Client’s Common Questions - Wills

<<Back to publications index>>

Why do I need a will ?

Your will is your chance to say who is to get your assets when you die.

It is a document that only comes alive when you die.
It is only the last will that operates and there is no limit to how many wills you can make.
A will can always be revoked (cancelled) or changed at any time as long as you have capacity (understand what you are doing and acting freely).
Your will can say what funeral arrangements you want.

What happens if I do not make a will - does it all go to the government ?

When you die without a will, the legal term is "to die intestate." The estate only goes to the (State) Government if you have no relatives of the required categories. In the next item I have set out the list of relatives in order. If there are no relatives in one group then it drops to the next group and so on. If there are relatives in a higher group then those on the lower group get nothing. The word spouse means either legal spouse or de facto spouse (see next).
If you die intestate, the persons entitled to your assets have to be established by documentary evidence such as birth, death and marriage certificates. These can sometimes be difficult to obtain if the events took place overseas or the details are unknown.
In your will you name the Executor. If you die intestate, the person who is entitled to apply to the Supreme Court to deal with your assets (called the Administrator) will be the person getting the largest share. If there are several getting the same share, they have to agree on who should be Administrator. There may be a dispute amongst these beneficiaries as to who should be the Administrator.
If any beneficiaries are under 18, the court may require the Administrator to give personal guarantees or other security to ensure performance of his/her obligations.

Who gets it when you don't have a will (Intestacy):

If you have a spouse and no children, all goes to the spouse.
Bear in mind that spouse includes de facto spouse and for this purpose if there is no legal spouse and no children, there is no minimum period of the duration to qualify. If there is a legal spouse or children then the relationship must have continued for a continuous period of 2 years, otherwise the legal spouse gets it. Some clever legal spouses offer their separated spouse a ‘second chance weekend’ at least once every 2 years to maintain this status. “Spouse” can be a same sex partner. The usual hallmarks of a de facto relationship are sharing accommodation and sexual relations, perhaps joint bank accounts and expenses. Each case has to be looked at on its merits.
If you have a spouse and children, the spouse gets the first $200,000 of your estate, the household chattels and half the balance. However, if the spouse’s share won’t be enough to give him/her the matrimonial home then the share increases to get the home and the children’s share is reduced accordingly. This only applies if your spouse exercises the choice to take the house within 12 months of the grant of administration (by giving a notice). If the spouse dies before giving the required notice, the right is lost.
If no surviving spouse but children then the children get the whole estate equally. If any children have died before you but have left children of their own (your grandchildren) then the share passes down the line i.e. to their children and if any of those have died before you, to their children etc.
If you leave no surviving children, grandchildren or spouse, then it passes to your parents.
If no parents then to brothers and sisters of full blood. Like children, if any of them have passed away before you, their children take their share (these are your nieces and nephews).
If no brothers and sisters of full blood then to brothers and sisters of half blood (step-brothers and sisters) and again if any have not survived then their share goes to their children (but no further down the line).
If no brothers or sisters then to uncles and aunts (being full blood brother or sister with your parents) but unlike your brothers and sisters, their children (your cousins) do not get the parents share if the parent died before you.
If no uncles and aunts of full blood with your parents then uncles and aunts of half blood with your parents. Again their children do not get their share if they died before you.
If no one in the above groups then it goes to the government (State).

Can I make my own will without a solicitor?

Yes. Your will is valid whether made with or without the assistance of a solicitor or Trustee.
The usual problem with homemade wills is that they are made as if you are about to die but when you do die (hopefully years later) everything has changed. A homemade will might say "I leave my house at Hurstville and my Rural Bank account to my wife Mabel, any other money to my sister and my car to my son". This might be fine at the time but what if you have sold the house at Hurstville (perhaps it was sold by your Power of Attorney because you are in a nursing home), the Rural Bank became the State Bank, then Colonial State then the Commonwealth Bank and changed its name to the Packer Bank - and there is no car ? - the effect of the will is completely different. The money from the house and car will go to the sister and your wife and son will get nothing.
An experienced solicitor would be less specific with assets and have thought of the possibility that the house might be sold and turned into cash and that the bank details may change.

Technical requirements of a will

Must be in writing
Signed by person making will (called the testator) with the apparent intention of approving the will (usually at the foot of each page).
If the testator is weak, his/her hand may be assisted to sign.
Signing on behalf of the testator by another person is permitted as long as the testator is present and directs that it be signed. This allows a person who is physically disabled to make a will. This other person may also then be a witness to the will.
If the testator is unable to read (either through illiteracy of vision impairment), the will may be read over to him in presence of witnesses.
Testator's signature must be witnessed by (at least) 2 persons who then sign themselves. Both testator and witnesses must be present during signing.
All should use the same pen as testator to avoid suggestions that they signed at different times.
Witnesses should print their name and address under signature so they can be found if necessary when the testator dies. They would normally only be needed if there is some doubt that the will was signed properly.
Witnesses can be any person old enough to give evidence in a court.
Witnesses cannot receive a benefit under the will nor can their spouse (if witness or spouse named in will, the will is still valid but witness misses out).

How old must you be to make a will?

You must be 18 to make a will.
You can also make a will if you are married below that age. In NSW you have to be 18 to marry unless you have a court's permission.
A will made in contemplation of marriage would become valid when you married, even if you were under 18 when you made it.
The Supreme Court can give permission to a minor to make a will.

What is an Executor and what do they have to do?

When someone dies, the Executor is the person who has responsibility to find out what their assets and liabilities are, pay all the debts and then distribute the balance in accordance with the will or the laws of intestacy.

Executors other duties include:

arranging the funeral
lodging taxation returns and making sure all tax is paid (the Executor is personally responsible for any unpaid tax).
take control of any business or farm and ensure that assets are not lost or stolen or perish.
if necessary, sell assets to raise funds to either pay debts, taxes or distribute to beneficiaries.
distributing the assets to beneficiaries (or the proceeds of sale of the assets).
keep financial accounts of what has been done.

Who can be the Executor ?

Any adult person can be an Executor.
There is no limit on number but more than 3 might become unworkable. It is common to appoint one with an alternate if the first can't or won't take on the task.
Must be a named or definite person, or the Public Trustee or a trustee company.
The Supreme Court requires the Executor resides within NSW or be able to give an address for service in NSW.
Usually you would want someone you can trust and who has some experience in dealing with assets. The duties may involve selling assets and making decisions as to the price and method of sale.
A solicitor can be the executor either alone or with other executors. It is sometimes a good idea to appoint the solicitor with other executors as a 'referee' in case of disputes.
A beneficiary can be the executor and it is common to appoint the person receiving the largest interest as executor.
It is not a good idea to appoint a person who may have a conflict with the other beneficiaries.
A person who is to receive a life interest should not be appointed as executor as the estate will continue until after they pass away.
A person who may wish to purchase an asset from the estate may not be a good choice as he can't buy from himself (being the Executor) without a specific clause in the will or the consent of all the other beneficiaries (who would all have to be adults) or court approval.

Who can be a witness to the will ?

Any person who is old enough to give evidence in court.
Can not be a beneficiary to the will or the spouse of a beneficiary (de facto spouse included). If they do witness the will they can't get their share although the rest of the will is not affected.
The task of the witness is to see the person making the will (Testator) sign the will and to acknowledge that by signing. They don't have to know what is in the will. The witness is entitled to ask questions of the Testator to be satisfied he/she understands what they are doing.

What is Probate ?

A Grant of Probate is the official approval that:

A will is the last will of the deceased.
The person named as the Deceased is in fact dead
The executor is authorised to collect assets from the persons/body holding them.
Probate is granted by the Supreme Court (although you don't have to go to court unless there is a dispute about the will)
People paying to the person who has been granted Probate are protected from claims in the future even if the Probate has been fraudulently obtained.
Probate can be revoked if the will is proven to be not the last made by the deceased or other defects are found in the process (i.e. the person is not dead).

Are there any death duties ?

Death duties were abolished in 1981 for any person dying after that date.
Capital Gains Tax is considered by some to be a form of death duties. I have given a short resume of this below.

Capital Gains Tax

This is a tax on the increase in value of assets.
It only applies to assets on which the ownership changed after 19 September 1985 (CGT date).
Death doesn't create a liability to pay tax (except as below) but is a change of ownership so that assets originally acquired before 1985 now become liable for tax on any increases (from the date of death)..
If the asset was bought by the deceased after CGT date, you inherit his liability although you don't have to pay it until you sell or transfer the property.
If the asset was the home of the deceased, you have up to 2 years from the date of death to sell without having to pay tax on any increase in value from the date of death to the date of sale.
For this purpose, a house ceases to be the home of the deceased if he has moved into other accommodation (such as a nursing home) for more than 6 years prior to date of death.
If you sell after the 2 years, any increase in value from date of death to date of sale is taxable
If assets are left to an overseas resident or a charity, death does create a liability for the estate. The law deems the estate of the deceased as liable for any increase in value to the date of death (if the deceased would have been liable if he had sold).

Does GST affect an estate?

It depends on what assets are in the estate. If the deceased controlled a business which has therefore passed to the estate, then the estate needs to register for GST and put in returns etc. Legal fees of administering the estate will be liable for GST. If real estate is to be sold, the agent commission will be liable for GST. The matter will need to be looked at by your lawyer at the time.

Vendor Duty

Sales of real estate in New South Wales since 1 June 2004 are liable for “Vendor Duty”. The rate of duty is 2.25% of the sale price.
One of the exemptions from Vendor Duty is that the real estate was the principal place of residence of the deceased.
To get this exemption, the sale contract must be entered into within 12 months of the grant of probate (not date of death).

My father is a bit absent minded. Can he still make a will ?

A person can make a will if they have testamentary capacity. This was defined by a judge as:

Must understand what a will is and what it does.
Must understand what assets he has.
Must understand what moral claims exist on the estate - i.e. who should receive the benefit of the estate.
Must not have a disorder of the mind that would "poison his affections, pervert his sense of right or prevent the exercise of his natural facilities ‑ that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which if the mind had been sound, would not have been made."
Even if a person is found to be generally insane, they can make a valid will during a lucid moment as long as that moment could be proved. The fact that a person is eccentric does not make them incapable of making a will.

What if something is put in the will by mistake ?

The Court will not admit to probate the contents of a will which were not known and approved by the testator.
Due execution of a will (signing it in front of witnesses) raises a presumption that the testator knew and approved of its contents
Probate can still be granted of a will that is rectified but excluding parts that were included because of fraud, mistake or inadvertence or by adding parts in to make it reflect the deceased’s intentions.

What happens to my debts when I die?

They are paid by selling your assets. This is one of the tasks of your executor.
Even if you have left an asset to a beneficiary (such as your home) it may have to be sold to pay your debts unless there are other assets available.
As part of an application for probate, your executor is required by law to advertise that he is going to apply for probate or your estate and invite people to make claims in your estate. Your solicitor would normally arrange this advertising. If you look in the legal pages of the Herald you will see such ads.
If your debts exceed your assets, they can't be paid. Your next of kin are not responsible for your debts (unless they have guaranteed them somehow).

I have heard of Testamentary Trusts. Does this have anything to do with a will? Can they save tax ?

A Testamentary Trust is a trust created by a will. It can be as simple as a clause that says A I leave my estate on trust to my Trustee to pay the income to my husband for his life and then to pay the capital to my children”.
The term is also used to refer to a trust created with money that came from an estate.
It is common in a will to make gifts to children. They might be your children or grandchildren. If these gifts are invested and earn interest, this interest will be income in the child's name. Normally a child (under 18) is only allowed to receive $416 per annum unearned income before paying tax at the maximum rate. This rule was introduced a few years ago to stop high income earners splitting their income through family trusts into their children's names. However, there is an exemption to this rule. If the trust income comes from assets left by an estate, then the normal tax rates and exemptions apply.
Means that the first $6000 is tax free and the progressive rates of tax apply to the balance. The savings can be substantial. If $400,000 was left to a grandchild and invested at 5%, the income would be $20,000 pa and the tax $2,380. If the same amount was placed in a trust for the child while you are alive, the unearned income rule applies and the tax would be $9,400.
You must have an estate of sufficient size to justify setting aside funds for infant beneficiaries and still provide for adult beneficiaries.
The exemption can also apply to funds you have placed into a trust for children when the funds have been left to you from an estate. There are more restrictions on this type of trust and the funds must be put into the trust within 3 years of the death. Also limits on the amount.

I have married since I made a will. Does this make any difference ?

Unless the will states that it is made “in contemplation of marriage”, marriage cancels a will so you now have no will - if you die without making a new will, Intestacy would apply to you.
Divorce does not invalidate a will but any legacy to the former spouse is dealt with as if they had already died (which is probably how you feel anyway). If you want to provide for an ex‑spouse the will would have to be very specific. I suggest words like 'This clause is intended to apply even though I have divorced ...'

How often should I update my will?

Only marriage will cancel a will but circumstances change and this means your will might need to change too. If you loose a spouse or child then you should review the will.

How can I cancel a will that does not reflect my current wishes ?

Make a new will. A standard clause in a will says 'I revoke all previous wills'.
Destroy the will or write cancelled on it. You need to have the original for this. The destruction must clearly be with the intention of revoking the will, not just accidental.
You can direct someone else to destroy the will but it must be done in your presence. It is not sufficient to ring your solicitor and tell him to destroy it.
By some writing (i.e. a letter) that is signed in the same manner as a will (with 2 witnesses etc).
You can't authorise someone else to revoke a will after your death.

My uncle left me a house in his will but the house was sold before he died and the money put into a bank account. Can I have the money ?

Not if it was sold by your uncle. If it was sold by his Power of Attorney or the Protective Commissioner, then you may be able to get the money that represents the proceeds of sale. The legal word for this is ademption.

A relative has made a will with a solicitor but he took the original with him after signing it and it can't be found. Can a copy of the will be used instead of the original ?

When a person makes a will and the original was last seen in their possession but can't be found when they die, then there is a legal presumption that they have destroyed the original intending to cancel the will.
Like many other legal presumptions, evidence can be given in court to overcome this. Such evidence might be statements by the deceased shortly before death that show he still intends the will to operate. But in the absence of any evidence as to what happened to the original or statements to support the intention that the will is still to operate, the person will be found to have died without a will.
The persons who would get the estate if there was no will, have to be notified and invited to consent or object to the use of the copy.
When the presumption can be overcome, evidence of the terms of the will may be accept by the Supreme Court even if a copy can't be found.

My aunt left a handwritten note saying that she wanted everything to go to me when she died but it is not signed or witnessed. Does it have any legal effect?

The Supreme Court now has power (since 1989) to give effect to any document that appears intended to give property to someone on their death. The court has to be satisfied that the document was intended to act as a will. Evidence can be given of statements of the deceased about their intentions.
The case of Brett Whiteley (the famous painter) is an example of this where the Supreme Court accepted evidence by a witness to a handwritten will of its contents though it could not be found.

What happens when a beneficiary in a will dies either before the person who made the will ?

When a beneficiary dies before the person making the will, the benefit 'lapses'. This means it will pass to the person who was to receive the 'residue' of the estate. If there is no 'residue' clause, this will be the person(s) who would get it on intestacy.
However, if the person who was to receive the benefit is a child of the person making the will and that child leaves their own children (the grandchildren), their share passes to the estate of such deceased child (not necessary to the grandchildren), unless the will states otherwise.
When a beneficiary dies after the death of the person who has made the will, even if not then paid out, their share is part of their estate and will pass to their beneficiaries.

What happens if two beneficiaries die together ?

When it can't be decided who died first, the law presumes people to die in order of seniority (i.e. eldest first). This may mean that the assets of the elder pass to the younger and then to the beneficiaries of the younger.
If two people own an asset as joint tenants (the other form of joint ownership is called 'tenants in common') then a rule known as 'survivorship' applies. This rule means that when one dies, it automatically passes to the other, regardless of what the first persons will said. If they are both killed together, it passes to the younger and then to the younger’s beneficiaries.

What happens if my executor dies?

If an executor dies, the will is still valid. If he/she dies before you, or after you but before obtaining probate of your estate, the other executors (if you have named more than one) take on the task. If this leaves you with no executor, one or more of the beneficiaries will have to apply for 'Letters of Administration with the Will Annexed'. The other beneficiaries will have to consent. Sometimes there may be a dispute about who should do the job and the Public Trustee would then be appointed as Executor.
If one of your executors dies after you and after obtaining probate of your estate, the other executors continue the task. If there are no other executors, the executor of the deceased executor takes over both your estate and the deceased executor's estate.

What happens if a witness dies?

The will is still valid
The only problem is that the witness can't give evidence that the will was freely signed by the Testator. This will only be a problem if there is a dispute over the signing of the will.

What happens to a persons property when they just disappear?

If a person is not heard of for 7 years, an application can be made for Probate of their will (if there is a will) or Letters of Administration of their estate (if there is no will).
Death must be the most likely explanation for silence. This means that they more likely disappeared to avoid paying their debts.
The time may be shortened if they were exposed to 'unusual perils' such as being lost at sea or in a plane. This is what happened to the passengers of the plane that disappeared on the way to Lord Howe Island.
Sometimes the declaration of death is made by an inquest into the disappearance.

When is someone considered legally dead?

Death is defined by law as the irreversible cessation of all functions of the person's brain or irreversible cessation of circulation of blood in the person's body.

I am an executor in a will. Do I get paid for my time and trouble ?

An executor who wishes to be paid for his time and trouble can claim 'commission'. This is an amount determined by the Supreme Court as compensation for what was involved.
If an executor is also left something in the will, this is taken as payment for their time and trouble. They can get nothing more unless the will specifically allows them commission.
To make a claim for commission, an executor would normally have to do something more than just go to his solicitor and tell him to do the work.

Examples of cases where an executor would be entitled to commission are:

where a business has to be run to sell as a going concern
where a house has to be cleaned up and this involves a reasonable amount of unpaid time (not when you engage a cleaner to do it)
The amount of commission is determined by the court based on the amount of trouble but something around .5‑2% of the estate would be usual.
A full set of accounts of the estate have to be provided to the court if commission is claimed.

I have young children, should I appoint a guardian for them?

A guardian appointed in a will (called a testamentary guardian) is the person entitled on your death to make decisions for your children. It would not bind a court but would be valid unless over ruled by a court. The problem is that the persons most suitable to have this role when you make the will may be unsuitable when you pass away.

Glossary - explanation of terms

Testator - the person who makes the will
Executor - the person(s) who collect in the assets, pay the bills and distribute the assets to the beneficiaries.
Beneficiary - the person(s) who receive a benefit from the estate according to the terms of the will
Probate - the approval of the Supreme Court to the will.
Intestacy - when a person dies without a will.
Household chattels (where someone dies without a will) - there is a lengthy definition in the Wills Probate & Administration Act Section 61A (which is too boring to include) but it specifically excludes motor vehicles, boats, aircraft, racing animals, original painting, trophy, clothing, jewellery or other chattel of a personal nature.

I trust this has shed some light on this complex but intriguing subject for you - Bernie Hayward.

<<Back to publications index>>