There is a common misconception that having a Will means that all the assets a person owns will be able to be distributed to loved ones once the Will-maker dies. People are often surprised to learn that a Will cannot, or cannot automatically, deal with the following:

• Jointly owned assets,
• Superannuation,
• Life insurance,
• Passing on a director role in a private company,
• Passing on a trustee role of a trust such as a Family Trust, and
• Dealing with what happens if the Will-maker becomes mentally incapacitated during their lifetime.

In this article, we will explain the above to hopefully help you identify a possible need to take more steps than simply drafting a Will, to safeguard your assets and roles.

Jointly Owned Assets

A jointly owned asset means that more than one person owns it. It is usually owned by two people, but it can be owned by more than two people. Under the joint asset structure, all owners own 100% of the asset (no divided portions).

The average person will acquire some jointly owned assets during their lifetime, usually in the form of joint bank accounts or real property, often a family home. However, these are not the only assets that are capable of being jointly owned and it is imperative that you check your asset structure if you are unsure of what it is. If you do not know how to check this, we can help you.

In NSW, jointly owned assets are not capable of being dealt with by a person’s Will. Rather, the entire asset is automatically distributed to the surviving owner. Essentially, whoever dies first automatically loses their ownership in the asset.

If you do not want this to happen, we can help you through a legal service called estate planning.

Superannuation and Life Insurance

Superannuation, usually distributed to the member’s nominated person or people, through a document called a Binding Death Nomination, is another asset that a Will does not automatically have the power to deal with, although steps can be taken to allow the Will to do so.

In certain situations, allowing a Will to distribute superannuation can be most beneficial. Through estate planning, we can help you determine whether you should distribute your superannuation through your Will. We can also help you:

• Understand the likely tax implications of leaving your superannuation to certain people, as not every person is taxed advantageously,
• Narrow down the most tax-advantageous people you can leave your super funds to, and
• Make any necessary changes to carry out your best-case-scenario.

Similarly, life insurance is not automatically dealt with under a Will, and it may or may not need to be depending on your policy and individual circumstances. A careful analysis of both superannuation and life insurance is often required.

Passing on Directorship Roles in Private Companies

A Will does not pass on a person’s director role in a private company unless the company’s constitution explicitly allows for it.

If the constitution is silent, we can help you potentially amend the document or assist you to choose an alternate path to pass on your director role in case of death or loss of mental capacity.

Passing on Trusteeship Roles in Trusts such as Family Trusts

Similarly, a person will be unable to pass on their role as a trustee to someone else through their Will unless the Trust Deed explicitly allows for it.

If the Trust Deed is silent, the role of trustee can be a bit more complicated to pass down than a directorship, and in order to work out the best course for your individual circumstances, we recommend you speak to us.

It is also important to understand that the role of trustee in a Self-Managed Superannuation Fund is a different category of trustee. Specific steps, which we can help you with, may need to be taken to pass down this role as well, depending on whether the trustee of the Self-Managed Superannuation Fund is an individual or a corporation.

Managing Medical and Financial Decisions if Mentally Incapacitated

A lot of people forget that even if they have a perfectly functional Will, they may lose mental capacity before they become deceased. This can happen due to a range of medical issues which result in the person no longer being able to make their own decisions.

A Will cannot help in these circumstances because a Will only becomes a legally-valid document once a person becomes deceased.

In these types of situations, Powers of Attorney, Guardianships and Advance Care Directive documents are likely to come in handy, as they allow a nominated person or people to make decisions on behalf of the mentally incapacitated person.

It is important to remember that the only time you will be allowed to plan and implement any of the above is (1) during your lifetime and (2) while you still have the mental capacity to make your own legal and financial decisions.

If you would like more information, or believe that you may require, or may benefit from, some estate planning, please give us a call so that we may assist you in any way that we can before it’s too late.