Many people, when writing their Will, will choose to simply allocate their estate in full to their surviving partner or equally between certain beneficiaries like, for example, any surviving children. Some, however, will choose to gift specific assets to specific beneficiaries. Detailing the distribution of specific property or other assets to individuals in your Will needs careful consideration.
Your Will enables you to choose how your assets will be dealt with after death. It’s a powerful document that, when well-drafted, ensures the beneficiaries to your estate are who you intended and that they are receiving what you intended.
It’s not only highly recommended that every adult has a valid Will but also that they review their Will from time to time and, in particular, when personal circumstances or relationships change.
Our earlier blog, “When should I review or update my Will?” gave 10 key reasons for you to consider updating your Will. But there are more triggers to consider based on some recent experiences we have had.
In this blog, we look at three matters where the Will-maker left specific items to specific people in their Will. Those instructions led to some inequity for beneficiaries when dealing with the deceased estate.
Dad had made his Will about 5 years ago and decided that a certain bank account should be gifted to his son. At the time, his daughter was an attorney under a Power of Attorney made by Dad.
Without realising the effect of the clause in the dad’s Will, to leave the bank account to the son, his daughter moved the funds to another higher-interest account.
Although this is more an issue as to the duty of attorneys, the issue remains that Dad probably thought, at the time the Will was done, that the gift was fair. However, with further consideration, he may have realised that the gift was too specific. For example:
Mum made her Will to ensure that her daughter, who had a mild intellectual disability, could remain in the family home for her lifetime. She left other assets of shares and money in superannuation to her son.
Although commendable at the time, the value of the home increased significantly whilst the other assets got expended on day-to-day living expenses for Mum. The end result was that the outcome of the Will distorted her wishes beyond her initial intentions, significantly in favour of her daughter.
Mum made her Will and decided to specifically gift a number of her main assets to her children based on their needs at the time of writing her Will. Her sons were to receive real estate, and her daughter was to receive bank accounts.
But the person who drafted the Will did not take into account where Mum’s funeral and other expenses would be paid from. Usually, those expenses are paid from the residue of the estate (that is, from any assets remaining after all the specific gifts of assets have been dealt with). In this case, there were no remaining assets after all specific gifts were made.
The result was that the expenses had to be apportioned against the value of all the specific gifts. This is a fairly complicated calculation and one which distorted the relative outcome for each child. This could have complicated matters further if the sons (whose specific gifts were real estate) were unable to pay their share of expenses from their own assets. That situation may have required them to sell the real estate to pay the expenses of administering the deceased estate.
There are a few points that arise from these experiences:
As we have always advocated, having a valid Will is important. It reduces costs and stress associated with dealing with a deceased estate. However, it’s also crucial that your Will clearly stipulates your wishes, with no ambiguity or unfair clauses.
Having your Will professionally drafted by an experienced estate planning lawyer will ensure its validity and will reduce the potential of a contested estate. Your lawyer will raise any concerns with you about the content of your Will and bring to your attention any matters that you may not have considered.
For more information or to arrange a consultation with a lawyer, you can call or email us.
This article is of a general nature and should not be relied upon as legal advice. If you require further information, advice or assistance for your specific circumstances, please contact E&A Lawyers.
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