There are many myths and misunderstandings surrounding Wills and estate planning, which often come from television shows and movies. This can lead to misconceptions and half-truths when people attend to their own estate planning, or when dealing with the estate of a deceased family member or friend.
This article covers five of the most common myths and misunderstandings.
1. If you die without leaving a Will then all of your assets pass to the government
This view is a particularly common misconception. A person who dies without a Will is known to have died ‘intestate’, and the distribution of a person’s estate in such circumstances is governed by the rules of intestacy found in Part IA of the Administration and Probate Act 1958 (Vic) in Victoria (each state and territory of Australia has similar provisions).
Only in the event that there is no relative entitled under the intestacy provisions to receive the estate, such as a surviving spouse, domestic partner, child, grandchild, parent, sibling, aunt, uncle or cousin, is the Crown (the government) entitled to receive the assets of the estate.
2. You don’t need a Will if you have very little in the way of assets
This view is often the belief held by younger people. Notwithstanding that a person may not hold considerable wealth, there is still a great benefit in leaving a valid Will. By dying intestate there is no individual in place who is authorised to commence administering an estate from the date of death, this includes receiving final employment payments and superannuation benefits. This can cause considerable difficulties and disputes for family and friends left behind.
Leaving a Will also allows a person to choose who will receive their estate on their death and the manner in which they will receive it, as opposed to intestacy laws governing the way in which these assets are distributed on death.
3. Wills and estate planning is something that only older people need to worry about
Sadly, some people die young. Others may become victims of accidents or have medical conditions which leave them incapable of managing their own personal and financial affairs. By putting in place a valid Will and Enduring Powers of Attorney (POA), you decide who is in control of your affairs should such a tragedy occur. This can make things easier for your family members and friends to manage if you are unable to do so, or should you pass away prematurely.
4. You can nominate whomever you wish to receive your superannuation benefits if you die
This is a common misconception. Many people believe that they can nominate anyone, including grandchildren, sibling(s), and/or parents to receive their superannuation in the event of their death.
Legislation restricts the categories of persons who can receive your superannuation member benefits and any associated insurance benefits (known as superannuation dependants), should you pass away. Such persons include:
- your spouse or de facto partner;
- your children;
- any person that is financially dependent on you at the time of your death;
- any person with whom you’re in an ‘interdependent relationship’ with at the time of your death; and
- your legal personal representative, which includes the executor of your Will should you leave one, or the administrator of your estate should you fail to leave a Will.
If you have made a nomination which is invalid (e.g. nominating someone who does not qualify as a superannuation dependent), the trustee of your superannuation fund will ultimately decide who received your death benefit.
A recent article published looks at superannuation, Wills and deceased estates in further detail.
5. There’s no point in leaving a Will because anybody can challenge it
This misconception is often held by people who find themselves involved in a court proceeding brought by a person seeking more from a deceased estate.
Firstly, a Will can be challenged or contested on the basis that:
- it was not signed by the deceased, or not executed in conformity with applicable legislation;
- it was not intended by the deceased to be their Will;
- the deceased lacked testamentary capacity at the time shortly before, and at the time of executing the Will; or
- the deceased was under undue influence at the time of executing the Will.
The most common challenge and what people generally think of, is when a person commences a claim for family provision from the estate of the deceased person (seeking provision if left out, or further provision if they believe they have not been left enough).
In 2015, the law in this area was amended in Victoria reducing the class of persons who can make a family provision. The class of eligible persons is limited to:
- a spouse or domestic partner of the deceased person;
- a child, including a stepchild and adopted child, of the deceased person;
- a person who, for a substantial period during the life of the deceased person, believed that the deceased as a parent of the person and was treated by the deceased as a natural child;
- a former spouse or domestic partner of the deceased person who, at the date of death of the deceased person, had either commenced but not finalised, or would have been able to take proceedings under the Family Law Act 1975 (Cth);
- a registered caring partner of the deceased;
- a grandchild of the deceased;
- a spouse or domestic partner of a child or stepchild of the deceased, if the child or stepchild of the deceased dies within one year of the deceased’s death; and
- a person who, at the time of the deceased’s death is, or had been in the past and would have been likely in the near future, had the deceased not died, a member of the household of which the deceased was also a member.
While many family provision claims ultimately result in the claimant receiving a benefit from the estate of the deceased person, the Will itself is not cast aside.
There are many myths and misconceptions about Wills and deceased estates, and these are just a selection of the most common myths. It is imperative to consider and execute your estate planning carefully and obtain the advice of experienced and knowledgeable professionals that work exclusively in this area of legal practice.
For tailored advice to meet your estate planning objectives, including reviewing your Will and assistance in preparing POA documents, please contact our Wills, Trusts & Estates team.
|Disclaimer: This publication contains comments of a general nature only and is provided as an information service. It is not intended to be relied upon, nor is it a substitute for specific professional advice. No responsibility can be accepted by Rigby Cooke Lawyers or the authors for loss occasioned to any person doing anything as a result of any material in this publication.
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