You can’t give what you haven’t got.
Some property you probably consider as your own won’t form part of your estate when you die, so your Will can’t distribute it. In Western Australia that usually means jointly owned property, assets held by a company or family trust, life insurance and superannuation.
Property owned as a joint tenant
There are two different types of joint ownership: joint tenants and tenants in common.
On your death, property you owned as a joint tenant with another person passes automatically to the surviving joint tenant and doesn’t form part of your estate. The family home, household chattels and bank accounts are commonly owned this way.
Property owned as tenants in common works the other way: your interest does form part of your estate and your Will can deal with it.
It’s possible to convert a joint tenancy into a tenancy in common and the other way round. If you want to do that, book a consultation with us.
Property owned by your company or family trust
Many people assume their Will reaches assets that are legally owned by a family company or trust. Those assets are the property of the company or the trust, so you can’t give them away in your Will.
What you may be able to pass on in your Will is control of the trust or entity. Your shares in a company generally form part of your estate, so your Will can direct who receives them and that person can then take your shareholder rights. For a family trust, the deed may or may not let you nominate a successor controller in your Will. Each trust is governed by its own terms, so they have to be considered on a case by case basis.
It’s important to get proper estate planning advice so control of these entities passes in accordance with your wishes. See Estate planning for your related entities.
Life insurance
The proceeds of a life insurance policy don’t form part of your estate where the benefit is payable to a nominated beneficiary.
Where there’s no nomination or the nominated person has died, the proceeds may be paid to your estate instead and dealt with under your Will. You should check what your policy says and make sure it is in accordance with your wishes.
Superannuation
Superannaution is not automatically dealt with by your Will. Your superannuation will only form part of your estate if the trustee of the fund pays it to your estate after you die.
Unless you have a binding death benefit nomination, the fund can pay your super death benefits to a dependant or to your estate at the trustee’s discretion. For most people super is one of the largest assets in the picture and one their Will has least control over. See Estate planning trap no. 1 – superannuation.
Why does this matter?
A Will drafted without knowing which assets it governs can produce a result nobody intended.
A Will leaving the house to one child and everything else to another does nothing at all if the house passes automatically to a surviving joint tenant. A Will dividing the estate equally between three children can leave them with very different amounts once super and insurance have gone directly to one of them. Likewise, a Will may achieve nothing at all if all the assets are actually held in a family trust.
Working out what your estate consists of is the first step in estate planning, before any documents are drafted or signed. See What is estate planning?
Frequently asked questions
How do I find out if my house is held as joint tenants?
It’s recorded on the certificate of title. A joint tenancy passes to the survivor automatically. A tenancy in common doesn’t and your share forms part of your estate.
Does a joint bank account pass to the survivor?
Usually yes. It can be disputed where the account was only put in joint names for convenience, for example where an elderly parent added an adult child to help with the banking and the money was always the parent’s.
Can I leave my superannuation to my estate?
Yes, by nominating your legal personal representative in your binding death benefit nomination directly with your super fund. The benefit is then paid to your executor and distributed under your Will.
Should my Will mention assets it can’t deal with?
A gift of something you don’t own simply fails and that beneficiary receives nothing. It’s better to know what’s in your estate and draft accordingly than to leave your executor explaining it to a disappointed family.
Find out what’s actually in your estate
We start by working out what you own and control and who you want to leave it to. We’ll then work out what you need to put in place to achieve that. If you have a company, trust or SMSF, it’s unlikely that a Will will be enough.
Contact us for an estate planning consultation to get started or call the Wills team on (08) 9220 4433.
This article is general information and not legal advice.
