Wills (including Testamentary Trusts)

Will Including Testamentary Trusts Whether you are young or old, with or without wealth, every adult should have a properly prepared Will.

Every adult who has a Will should re-read it at least every 5 years. If it appears that significant life or financial changes have occurred since the Will was made, an appointment with Phillip Graham should be arranged.

When Phillip Graham sits down with clients who are seeing him for the purpose of making Wills he brings to the consultation his considerable legal knowledge, experience and skill as gathered over his more than 40 years of practise. He also brings to the consultation his personal knowledge and life experiences as accumulated over more than 60 years.

This combination of legal and life experiences is very important to proper Will drafting.

It is trite but true that everyone will die. A failure to make, or update, a Will may result in unintended inheritances and substantial costs of administration of an intestate estate. Substantial legal costs may also be incurred where:

  • A Will is ambiguous;
  • A Will has not been signed and witnessed in accordance with law;
  • A Will is subsequently altered, damaged or lost;
  • A Will fails to make adequate provision for a person deemed at law to be an eligible person for whom the Court may order that provision be made out of the estate for the proper maintenance and support of that eligible person;
  • A Will has been made under the undue influence of another person; or
  • A Will has been made by a person who lacks mental capacity.

By a Will a person appoints a trusted person as executor. The executor also performs the role of trustee of the deceased person's estate. The executor has wide powers but must exercise those powers for the purposes provided in the Will. The executor's powers begin from the time of death.

The failure to make a Will that properly appoints a trusted person as an executor may result in the applicant for administration being required to provide one or more sureties to guarantee that they will make good any loss which any person may suffer as a consequence of a breach by the administrator of his or her duties. This can be a substantial burden equivalent to the value of the deceased's estate.

The assets of an intestate person (a person who dies without having made a valid Will) will pass to that person's next-of-kin in accordance with a statutory formula. The statutory formula often does not replicate how ordinary people want their assets to be divided. Where an intestate person has no living next-of-kin those assets go to the Victorian Government. All of these unwanted consequences can be avoided by having a properly prepared Will.

It is often incorrectly assumed that proceeds of superannuation form part of the deceased person's estate to be passed on to the beneficiaries named in the Will. Superannuation is often not an asset of the estate at all. Superannuation is commonly paid to the beneficiaries named by the deceased in a binding nomination (if made) or to beneficiaries chosen by the Superannuation Fund Trustees exercising the discretion allowed to them at law.

A Will prepared by Graham Legal contains carefully prepared clauses to ensure that the effects of superannuation payments outside the estate are taken into account by an executor before a distribution under the Will is made. These clauses operate to avoid double dipping by beneficiaries who receive superannuation proceeds whilst also being named as beneficiaries under the Will.

It is too often thought that a person only needs a Will drawn by a Solicitor when they have substantial wealth. Often we hear that a person's requirements for a Will are straight forward because “I don't have much to leave”.

On the contrary, if a person dies leaving an estate of modest value, it is even more important that the Will has been properly drawn. The value of an estate very rarely determines whether or not a person's instructions for their Will are straight forward.

The perception that a person’s modest estate means that a casual approach to the making of a Will may be reasonable is very often wrong. A casually made Will (especially one that is a pre-purchased form where blank spaces are filled in), may suffer from any one or more of the errors mentioned in dot points above. The cost to the deceased person’s estate of having to make application to Court to resolve these issues can be greater than the estate itself. What a waste!

A casual approach to the making of a Will is one thing. More commonly it is relationship issues and a person's desire to leave particular assets to specific beneficiaries that causes complexity and the likelihood that errors of drafting may occur.

Problems are also more common where a Will is made in the absence of lateral thinking. All too often we see clients who confess that they had not considered the consequences of their intentions in the event that an unexpected death, insolvency or broken relationship occurred between the date of the Will and the date of the person's death.

Proceedings at Court may result if it is necessary to resolve irregularities and/or ambiguities regarding the drafting of a Will. Court proceedings may also be necessary where, in the particular circumstances that have occurred, the Will does not make adequate provision for an eligible beneficiary. See https://www.grahamlegal.com.au/disputing-a-will-or-Intestacy.html for further informationn. Proceedings in Court can cost the estate tens of thousands of dollars and leave the grieving family forever fractured.

Relationships are diverse

Some clients have:

  • a spouse or domestic partner;
  • children and/or step-children;
  • children from more than one relationship;
  • partners who have children from previous relationships;
  • dependants;
  • dependants with special disabilities;

A Will allows clients to have control over the distribution of their estate. Some Wills need to reflect that a client's relationship with a particular family member has broken down.

Discretionary Testamentary Trusts

Some Wills are drawn so as to create Discretionary Testamentary Trusts. These special Wills are appropriate for clients:

  • who have substantial wealth and who are concerned to give their primary beneficiaries the opportunity to avoid tax by distributing income earning assets broadly; or
  • who have concerns that particular beneficiaries are facing probable bankruptcy; or
  • who have concerns that particular beneficiaries are facing a probable family law settlement.

Wills creating Discretionary Testamentary Trusts can provide significant taxation advantages particularly where a beneficiary receives a large inheritance that will result in taxable income.

The Australian Taxation Office accepts that taxable income from a deceased estate may be distributed between testamentary trust beneficiaries, including children, with each beneficiary being eligible for the tax free threshold of $18,200.

Graham Legal also prepares Wills containing Special Disability Trusts within the meaning of Section 1209L of the Social Security Act 1991. These trusts are used for the purpose of making provision for handicapped children or adults suffering impairment that would qualify the person for any of the following:

  • a disability support pension; or
  • an invalidity service pension under Part III of the Veterans' Entitlements Act; or
  • an income support supplement under the Veterans’ Entitlements Act on the grounds of permanent incapacity.

Financial circumstances are diverse

Some clients have:

  • substantial wealth with a portfolio that includes assets that will, over time, be sold or retained, appreciate or depreciate or simply change in relative value to the portfolio;
  • few assets, but the prospect of accumulating great wealth over time;
  • assets, some of which are subject to Capital Gains Tax and others of which are not;
  • their assets owned in conjunction with other people (either jointly or as tenants in common);
  • discretionary family trusts;
  • superannuation under the effective control of a fund manager or trustee.
Testamentary Guardianship

Parents of infant children may, by their Will, appoint Testamentary Guardians to provide day to day care in the event of the parents' early death. Why Use Graham Legal?

Every client is different and the Wills that Phillip draws meticulously reflect that. Our prices include an allowance of one hour for the initial face-to-face appointment during which instructions are taken.

A Will must be drawn carefully to ensure that its provisions are clear and unambiguous. Words often have several meanings. The actual meaning of words often depends on the context in which they are used. Wills should be drawn by persons who are experienced in drawing them. A Will often includes words and expressions that have been defined by the Courts over centuries of common law cases. These words and expressions are adopted because they have a known meaning.

Over his years in practise Phillip has written thousands of Wills and Powers of Attorney. Wills are not always easy to draw and it is easy to make a mistake. Apparently simple concepts that clients bring to Phillip are often very much more complex than the client has appreciated. Phillip's life experiences coupled with his experience in writing Wills and in handling deceased estates has given him the ability to look laterally to point out consequences that clients have not until then appreciated.

Graham Legal's prices are extremely reasonable given the care and responsibility involved in the task. That said, every Will is different and longer attendances and special or unusual instructions will be charged accordingly.