Understanding what’s yours to begin with in a will

Published 27 Dec 2013

Contesting wills cases can arise for several reasons, and often come up when there is a dispute between family members over which assets rightfully belong to the correct party.

While many believe this issue can easily be addressed by covering it in a will, the truth is there are many caveats to what you, the testator, actually own and have the right to give away. Troy Palmer, national manager of estate planning at wealth management firm NAB Private Wealth, recently explained the most common assets testors misunderstand when drafting their wills.

He explained that you don’t actually own many of the assets you think you may. This may differ if you hold them individually or jointly, or if they are held within a company or by a family discretionary trust.

“Quite a few clients don’t understand how their assets are held,” Mr Palmer said, adding that this is a serious blunder.

He stated that the most commonly misunderstood asset is a superannuation fund. Because a super is actually a form of a trust, it won’t automatically be distributed to beneficiaries outlined in the will. Before this can happen, there are several processes it must go through.

“It depends whether you have a self managed super fund or an industry-type retail fund and whether you have binding or non-binding nominations in place to cover off who the beneficiaries of your super will be,” Mr Palmer explained.

Complex family discretionary trusts

Mr Palmer also talked about how complex discretionary trusts can be. He stated that several of his clients have a certain number of assets in trusts, and write in their wills that they would like to leave them for multiple people. This, he said, is just not how it works.They don’t actually own these assets.

“They’re owned by the trustee of that trust, and it really depends on what’s in the trust deed of that particular trust and whether there’s a corporate or individual trustee, and what the succession of that layer looks like if the person passes away,” he said.

Any asset that is jointly owned can lead to serious inheritance disputes, and testators should always work with wills experts when drafting the document.

However, when contesting wills cases do arise, it’s best to work with contesting wills lawyers who have years of experience handling such matters.

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