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Wills

 For assistance with your will
please call (08) 9443 5383 

 WILLS

There are many advantages for you and those you leave behind if you have a  will when you pass away, as opposed to dying intestate (i.e. without a will), as the following table illustrate

 

If You Die Having Made a Will     If You Die Intestate 
You can distribute your assets in the manner you decide is in the best interests of your loved onesThe Law that is applicable in the state or other jurisdictions where your assets are located determines who gets what share of your estate. If you have no family your property goes to the Crown.

An executor is appointed who can represent your interests from the date of your death, including:

(a) organizing your funeral;

(b) organizing finance for your loved ones;

(c) holding property on trust for, and applying that property for the benefit of, minor children from the date of your death;

(d) immediately collecting and preserving your assets; and

(e) attending to creditors in good time to avoid disputes with them.

The court must appoint an administrator which takes quite some time.

Various people may rank equally in terms of who is entitled to apply to the court for permission to administer the estate.

While family members can organise your funeral there can be problems if no one person is clearly in charge.

No one is appointed until the court grants letters of administration.

No one is in charge of protecting and preserving the estate assets and dealing with creditors.

You can appoint a guardian for your minor children.Applications need to be made to the Court for guardians to be appointed for minors.

WHAT SORT OF WILL?

Unless a testator has significant income-producing assets or an intellectually disabled, mentally incapable or wayward children for whom provision is to be made, a simple will is usually adequate.

If a testator has significant income-producing assets, which might include the family home if that is to be sold and the proceeds distributed to one or more beneficiaries, the testator should consider a will with a full discretionary testamentary trust.
 

DISCRETIONARY TESTAMENTARY TRUSTS

A will may provide for the creation of one or more discretionary testamentary trusts, depending on how many beneficiaries are provided for in this fashion, where each discretionary testamentary trust:
 
(a) is created on the death of the testator or testatrix;
(b) has a beneficiary nominated as the primary beneficiaries of the trust, but with various related general beneficiaries to whom, or to which, income, capital gains and capital can be distributed;
(c) has the executor as the initial trustee, but which may allow the primary beneficiary to control the trust on attaining a nominated age, which can be any age 18 or over, but we recommend to be not less 21 years of age; and
(d) has all the terms of the trust and the powers of the trustee contained in the Will.
 
The main advantages to having a will with gifts given pursuant to the terms of a discretionary testamentary trust are as follows:
 
Flexibility - The trustee has the power to distribute capital and income not only to the primary beneficiary of the trust but also to various related general beneficiaries, at the trustee's discretion.
 
Income Tax - The primary and general beneficiaries pay income tax on their allocated share of income according to normal marginal tax rates, but beneficiaries under the age of 18 years are taxed at adult rates rather than at a higher rate normally paid by minors.  This allows income from the trust assets to be tax-effectively distributed to spouses and children of a primary beneficiary, as well as investment companies and other trusts.
 
Capital Gains Tax - Similarly, the trustee can select which of the beneficiaries of the trust should receive capital gains in a tax-effective manner.
 
Protection of Assets - While the primary beneficiary does not control the trustee of the trust, creditors of the primary beneficiary, including ex-spouses, cannot have recourse to the trust assets, although the Family Court may take the benefit of the trust into account in dividing assets.  Once the primary beneficiary does get control of the trust, creditors of the primary beneficiary may have recourse to the trust assets, but in the case of an ex-spouse, it may be possible to successfully argue that:
(a) the trust assets were 100% the proceeds of an inheritance; and
(b) the trust assets were not the result of the joint efforts of the spouse while they were together,
... so, the trust assets should not be taken into account when distributing assets between the ex spouses.

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Articles

The Importance of Making a Will - 7th Nov 2006

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