What is a Will?

A Will is a written legally binding document, normally written in a special format, which is designed to define your wishes for your assets after your death. It also can provide instructions on other matters, such as funeral arrangements, your infant children’s guardian etc. A will can be changed as many times as you like during your lifetime. Is it time for you to review your will?

How do I make a Will?

As long as you are over 18 years of age and of a sound mind you can and should make a Will. You must select at least one Beneficiary to take the estate and at least one Executor to be responsible for the financial arrangements. Some of the things you might wish to consider when making your Will are:

• Who are my potential beneficiaries? eg: spouse, children, grandchildren, others, what if they die before I do?
• What gifts will I leave them? eg: a sum of money, an object, a right to reside in a house for life, or a share of my estate.
• Who should I make my executor or trustee to carry out my wishes in a proper manner?
• Who should be the guardians of my children?

What is Estate Planning?

The objective of estate Planning is to ensure that the client retains control over his affairs during his lifetime, while at the same time arranging a distribution of income and capital in such a way that meets his requirements, and to ensure that upon his death the estate is distributed in the most advantageous fashion among the persons whom the client wished to benefit. Some of the important factors to be considered are:

• The financial requirements of a person’s family, both during lifetime and after death, including the availability of liquid assets for the payment of debts and liabilities.
• The likely consequences of inflation
• The nature of the assets in the estate
• Domicile and residence
• The protection of assets from family law disputes of bankruptcy
• Possible income tax consequences, including current or potential future liability for income tax on capital gains
• The desire to liquidate or to continue a family business

There are four main attributes, or desirable features, of an Estate Plan: Simplicity, Clarity, Flexibility and Practicability.

What is a Testamentary Trust?

A testamentary discretionary trust is a trust established by the Will of a Testator rather than during the lifetime of the Testator. The discretionary character follows from the power of the trustees in exercising a discretion as to which of the beneficiaries named in the trust are to share in the capital and/or income of the trust fund. In some circumstances, creation of a testamentary discretionary trust can be significantly tax effective – click here to see an example. Children as beneficiaries of the trust in the circumstances defined in the Act may enjoy a tax free threshold and normal rates of tax thereafter if the income received by them is “accepted trust income”. The following circumstances may call for consideration of a testamentary trust:

• A typical husband/wife mutual Will
• Tax benefits
• Preserving pension entitlements
• Provision for a beneficiary with a disability – merit of channelling surplus income to non-disabled children and reversion of capital. In September 2006 the Federal Government introduced new means-test concessions that allow the severely disabled persons pension not to be affected by any trust income or trust asset, up to the value of $500,000.
• Protection of assets – the spendthrift or potentially bankrupt child, protection of a child’s inheritance from a family law dispute.

Other Documents you might Need

Enduring Power of Attorney & Guardianship Appointment

We believe that when making a Will you should also make an Enduring Power of Attorney and a Guardianship Appointment. These are simple documents that can save you a great deal of time and frustration. A Power of Attorney enables another person to make financial decisions for you if you are incapable of making them yourself. A Guardianship Appointment allows your guardian to make decisions such as where you live (for example: a nursing home), the medical treatment you receive, and other matters relating to your health. For example, If you where injured or incapacitated, who would have the legal authority to consent to your medical treatment and how would they pay for your care if they were unable to sell your assets to fund your care or accommodation?

Superannuation Nomination of Beneficiaries

It is important to know who will benefit from your superannuation in the event of your death. Superannuation is not necessarily left through your Will. It may be possible to prepare a binding death nomination which will bind the trustee of your Superfund to carry out your wishes.

How to Review your will?

Reviewing your Will

We recommend that your Will be reviewed at least every 2 years, or whenever your circumstances change.

Have your circumstances changed with the result that your Will could now be out of date? Complete this checklist to determine if your Will needs reviewing and updating. You will need to look at your Will and see when you made it. Then spend a few minutes thinking about whether any of the following or other factors have changed in your life since you made your Will. If you tick yes to any of these you should consider revising and updating your Will.

• Death of a beneficiary
• Birth of an additional beneficiary e.g. testator’s child
• Engagement to Marry
• Marriage
• Separation from a spouse
• Divorce
• Entering into a De-facto relationship
• Breakdown in a relationship with relatives or friends
• Disposal of major assets
• Acquisition of major assets
• Are the executors names in your Will still the ones you want?
• Have you made a gift or loan of money to one of your beneficiaries which affects the division of your estate e.g. for school or university fees, or a house deposit?

What will it Cost?

If your needs are relatively straight forward it may that you only need a Simple Will, and a Power of Attorney and Guardianship Appointment. However if your affairs are more complex, we suggest we forward you a fact finder and then spend considerable time with you to assist you to determine the best possible plan for your circumstances. Although this process is time consuming, we recognise that costs are an important issue to our clients and we have decided to charge fixed costs when charging for Estate planning work according to the following scale:

1. Simple Will $440
2. Simple Wills for husband and wife $660
3. Upgrade of a Simple Will $385
4. Simple Will with a Power of Attorney $770
5. Simple Wills with a Power of Attorney for husband and wife $1155
6. Simple Will with a Power of Attorney and Guardianship Appointment $990
7. Simple Wills with a Powers of Attorney and Guardianship Appointments for husband and wife $1485
8. Power of Attorney for single person $220
9. Powers of Attorney for husband and wife $330
10. Guardianship Appointment for single person $220
11. Guardianship Appointment for husband and wife $330
12. A fully documented individual Estate Plan $2000-3000 (estimate based on time spent)*
13. A fully documented husband and wife Estate Plan $3000-6000 (estimate based on time spent)*
14. A Superannuation Death Benefit Nomination $385

All rates are exclusive of GST. A one-off administration fee of $50 applies to all new files opened.

We provide a holding service for you Will in a Fire Proof Safe Custody packet for no additional charge.

NEW!! – FREE telephone review of your will every two years or earlier if you wish. Enquire today

* If you need us to carry out a review of your assets in connection with making your Will, we may charge according to time spent at an hourly rate of $350 plus GST for a Solicitor and $70 plus GST for a Paralegal, plus any search fees for establishing how the title to your assets is held.

Wills and Probates Frequently Asked Questions

Can wills be registered in NSW?

There are private companies offering will registration facilities. These do not have the support of the Law Society which will recognise only a facility established under the law in NSW. The Registrar in Probate has a facility for lodgment of a will in the testator’s lifetime, although this is rarely used. In view of the ease of making a new will or codicil, will registration offers no certainty of proof.

Does a will need a grant of Probate or Letters of Administration before assets of the deceased can be dealt with?

It depends on the nature of the assets. If the estate is small and the assets comprise say a motor vehicle, furniture and personal effects and bank, credit union or building society accounts of not more than $20,000, these can usually be dealt with – in the case of a will – by production to the bank or financial institution of the will, a death certificate, evidence of the executor’s identity, a completed withdrawal form and a completed indemnity in the form required by the bank or institution. The executor is personally liable for the payment of the funeral expenses and debts of the deceased, and is personally liable to the beneficiaries for payment of their entitlement. Where there is no will, in the above circumstances, subject to production of the death certificate, a completed withdrawal form and a completed indemnity as above, and evidence of the identity of the next of kin, payment may be made to the next of kin who will then be liable for payment and distribution as above to the persons entitled.

What happens if there are more than one executor and they die before the Estate is fully administered, are their executors the executors of the first estate, or is a further grant required from the Court?

No, it is the executor of the last surviving executor who is automatically the executor in the first estate “by right of representation” as soon as he or she obtains a grant of Probate of the will of that last surviving executor. If that person dies without a will, a further grant will be required to complete the administration of the first estate. The application to the Court will be for Letters of Administration cta. dbn. (cum testamento annexo, de bonis non administratis) (with the will annexed, in respect of the unadministered assets).

Is an executor automatically entitled to the payment of commission for his or her efforts?

On rare occasions in the will a specific legacy is left for the executor to cover his or her executorial work. In that event no further order is needed for payment of the commission specified. Similarly if there is a legacy or other bequest to the executor contained in the will, there is a prima facie presumption that the legacy or bequest is intended to cover any entitlement to commission. Otherwise payment of commission may be authorised by the Court on application by the executor on the filing and passing of accounts in the estate. The payment of a commission may also be agreed by all the beneficiaries provided they are of age and not subject to any legal disability.

Can a solicitor-executor come to an agreement with him/herself on the legal costs payable, apart from the costs up to the grant which are regulated?

No, similarly if the solicitor is a co-executor with another person. Disclosure of the basis and estimated amount of costs will need to be disclosed to the beneficiaries, other than those due to receive small legacies.

When do accounts have to be filed and passed?

When required by the Court. The accounts will be required to be passed where the executor (or one of them) is a solicitor or an accountant, or where any of the beneficiaries are minors or charities, except where the estate is less than $150,000.

When do legacies have to be paid?

As soon as practicable once the executor has made provision for the payment of all debts and liabilities of the deceased and the estate. If not paid within 12 months after the death of the deceased, the legacies bear interest from that time at the rate prescribed in the Wills Probate and Administration Regulation, currently six per cent per annum.

Do estate monies have to be placed in an Estate account?

Not necessarily; if the monies are going to be received from the realisation of assets and paid out within a short period-a few months only-they can be paid to the credit of the estate in a solicitor’s trust account. However, if there is any significant delay in investment of monies not required to be distributed, those monies should be invested prudently by the executor as provided in section 53 Trustee Act 1925, as amended from 13 March 1998.

How is an executor or trustee protected against further claims before the estate or trust can be safely distributed?

A Notice of Intention to Distribute the Estate (or Trust) should be advertised in accordance with the Supreme Court Rules, in the prescribed form, giving at least one month’s notice of the intention to distribute. If the executor has received notice, formal or informal, of an intention to make a claim against the estate under the Family Provision Act 1982, notice of intention to distribute must be also served on any such intended claimants. If a longer period of notice is given by the executor, that period will have to expire before the executor gets statutory protection against subsequent creditors or claimants.

At what age can you make a Will?

Anyone over the age of 18, and anyone under 18 who is married, can make a Will. Persons under 18 who are unmarried can make a Will with the approval of the Court; this can be advisable for young people who are earning large sums of money in modelling, in show business or arising out of their sports activities or from commercial endorsements.

What happens if the Will doesn’t appoint an Executor?

One of the beneficiaries, usually a major beneficiary, can apply for Letters of Administration with the Will Annexed. When that application is granted the applicant is the Administrator of the Estate, with all the duties, obligations, rights and powers of an executor to carry out the wishes of the deceased as set out in his/her Will.

When should Probate be applied for?

The Probate Rules require an application for Probate to be made within six (6) months of the testator’s death. If the application is not made within that period an explanation of the reasons for delay will have to be given in the form of an Affidavit, either a separate Affidavit or included in the Affidavit of the Executor.

What is the position if there are two executors and they don’t agree?

The duty of the executors, if they decide to accept their appointment, is to obtain probate and discharge their duty of care towards the beneficiaries. If the disagreement between executors is causing delay in the application for Probate, one of them, preferably with a solicitor’s advice, should give notice to the other that he/she intends to apply for Probate and call on the other executor to join in the application. If that executor fails to respond within the specified time, the first executor may proceed to apply for Probate on his/her own, with leave being reserved to the other executor to come in and prove the Will.

What if the disagreement relates to the identity of, or the disposal of, the estate property?

Either or both of the executors can apply to the Court under Section 63 of the Trustee Act for an opinion, advice or direction on any question regarding the management or administration of the estate property or regarding the interpretation of the Will. Provided no fraud, misrepresentation or wilful concealment is involved, an executor who acts in accordance with the opinion, advice or direction of the court is deemed to have discharged his/her responsibility as executor.

What if the executor appointed in the Will is under 18?

A limited grant of Administration can be granted to his/her guardian, to expire on the executor turning 18. At that time a grant can be obtained by the executor to complete the administration of the estate.

Are Probate costs regulated?

The costs of the legal work of and incidental to obtaining the grant of Probate, up to delivery of the grant of Probate by the court, are regulated as to the maximum amount chargeable. The current scale applies in respect of persons dying after 5 March 1993, and the amount chargeable under the scale is required, under the Costs Rules, to be disclosed to the executor at the time when instructions are first received by the solicitor, together with the basis and expected amount of charges for legal work done in the administration of the estate after the grant of Probate.

I am acting for two executors, one of whom wishes to apply for commission. Can this be done by agreement or by court order?

There is a decision of the Supreme Court in Buckley and Others v Permanent Trustee Co Ltd (1990) 21 NSWLR 112 in which it was held that a trustee company may be liable to a reduction in its normal rate of commission if the co-executor had participated in discharging the executorial duties. The commission for private executors will be based on their “pains and trouble”, and will be such as is “just and reasonable”, having regard to their involvement in the administration. The normal range is between 1 and 1.5 per cent of the gross value of corpus and about 2 per cent on income. The quantum of payment of commission can be agreed to by all of the beneficiaries if they are sui juris, otherwise application should be made to the Court for an order for payment of commission at the time of filing and passing the estate accounts. The amount which may be allowed to the executor seeking commission will depend on the degree for which he or she has been responsible for the discharge of the office of executor. Excessive payments of commission or costs are liable to be set aside under s.86A of the Probate Act.

I have been asked to prepare a will by a person who, to my knowledge, has given an enduring power of attorney. Should I contact the attorney to verify the capacity of the intending testator?

A Depending upon the circumstances of the intending testator, such as whether he or she is in a nursing home, hospital etc, it would be wise to first check with the testator’s treating medical practitioner or hospital superintendent to ascertain whether the client is suffering from any form of dementia or has any periods of lucidity. Subject to such confirmation you may also refer to the testator’s done under power of attorney to ascertain whether the donor, so far as the donee is aware, has current mental capacity and the ability to make a will. Depending on satisfactory evidence being available, you may proceed to take the testator’s direct instructions and to have the will executed at that time, without any delay which might result in deterioration in the testator’s physical condition, or loss of testamentary capacity.

Does an adopted child qualify as a “natural” child in an estate ?

The Adoption Act 2000 provides (s.95) that an adopted child has the same rights in relation to the adoptive parent(s) as a natural child born to them; they are regarded in law as the parents of the adopted child, who is regarded in law as the child of the adoptive parents and as having ceased, on the making of the adoption order, to be the child of the birth parents. In applying the Probate Act to the succession to property in an intestate estate and in the construction of any disposition of property, s.99 of the Adoption Act provides that an adopted child is deemed to be related to any child or adopted child of his/her adoptive parent(s): as a brother or sister of the whole blood (if adopted by two spouses jointly) and as a brother or sister of the half blood in any other case. Under s.100 of the Adoption Act, trustees and personal representatives who give the notice referred to in s.60 of the Trustee Act or s.92 of the Probate Act receive the benefit of the statutory indemnity in respect of a claim by any person (including an adopted child) on expiration of the period fixed by the notice.

Is a Power of Attorney liable to Stamp Duty in NSW?

No.

Does a Power of Attorney have to be registered before a contract can be signed by the Attorney?

No; it must however be registered in the General Registry of Deeds before a Memorandum of Transfer is signed prior to completion.

Publications by ChristieLaw

How to use the costs-capping rule in Family Provision Act claims – May 2006