Legal
July/August 2003
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Wills
By Tom Williams, Solicitor
ou cannot escape either death or taxes. The latter is between you and
Mr Costello, but death is a very personal matter which not only affects
you but also the family you leave behind. The key question you should
ask yourself is "How can I look out for my family's future wellbeing
whilst minimising the paperwork?"
The most effective method for providing for your surviving loved ones
is by completing a Will which firstly, lists all your current assets (including
business interests) and then directs your executor how you wish to distribute
your estate amongst the survivors.
If you do not have a Will, ask your lawyer to prepare one immediately.
Wills are easy to prepare and most lawyers charge only a nominal fee for
this service. There should be a separate Will for each member of the family
who is either married or over 18.
Is the existing
will still current?
This article is not intended to describe how to prepare a Will but rather
the necessity of reviewing your existing Will in the same way that you
would review any other business document, such as your fire insurance
policy. No modern business person renews a policy retaining the same face
value without making provision for the changing replacement costs for
any property that could be lost to fire. If you periodically update your
fire coverage then apply the same business logic to your Will.
It is amazing how many people are still using the Will they made when
they were first married and were just starting out in life. This article
seeks to remind you that your life and business interests have become
more complicated and will continue to evolve over time. Perhaps, during
the past few years you have had children, gone into business, bought or
sold property, changed your religion, or are planning on cashing in your
superannuation and retiring up north? These events represent major changes
in your circumstances and should be reflected in your current Will.
Any major changes in your life should encourage you to retrieve your
existing Will and review its provisions in the light of good business
practice. In some ways your Will is like your best suit, it will date
if it is left in the closet too long. Styles change, as does the current
business environment - 20 years ago few people made allowance for their
superannuation entitlement when calculating their net worth.
Does your Will adequately provide for the family? Unfortunately accidents
do happen and what you planned five years ago may be no longer appropriate
in light of your current commitments. Does your Will provide for the dreadful
possibility where both you and your partner are killed in the same accident?
The Bali bombing was a dreadful example of the personal devastation of
a random act.
Using your current Will (and after discussing your plans with your accountant)
you should review the status of your present assets and commitments with
your lawyer. What has changed?
- Your family home is usually your single largest possession. Recent
property prices may have increased its value dramatically and may
well have transformed a modest purchase 10 years ago (heavily mortgaged?)
into something worth a million dollars today. (Of course the mortgage
was paid off years ago!). Perhaps you have sold that house and bought
another, plus acquired an investment property
- Your small business may have grown substantially in the past few
years and you feel justifiably proud of the results of all your hard
work. Its current worth as a going concern represents the family's
nest egg after you are gone - either to be sold outright or be retained
to allow your survivors to continue running it. What, if any, are
the tax implications?
- Does your current Will mention your superannuation, or have you
taken out additional life insurance?
- Do you have a few Telecom shares in a safe deposit box somewhere?
- Have you just come into an inheritance from your long lost aunt?
- Do you have a part interest in some land awaiting subdivision?
The list of your assets and business involvements will continue to change
over time and your existing Will may become increasingly out of step with
reality. In turn, the plans you made some years ago may need to be updated:
- Do you still want your children to go to private school? Or have
the children moved onto university? In either case is there adequate
provision for their education?
- Have the addresses of your relatives changed? Has anybody mentioned
in the Will died, married or divorced? Surely you no longer want to
leave the boat to your brother-in-law now that he and your sister
are divorced?
- Your daughter just had your first grandchild who was named after
you. Do you wish to leave the boy something to remember his grandfather
by?
- Has the named executor been seriously ill recently or has she moved
overseas or no longer on speaking terms with some of the family? Possibly
it's time to name a new executor to facilitate the easy and peaceful
distribution of your estate?
If after reviewing your current Will, you decide that it no longer
reflects your current intentions then arrange with your lawyer to draft
a new one. As a rule of thumb, your Will should be reviewed every two
years and updated at least once every five years.
Formerly Wills were update by the insertion of extra pages called a
codicil which included the required amendments. These days of word processors
it is quicker and cheaper to have a new Will prepared and a copy left
in your lawyer's safe. Once the new Will has been executed, the old
Will should be ruled through and marked 'Revoked by Will date ….
and presently held at…'. The revoked Will should be kept on file
by your lawyer for legal reasons. All copies of the Will held by your
family should be destroyed. Leaving copies of revoked Wills around the
house serves no purpose and can only lead to confusion for your survivors
and the poor executor after your death.
Finally, if you decide to rewrite your Will, it is often easier to
redo both yours and your partner's wills at the same time. Similar,
but separate Wills covers the eventuality of a joint fatal accident
and facilitates the probate of both estates simultaneously.
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