15th Nov 2022

Advice Relevant To Making a Will

l. Capital gains tax.

You are required by section 16OZZU(1) of the Income Tax Assessment Act 1936 (Cth) to keep records in relation to those of your assets which are subject to capital gains tax. The records, which must be in English, must, broadly, enable ready ascertainment of:

(a) if you acquire an asset:

(i)  the date of acquisition;

(ü)  the cost base to you; and

(b) if you dispose of an asset:

(i) the date of disposal;

(ü) the cost base to you; and

(iii) the consideration in respect of the disposal.

You should therefore maintain a list of significant assets, directed at meeting these requirements, and that list should be kept with the copy of your will to simplify the task of your executors.

The way in which this will is drawn, or the way in which you arrange or conduct your affairs, may affect the incidence of capital gains tax. You should discuss these questions with your accountant or tax adviser

2. Pension entitlements.

A gift under your will to someone who is in receipt of a pension (or who may become entitled to a pension) may have the effect of increasing their income or their assets, and so reducing their entitlements, or disentitling them altogether. This matter is complex.  You should consult a specialist or the Department of Social Security about it.

3. Property you cannot give by will.

(a) Jointly held property.

This passes automatically to the surviving joint owner on the death of the first dying joint owner - it does not form part of the estate of the first person dying. (If you own property with another person you may hold it either as 'joint tenants' or as 'tenants in common'.  It is easy to confuse the two, and it is important to be sure what type of tenancy you have in the property Joint tenancy and tenancy in common are described more fully at the end of this note).

(b) Property held in trust.

This passes to or is held for the beneficiaries of the trust according to the terms of the trust.

(c) Shares.

Certain shares in private companies cannot be given by will.

(d) Partnership property.

Your interest in partnership property may be given by will.

(e) Superannuation.

Your superannuation arrangements may not entitle you to dispose of your superannuation assets by your will.  The rules differ from fund to fund - you should discuss the matter with the administrator of your superannuation fund. Further you may be able to direct the Trustees of your fund to pay your membership benefit to dependents under a Binding Death Nomination. Advice should be sought from the administrator of your fund with regard to this option.

(f) The proceeds of life insurance policies.

If you have nominated the beneficiary of any insurance policy you own, 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 are not sure whether you have nominated a beneficiary, or whom you nominated, consult the insurance company concerned. Further, if you do not own the policy on your life, it does not form part of your estate.

(g) Capital guarantee deposits.

With some capital guarantee deposits where there is an option to nominate a beneficiary and that is done, the nominated beneficiary receives the investment and it is not part of your estate.

Joint tenancy and tenancy in common

1. Joint tenancy.

This is a form of co-ownership in which the following principles apply:

(a) There are no shares.

In theory each joint tenant has the whole of the property.  No party has a specific share in the property while the joint tenancy continues.
This means that the joint tenants must have equal interests in the property and are entitled equally to its rents and profits. There can be two or more joint tenants.

(b) The principle of “survivorship” applies.

On the death of one joint tenant the surviving joint tenant receives the whole property automatically by operation of law irrespective of any will made by the joint tenant who died and irrespective of the intestacy rules.

It follows that property held in joint tenancy does not form part of the estate of a joint tenant who dies.  This is important when deciding whether a grant of probate is needed.

A grant is required if the estate contains land - but this does not include property held in joint tenancy, as it does not form part of the estate. The property passes automatically, by operation of law, to the survivor or survivors without forming part of the estate of the first-dying.

A grant of probate is, therefore, not required for transfer (to the other joint tenant or tenants) of property held by the deceased as a joint tenant.

Further, a joint tenant cannot in his or her will deal with property held in joint tenancy because the property goes automatically to the other joint tenant on the death of the first of the proprietors to die..

(c) The principle of joint tenancy applies to real as well as personal property - it applies to land as well as to furniture and bank accounts.

(d) Joint tenancy is usual in marriage and with domestic partners where the spouses wish to hold the property equally and also wish the principle of survivorship to apply.  It is not common in other situations.

2. Tenancy in common.

A form of co-ownership in which property is held in common with others but where, in contrast with joint tenancy, the share of a deceased tenant in common passes to his or her beneficiaries under his or her will or intestacy and does not automatically pass to the surviving tenant or tenants in common.

Tenants in common have fixed, undivided shares in the property. Tenants in common can have unequal shares (for example, two-thirds to one and one-third to the other).

The share belonging to a tenant in common becomes part of the estate of that tenant in common when he or she dies; that is, a testator who is a tenant in common can leave his or her share by will or, if there is no will, the intestacy rules apply to the share that belonged to the tenant in common. (There is no principle of survivorship for tenants in common.) A tenant in common can deal with his or her share in the property by will.

Tenancy in common is frequent in property given to be shared between partners, and, say, in a gift to a testator's children. It is infrequent between husband and wife. However, where there are children of a previous relationship or where the parties have  contributed unequally to the asset concerned it is appropriate for a husband and wife to own property as tenants in common - they can leave their shares to their own children, and they can own unequal shares in the property to reflect their respective contributions to the property

After signing the Will

l. If you have signed the will elsewhere than in our office, please send a photocopy of the signed will to us so we can check that it has been correctly signed.

2. Do not attach anything to the original will, not even by paperclips.

3. The original will should be in safe keeping, either by the solicitor who drafted the will or in your bank safe deposit.

4. Should you retain a photocopy of your will, note on the envelope in which the photocopy of the will is contained:

(a) where the original of the will is lodged. It is important that it be easily found when needed; and

(b) the date you signed the original will.

5. Keep the copy in your filing cabinet with your important papers.

6. You should inform your executor and your family where the original will is kept, and when it was deposited there.

7. It is best to keep copies of your will to a minimum, but if you do make further copies write ‘Copy’ on each page of any copy of the will.

8. Once we have told you your will has been correctly signed - but not before - please rule a line through each page of your old, revoked will, and write on it ‘Revoked by will dated ***, presently held at *** and file the old will with the copy of the new will or return the old will to us for filing.

9. You may wish to make a list of your assets to assist your executor(s). If you do, keep the list with the copy will, not with the original. A list of this kind does not form part of the will itself.

Reconsidering your Will

l. Your will is revoked by the marriage unless the will is expressed to be made in contemplation of that marriage. Consult a Solicitor about your will if you decide to marry.

2. Divorce may affect your will. The matter is complex and the law is not uniform throughout Australia. If you are contemplating divorce, or have been divorced since making your will, consult a solicitor.

3. Review the copy of your will every two or three years or whenever a major event occurs in your family your assets or the taxation laws (to make sure the will is still what you want). In particular, consult a solicitor:

(a) if you change your name, or anybody named in the will changes theirs;

(b) if an executor dies or becomes unwilling to act as executor or becomes unsuitable due to age, ill health or for any other reason;

(c) if a beneficiary (someone who has been left something in the will) dies;

(d) if you have specifically left any property which you subsequently sell or give away or put in trust or into a partnership, or which changes its character. This applies particularly to specifically bequeathed shares in a company which restructures its share capital;

(e) if you marry or divorce;

(f) if you have children (including adopted or foster children) after the will is executed; or

(g) if you enter or end a de facto relationship.

4. If you wish to change your will or revoke it or make a new will without informing your husband or wife or de facto spouse you may do so, but you should consult a solicitor.

5. Do not add to or delete any part of the will after execution. Consult a solicitor if you want to change or revoke your will because even the simplest changes must be correctly done or your testamentary wishes could be thwarted.

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