There is often a lot of confusion about what assets you can and can’t leave as part of your Will and how best to deal with control of certain assets upon passing. I thought I would provide a brief overview of some common oversights and areas that not everyone understands.
How you purchase assets such as real estate, shares and managed funds with another person will then govern whether or not it can be left in your Will. When purchasing an asset with another person you can hold the asset as either ‘Joint Tenants’ or as ‘Tenants in Common’.
These are easily confused if assets are held as:
- Joint Tenants – on your death your interest in the asset automatically goes to the survivor, irrespective of what you have said in your Will.
- Tenants in Common – you can leave your share of the asset any way you want in your Will.
If you don’t want an automatic transfer on death to occur, then you need to alter the terms of your ownership on the title documents applying to the particular asset. Just to add to the potential for confusion, the Tax Office treats all jointly held assets as if they were owned as tenants in common for capital gains tax purposes and any change could cause a tax issue.
Assets Owned by Other Entities
You can’t leave assets in your Will which are not legally owned by you. Assets held by a Trust, Company or Superannuation Fund cannot be left as your assets. The control of the Trust may be left or shares in the company can be left (you need to ensure that your Solicitor reviews your constitution to ensure that this can occur).
For many people their Superannuation account balance and any insurance proceeds attached to their super represents their second largest asset after their home. Most people are shocked to learn that their Will does not necessarily direct what happens to their Superannuation on death.
Unless you have made a binding death benefit nomination, the Trustee of the relevant Superannuation Fund has the initial power to direct where your Superannuation goes. The Trustee’s decision can be challenged so delays and disputes occur frequently. Any nomination given to your fund Trustee should be reviewed and consideration given to making a ‘binding nomination’. It is important to note that some industry and public offer Superannuation funds do not permit making binding nominations.
The Proceeds of Life Insurance Policies
If the owner of the policy has nominated a beneficiary of the policy, the nomination takes precedence over the terms of the Will. It follows that, where a nomination is made, the proceeds of the policy do not form part of the estate. If you wish the proceeds of the policy to go to someone other than the nominee, the nomination must be changed. Each policy should be checked to determine who has been nominated.
As you can see it may not be as straight forward as what you may have thought, so it really is best to seek advice to help you gain a better understanding of your financial situation.
The last thing you want is to burden your beautiful family with more stress after your gone because you’ve made some simple mistakes!
Originally published on LinkedIn on 29/02/2016