The hidden gaps in an estate plan: Five things your Will might not deal with

A comprehensive estate plan involves much more than just preparing a Will. Rather, it requires consideration of:

• The assets you own;
• How you own those assets;
• Entities or assets you control; and
• What happens to your assets and controlling roles when you die.

Here are five things which are not automatically captured by your Will.

1. Jointly owned assets

Assets owned jointly do not form part of your estate. Instead, the right of survivorship applies, meaning the asset passes automatically to the surviving joint owner, independently of your Will.  

For example, you may intend to leave your ‘share’ of your home to your children on your death. However, if the property is owned as joint tenants, your interest will pass automatically to the surviving joint owner on your death and cannot be dealt with under your Will. Similarly, funds held in a joint bank account will generally pass to the surviving joint account holder. It is then the Will of the surviving owner which deals with that asset on their subsequent death.

If this does not reflect your intentions, you would need to consider restructuring ownership of the relevant asset so that it can be dealt with via your Will. 

2. Superannuation

Superannuation is governed by superannuation law, your fund’s rules and any death benefit arrangements you have put in place. Your superannuation entitlements do not necessarily form part of your estate when you die. Therefore, death benefits may not be capable of being dealt with by your Will.

A Binding Death Benefit Nomination allows you to direct how your superannuation entitlements are paid, either to an eligible beneficiary or to your ‘legal personal representative’. Payment of a death benefit to your legal personal representative means that the benefit will form part of your estate and be distributed according to the terms of your Will. Without an effective binding nomination, the trustee of your fund may have discretion about how your superannuation entitlements are distributed.  

It is therefore important to consider your superannuation as part of your estate planning, before assuming it will be distributed via your Will.

3. Family trust assets and control

You may consider assets held in your family trust as assets which you own. Legally, however, these assets are owned by the trustee and are held subject to the terms of the trust deed.

This means that you cannot ‘leave’ trust assets as gifts under your Will and this may not achieve your intended outcome. Instead, an important estate planning consideration is who will control the trust after you die.

For example, if a holiday home is owned by your family trust and you would like your children to benefit from it after your death, you cannot simply gift the property to them under your Will because you do not personally own it. Instead, consideration needs to be given to who will control the trust after your death and how the property can be dealt with for the benefit of your intended beneficiaries under the terms of the trust.

As part of your estate planning, a review of the trust deed and, where the trustee is a company, the company’s constitution and ownership structure, can help determine who currently controls the trust, how that control will pass on your death and whether any aspect of that control can be dealt with under your Will.

4. Company interests

If you own shares in a private company, you may wish for these to pass under your Will when you have died. Generally, this can be achieved. However, there may be other documents which govern what happens to these shares when you die.

For example, you may have an existing shareholders agreement or company constitution in place which requires that your shares pass to the remaining shareholders on your death, or gives those shareholders a first right to acquire them before they can pass to your intended beneficiary.

Understanding these arrangements is an important part of your estate planning so that you can consider if they align with your overall estate planning objectives.

5. Assets governed by separate arrangements

There are also other interests which may be governed by their own agreements or policies which can affect how they are treated on your death.

For example, a life insurance policy may have its own ownership arrangements which mean that the benefits are not paid to your estate. Alternatively, you may be a party to a loan agreement which has terms about how and when the debt is to be repaid and the impact that your death has on the arrangement.  

Therefore, if another document governs an asset or arrangement, it must be considered as part of the estate plan as it may override the wishes expressed in your Will.

How we can help

If you would like advice or guidance regarding Estate Planning, our experienced lawyers in the Moores Wills, Estate Planning and Structuring team can assist you. 

Contact us

Please contact us for more detailed and tailored help.

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^{Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.}