A STEP BY STEP GUIDE TO PLANNING YOUR WILL

Your legal partner

in Wills & Estates

Many people avoid making a Will because they think they will live to a ripe old age and have plenty of time, don’t want to think about dying or they don’t feel they have anything worth leaving. Even worse – sometimes they just don’t bother as they assume things will automatically go to their chosen loved ones – Wrong!

Making your Will Making your Will It’s not about you!It’s not about you!

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Making a Will is not about you! -it is the best thing you can do to make your passing less stressful and distressing on the ones left behind.

Dying without a Will can leave a terrible mess for your family and loved ones. It leaves them in limbo and causes extra stress and delays for all the jobs that need to be done - bank accounts need to be closed (even if there is no money in them), property needs to be disposed of and debts need to be paid – imagine dealing with Centrelink if you have no official ‘standing’! If you die without a last Will, you will die intestate, which means that state law will determine how your assets will be divided and the results may not be what you would have wished.

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A Will makes it much easier for your family or friends to sort everything out when you die – without a Will the process can be very time consuming, stressful and much more expensive.

Your Will ensures the right people receive your gifts. If you die intestate, everything you own will be shared out according to a fixed formula defined by the law – regardless of what you might have wanted. Depending on your circumstances as at the date of death, family members who you have not spoken to for 20 years or family members with addiction problems may get a share of the pie.

A Will can be structured to help reduce the amount of Tax and Duty that might otherwise be payable on the value of the property and money you leave behind.

Writing a Will is especially important if you have children or other family who depend on you financially, or if you want to leave something to people outside your immediate family.

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The transfer of assets from one generation to another, also known as estate planning, is a must for every individual irrespective of age or the size of his or her wealth. You do not need to wait until you own lots of assets or until you turn 65. Life is unpredictable and uncertain. It is always better to prepare a Will, even if you are in the pink of health, as uncertainty may occur anytime. Doing this one essential task prevents the addition of financial and legal stress to the emotional grief your loved ones may already be facing upon your absence.

Even if you are young, single and have no children – once you are 18 a Will assists your loved ones in administering your affairs after your passing. Most young people often think they own nothing, however, many have sizeable life insurance components in their superannuation, or cars.

Don’t do it for yourself – do it for those Don’t do it for yourself – do it for those you love.you love.

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Making Making Your WillYour Will

Step by step

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Before you can write a Will you need to decide who will act as your Executor and who will receive what.

You should set down the basics of your plan for your money and possessions – your estate – early on, before you visit a solicitor or discuss your Will with your family.

Don’t worry, it’s easier than it sounds – just follow this step-by-step process.

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It will probably take you just a few minutes to tick off this step – you can even do it right now.

You might include:

• Your partner or spouse• Children and other family members• Friends• Charities

1 Make a list of who you Make a list of who you want to benefit from your want to benefit from your estateestate

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Each person named to receive something in your Will is known as a “beneficiary”.

A person of any age, including a minor (that is a child under 18 years of age), can be a beneficiary. If a minor is listed as a beneficiary of property or shares, the Executor is responsible for administering the assets of the minor beneficiary in accordance with the terms of the Will (unless someone else is specifically appointed for this purpose).

If your Executors are advanced in age and your beneficiaries are young then you may need to consider who will administer the assets should your Executor die or lose capacity.

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Start with assets that are easiest to value:

• Bank accounts• Valuable objects, like jewelery or heirlooms

Then move on to the things that change in value. These will be harder to estimate exactly. They include :

• Your business interests and assets• Stock market investments - shares, bonds &

funds• Property – your house, plus any investment

properties, land, or even a parking space that you own.

2 Make a list of your assets Make a list of your assets and liabilities, allocating and liabilities, allocating values to eachvalues to each

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Remember to factor in the value of any debts secured against your assets!

For significant assets, such as a house, property or car – correctly identify whether you own this asset independently or with someone else (for example: a spouse or business partner). Remember you can only bequeath what you own, so, if you only hold a part share in an asset, you can only give your share to someone else upon your death.

For real estate there are two ways you can co-own property with someone else. If real - estate is ‘jointly owned’, the surviving joint owner will acquire the property automatically when you die. The jointly owned asset will not form part of your Will (unless you are the last surviving joint owner). If the real-estate is owned as ‘tenants in common’, the portion of the property owned by you may be allocated in your Will.

DEBTS - Don’t forget to include any private loans or debts – many parents lend monies to children for property purchases or to establish businesses. Decide if these are to be deducted from their share of the estate or forgiven. If there are no documents recording these arrangements, speak to your lawyer, as this may need to be addressed as part of your Will making process.

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Did you know that Did you know that

your Superannuation your Superannuation

is not automatically is not automatically

considered part of your considered part of your

Estate ?Estate ?

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Think about how you Think about how you want to split your money want to split your money and property when and property when making your Will.making your Will.

There are 2 main options – or a combination of these:

1. Residuary bequests – Your residuary estate is what remains after the payment of any debts, funeral and testamentary expenses. Each beneficiary’s share is generally expressed as a percentage or fraction of the residuary estate.

If your affairs are comparatively simple - for example, you want to leave everything to your husband, or you want to leave everything to be shared 3 ways between your 3 children.

This type of Will means that all debts are paid and then everything left is split evenly.

2. Specific bequeaths - For specific items that you want to leave to particular people.

Examples of specific bequests include:

“I leave the Pro Hart painting titled XXX” to my grandson

“I leave my jewellery to my daughter”

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Items such as “my jewellery” will be determined at the date of death. If there is no jewellery at that time, then the gift will fail. Likewise, if a person has already given away items during their lifetime, then these items will not be covered by the terms of the Will.

Don’t overlook the smaller items. Such items may not be significant in value but they may still have an intrinsic, personal or emotional value. Often parents or grandparents leave their children specific gift items such as jewelery or other family heirlooms. In our experience, estate disputes can sometimes begin over these types of items, so make it clear who you want to receive particular special pieces.

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If things are more complicated, you’ll probably use a combination. For example:

There are broadly four types of legacies you can leave.

“I leave $2,000 to my son” – this is called a ‘pecuniary bequest’. It means you leave a fixed sum of money.

“I leave half my estate to my brother” – this is a ‘residuary bequest’. It means you leave a percentage of whatever your estate is worth after any debts, costs, liabilities, legacies and taxes have been paid. This is the same as discussed above.

“I leave my share of my house to my wife if she survives me, but if she does not survive me then it will pass to my daughter” – this is a ‘reversionary bequest’ for your daughter. You can specify what happens if the person you leave it to dies.

“I leave my share of my house to my wife for the rest of her life, and then it will pass to my daughter” – this creates a ‘life interest’ over your share of the house. A life interest allows you to say who you would like to benefit from your property immediately after your death (e.g. your wife), and then who you would like to benefit from your property (e.g. your daughter) once the first person you have chosen to benefit immediately after your death has died. This type of gift can easily go wrong, so legal advice is highly recommended if you want to include a ‘life interest’ in your Will. Life interests can also have adverse tax implications where the initial beneficiary wishes to terminate a life interest early.

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Did you know that you Did you know that you

cannot challenge a Will cannot challenge a Will

just because you don’t just because you don’t

like the terms? like the terms?

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We find people are often prompted to write their first Will after the birth of a child. In doing so, you’re securing your wishes for the future of your children if you and your partner are no longer around.

When writing your Will, you can nominate another person(s) to care for your children until they are adults (i.e. be their guardian).

When choosing whom to nominate as a guardian, consider:

• Similarities with your lifestyle, values and religious beliefs – whether theirs fit closely to yours

• Who your child might already have a bond with

• Whether the nominee already has or is planning to have children

• The transition, in terms of location and lifestyle, your children would need to make

• Practically, who can take on the role – physically, financially and emotionally

Guardianship of Guardianship of childrenchildren

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You can write down your wishes for your children (either directly in the Will or in a separate letter of wishes addressed to the guardians of your children), which may include: where they should reside, who you would like them to have contact with, what type of education and extra-curricular activities you would like them to undertake and the key values that you would like them to be taught. You can also include your thoughts on issues like access to pocket money etc. This information can be stored with the Will for access by the guardians.

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Did you know that Did you know that

we do not have a formal we do not have a formal

‘reading of the Will’ ‘reading of the Will’

in Australia?in Australia?

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Sometimes you might want to set some safeguards on your bequest – for example, if you’re leaving something to a child or someone with disabilities or mental health or addiction issues.

Many people handle these issues by setting up Trusts: this means that what you leave can be managed by people you trust to act in the best interests of your beneficiary, either for long term or until a time when they can look after themselves.

Trusts can be straight forward or complex. If you are considering a Trust, you need to consider who will administer this Trust. Trusts should always be discussed with your lawyer.

5 Think about protecting Think about protecting your beneficiariesyour beneficiaries

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6 Setting up a trust Setting up a trust

If you have a particularly large estate, or disabled dependants to protect, you may want to think about setting up a Trust with a trustee to manage your estate for the benefit of your beneficiaries.

Many Wills establish what are known as Testamentary Trusts – which are Trusts established by the Will itself. These are useful to protect particular assets or beneficiaries. For more information on Testamentary Trusts, please contact Bailiwick Legal to request a copy of our Testamentary Trust Fact Sheet.

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Did you know that Did you know that

an Executor can decline an Executor can decline

to act after you have to act after you have

passed away?passed away?

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7 Decide who you trust to be Decide who you trust to be your Executor your Executor

Being an Executor can actually be a challenging task and takes time and work. It is important that you don’t think of it as an ‘honour’ to be bestowed, but to recognise that it can be challenging and difficult. A family member who is nominated may feel very honoured, but they will need to have the time and be savvy enough to fulfill the role.

If you want to list multiple Executors they need to be able to work together (physically and relationship wise). It would not be ideal to name your two children who do not get on and live in different countries.

If there is a risk of family conflict it’s possible to nominate a neutral person to take on this role, such as a lawyer, accountant or family friend. This will provide peace of mind for your loved ones at the time of your passing. Using an independent Executor service may come at a cost which is usually paid out of your estate.

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It is highly recommended that you discuss your intentions with the persons who you seek to nominate. Just because you have named someone in your Will as an Executor, does not mean that they are bound to take on the job when the time comes. They have the choice of declining (known as “renouncing”) so it is a good idea to have a substitute or back up nominee.

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8 Managing complex Managing complex circumstancescircumstances

Life isn’t always straight-forward – there may be complexities in your family, financial circumstances, businesses etc. The great thing is that your Will can be customised to accommodate your specific circumstances. The best way to ensure this is to consider, consult and discuss the circumstances with a lawyer. In doing so, you’re ensuring your wishes are documented correctly.

Circumstances which may be deemed complex and therefore warrant thorough consideration prior to writing your Will include:

• Excluding someone who would normally expect to benefit from your Will

• Previous marriage/divorce or other family complexities

• Providing for a beneficiary with special needs• Having a self-managed superannuation fund• Controlling family trusts• Being a company director

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Be sure to explain your specific circumstances to your lawyer. For example, why you may wish to exclude someone or leave a particular person a lesser share than they may expect to receive. This information may be kept on file and referred to if a claim is made against your estate. You may also want to consider preparing a statutory declaration in addition to your Will outlining your reasons for dividing your estate in the manner you have.

We strongly recommend that you seek the advice of a specialist estate lawyer when your circumstances are not entirely straightforward to ensure your wishes are correctly recorded.

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Did you know that Did you know that

a Will is only one of a Will is only one of

your estate protection your estate protection

documents?documents?

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When you make your Will, it is also a really good time to consider preparing your power of attorney.

An enduring power of attorney allows you to appoint another person to make financial decisions for you when you are unable to make decisions yourself. It allocates the responsibility to another trusted person, chosen by you, to make decisions on your behalf. You can prepare an enduring power of attorney when you prepare your Will but it is a separate document with separate powers to be used in different circumstances.

9 Enduring powers of Enduring powers of attorney attorney

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Enduring powers of Enduring powers of guardianshipguardianship

You should also consider making an enduring power of guardianship.

An enduring power of guardianship allows you to appoint another person to make medical and lifestyle decisions for you when you are unable to make decisions yourself. This is also a separate legal document.

It is fine to appoint the same person to act as your guardian and your attorney.

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Advanced medical Advanced medical directive directive

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Many people nowadays also choose to create a document known as an Advanced Medical Directive. This document is a list of medical directions that you want carried out should you become incapable of making such decisions on your own. Issues such as whether you choose to allow blood transfusions or if you would choose a ‘do not resuscitate’ option.

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What to do once you’ve What to do once you’ve made your Willmade your WillOnce you’ve worked through the steps you’ll have a reasonably clear idea about what you want to leave in your Will and to whom. Then make an appointment to see your Estate lawyer and they will be able to advise on important issues and write your Will properly to ensure that your wishes are carried out.

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Did you know that Did you know that

not investing in not investing in

an estate plan an estate plan

can cost considerably can cost considerably

more money in the more money in the

long term?long term?

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Final Considerations Final Considerations Regarding Creating a WillRegarding Creating a WillRemember that, once you have a Will, you still need to make sure it continues to reflect your current wishes. This is why it’s imperative that you update your Will periodically, making sure to consider marriages, divorces, births, deaths, and other life events.

No matter your age or economic status, creating a Will is the single best action you can take right now to look after your loved ones. Having a valid last Will and testament helps assure that your wishes regarding the distribution of your property will be followed when you’re gone, and you’ll be doing your loved ones a favour by sparing them more stress during an already difficult time.

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Karolina Rzymkowska (Shim-kov-ska) (LLB, MBA)

Head of Wills. Estate Planning & Estate Litigation

Karolina has over 12 years’ experience in national firms and the banking sectors and specialises in estate and succession planning, having regard to complex personal circumstances, asset protection issues and tax minimisation objectives.

Karolina’s estate planning practice is a specialist practice principally designed to meet the estate planning needs of sophisticated high net worth individuals or those with complex personal affairs. She works closely with client’s financial planners to ensure the best outcomes for her clients.

Her Litigation and Disputes practice protects the interest of beneficiaries and Executors, representing clients through Estate disputes including negotiations or the Court process.

Karolina can be engaged directly by clients, accountants or advisors and can assist with Probate, Letters of Administration and Estate Disputes.

Contact Karolina on 08 9321 5451 or by email: karolina@bailiwicklegal.com.au

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What’s your Bailiwick ?

Bailiwick is a noun and its modern use is defined as ‘the sphere in which one has superior knowledge or authority’.

(Merriam Webster’s Dictionary)

A 15th century term originally deriving from Middle English, it was used to refer to “the person responsible or in authority for a particular area” (the Sherriff). Over time this concept of a sphere of responsibility was applied to skills and expertise rather than a physical location. Considered an old-fashioned word nowadays you will still hear it referenced to someone’s specialist skill set and area of authority or knowledge. Here at Bailiwick Legal (A firm of modern legal minds with traditional client values) we

thought it was perfect to describe us !

Address: LV 2, 44A Kings Park Road, West Perth, WA, 6005

Postal Address: PO Box 1212, West Perth 6872

(08) 9321 5451admin@bailiwicklegal.com.auwww.bailiwicklegal.com.au