other claimants

Another common enquiry from older clients is how can they ensure that the de facto partner or spouse of their children, do not make a claim on the gifts that the parent wishes to give to their child or grandchild. In these cases a testamentary trust can be created in a Will to ensure the gift is preserved for the child or grandchild for a period after the death of the parent and the gift does not extend to spouses or de-facto partners, and in most situations these trusts can prevent claims from other third parties like a Trustee in Bankruptcy.

Properly documented loans clarify debt positions

For many reasons, loans to children in the lifetime of the parent are better protected if documented and dealt with like a commercial “arm’s length” transaction. Some examples of why this course is advisable is to protect the loan amount (and the parents’ interest) is in the case of Family Law dispute, where a spouse makes a claim against the marriage estate which may, inadvertently, include a substantial advance or loan made by the parents. If the advance is characterised as a “Loan” which proper documentation and a regime to pay back the loan and the loan is secured by a mortgage over the matrimonial home, or some other form of security, then the parents may be successful in asserting their priority interest in the funds and reclaiming them in the Family Law dispute. A similar scenario may occur where a de-facto partner may make a claim on a child’s assets.

Another scenario requiring a dependable lawyer is where a child becomes bankrupt and the Trustee in Bankruptcy may seek to make a claim on the child's assets, which may include the advance from the parents. If the parents can show that there is a legitimate Loan of the monies advanced, then the Trustee may not be able to take those funds and the parents can preserve their funds.

Conveniently located in Leichhardt in Sydney's inner west, Forum Law can advise and assist you with preserving your loans and other assets.

Forum Law is an active member of several reputable law and industry associations. We have recently obtained ISO9001 accreditation.