Be Prepared: Get your will up to scratch
What happens when there is no will in place?
Although most Australians plan to leave a valid will when they die, the sad reality is that a staggering 40% die without a will each year. In some cases, a sudden and unexpected death will prevent the intended will maker from creating or updating their will. In other situations, a decline in health over time might create the unfortunate situation whereby a will maker’s capacity has diminished to the extent that they no longer have testamentary capacity to create a valid will. When a person dies without leaving a valid will, they are said to die intestate. When this happens, his/her estate is divided up according to the rules of intestacy which are prescribed by legislation. These rules stipulate who gets what and in what proportions. This is usually different to how the deceased person would have wanted his or her estate distributed. Further, the default position under the rules may not provide adequately for family or other potential beneficiaries, which can prove a costly exercise if a claim for further provision is made to the court.
Validity of a will
There are other factors which can affect the validity of a will. Any previously made will, unless made in contemplation of marriage or more recently a civil partnership, will be revoked upon that marriage or civil partnership being entered into.
Divorce/ Termination of a civil partnership
Upon divorce or the termination of a civil partnership, any gift made to the former spouse will be revoked, as will any appointment made under the will to appoint the former spouse as executor. Accordingly, if your will is not appropriately updated at this time, the severance in this relationship may cause certain gifting provisions in your will to fail. Similarly, unintended outcomes can occur when a person dies during the period between separation and divorce/termination of a civil union, and they have not updated their will. People do not often understand that despite being separated, a will they made during their marriage/civil union, or in contemplation of their marriage/civil union, remains valid. Unless testamentary intentions are reflected by updating your will upon separation, any gift or appointment as executor to a former spouse, will remain effective. This position may be challenged, however it is often a costly exercise to do so.
A practical example
A practical example might concern the will of Jim who separates from his wife Kelly, in 2002. Jim has a will which was executed in 1999 while he was married to Kelly, which appoints his brother as executor, and Kelly as the sole beneficiary of his estate. Neither Jim nor Kelly seeks a divorce, despite the separation. Jim commences a new relationship in 2004 with Jenny, and later that year, they start living together on a genuine domestic basis. In 2012 Jim dies unexpectedly in a motor vehicle accident. When Jenny goes to look for Jim’s will, she finds the 1999 will. Notwithstanding Jim and Kelly’s separation, the period of time which has elapsed since then, and Jim’s new relationship with Jenny, the 1999 will appointing Kelly as sole beneficiary remains effective. In these circumstances, Jenny, as Jim’s spouse, is entitled to commence proceedings on the basis that she was not adequately provided for under Jim’s will. Although the risk of such a situation eventuating may seem remote, it is not uncommon to represent clients which have found themselves in situations not dissimilar to the example provided above.
Best practices when preparing your will
It may be tempting to prepare a handwritten attachment (or codicil) to the will to reflect your updated testamentary intentions. This practice should be avoided as codicils, whilst effective, can go missing leaving the will maker’s true testamentary intentions undiscovered. It is important to remember however, that no matter how diligently your will is prepared, there can be no guarantees your will won’t be challenged by a disgruntled beneficiary, or the proverbial “black sheep of the family”. The legislation provides categories of people who may challenge a will if they feel they have not been adequately provided for. To get the right advice about possible challenges to your estate, and ways in which you can minimise the risk of such challenges so as to avoid unintended outcomes, it is imperative you:
- have your will prepared by an appropriately qualified professional; and
- review your estate planning whenever your circumstances change.