04.How to draft your will
While the rules differ in different states, there are some common aspects:
Usually you must be 18 years old or already married The will must be in writing, and you must have testamentary capacity. This essentially means you must be of sound mind and understand the implications of making a will, what assets you have and who your usual beneficiaries would be.
Be clear about anyone mentioned in your will Rather than simply writing “my spouse”, state their full name. Ordinary wording and everyday terms do not necessarily have the same meaning in law, which can be quite specific and precise. Ambiguous wording is extremely common in homemade wills, which may result in substantial costs and delay, so it’s always a good idea to get legal advice when preparing your will. This can cost anywhere between $200 and $1000, so shop around.
Your will must be signed in the presence of two independent witnesses In some states, the witnesses cannot be beneficiaries or the spouse of a beneficiary, otherwise they may lose their inheritance.
Appoint an executor The executor’s duties include not only distributing your assets according to your wishes, but also applying to the Supreme Court for probate – a formal document that gives the executor permission to administer your estate, lodge a tax return and establish any trusts (such as bequests given to young children). This can be quite onerous and time-consuming, so check they’re willing to do the job and ensure you appointing a substitute executor if your first choice is unable or unwilling. Another option is to appoint a solicitor or trustee company as your executor.
Update your will when your circumstances change Starting a de facto relationship (with someone of either the same or opposite sex), marriage, separation or divorce, having a baby or your executor becoming unavailable are common examples of changing circumstances. If one of your beneficiaries dies, part of your will may no longer be valid and the gift you leave to them may instead be distributed according to state government rules – so it’s important to name substitute beneficiaries in your will. Another reason to keep updating is that the value of certain assets, such as shares, may change over time, so you might want to check your assets are still distributed fairly. As a rule of thumb, you should review and update your will every five years.
Keep your will in a safe place where it can be found “If it can’t be found and was in possession of the will-maker, the law assumes it has been destroyed by the will-maker with the intention of revoking it,” says our expert, Dr John de Groot. Thus, making sure your executor knows where your will can be found can prevent problems later on.
Superannuation can make up a large part of your assets, particularly if you‘ve taken out life insurance through your super fund. However, you may only have limited control over how the money will be distributed should you die. The person who receives your super money is determined by the trustee of your super fund, and is usually a dependant, such as your spouse and/or children, otherwise it goes towards your estate.
Some (but not all) super funds accept a “binding nomination”, which gives you certainty on who receives how much. You must update a binding nomination every three years, otherwise it goes out of date. You can usually only nominate a financial dependant – your spouse, children or alternatively your estate – as the beneficiary. The tax treatment for super money differs depending on the beneficiary. While financial dependants and your spouse receive the money tax-free, non-dependent beneficiaries, such as adult children, may have to pay tax.
Public trustee services
Public trustees were originally established to look after deceased estates where there was no will and no relatives. Today they still offer these services, plus they can also help you make your own will and store it securely.
Although public trustee will-making costs are competitive or free, they usually request to be the executor of your estate. Charges for this service differ depending on the state you live in, but range up to a commission of 5.5% of the value of your estate in the case of the Victorian Public Trustee. This may work out to be expensive if your estate is straightforward. However, in complicated cases, such as when trusts are being established for funds inherited by young children and there are a number of complicated taxation issues to resolve, the fees can be very competitive. In some states, public trustees charge an hourly rate rather than commission for administration costs. Public trustees also offer trust administration services and can look after your affairs if you become incapacitated and give them an enduring power of attorney.
Public trustees are state government agencies; you can find their contact details in the phone book or by searching on the Australian Government website.