Last Will and Testament with Testamentary Discretionary Trusts

Guide to preparing your Will

Where you engage us to prepare your Will with testamentary trusts, the following information highlights the questions to be considered and answered when preparing the document:

1.   The Testator

1.1    Your Details

  • Full legal name:
  • Address:
  • Occupation:
  • Gender:

2.   Contemplation of marriage

2.1   Are you intending to marry?

3.   Funeral directions

3.1   Do you wish to include instructions regarding the disposal of your body after you pass away?

If “No”, you can specify instructions for the disposal of your body in a separate list, which you can update at any time.

3.2   If “Yes”, would you like to be buried or cremated?

Organ transplants and medical research

3.3   Would you like your organs to be available for transplantation, which includes any medical therapeutic (as opposed to research) purposes?

3.4   Would you like your body to be available for use in scientific research, which includes medical research and education?

4.   Executors/Trustees

The executors/trustees are responsible for:

applying for probate; and gather and distribute the assets in accordance with the will;

ensuring that the testator’s debts, taxes and funeral expenses are paid; preparing the related accounts and tax returns;

managing any assets that are held on trust for beneficiaries pursuant to this will until those trusts vest

Who can be an executor/trustee?

An executor/trustee may be an individual over 18 years old, a licensed trustee company, or the Public Trustee.

You can appoint your solicitor, accountant, financial planner, and/or a trusted family member.

Public Trustee / Trustee Company

4.1   Do you wish to appoint the Public Trustee as sole executor/trustee?

4.2   Do you wish to appoint a licensed trustee company as sole executor/trustee?

If you answered “yes”, you can appoint a back-up executor/trustee if the trustee company is unable or unwilling to act.

5.  Individual executor/trustee

5.1   If you answered “No” to 4.1 & 4.2, how many individual executors/trustees would you like to appoint?

5.2   Details of executors

  • Full legal name:
  • Address:
  • Occupation:
  • Relationship to you:

6.   Substitute (ie backup) executors/trustees

6.1   Do you wish to appoint any back-up executors/trustees if your nominated executors are unable or unwilling to act?

6.2   Details of substitute executors

  • Full legal name:
  • Address:
  • Occupation:
  • Relationship to you:

7.   Key terms re executors/trustees

Legal advice

7.1   Do you wish to nominate a solicitor or law firm for the executors/trustees to engage?

Professional services provided by executors/trustees

7.2   Are any individual executors/trustees professionals who might provide professional services in administering the will?

Payment of executors/trustees

7.3   Will individual executors/trustees who are professionals be entitled to reasonable fees for any professional services they provide in administering the will?

If so, this will be in addition to any gifts that they may receive under the will and any commission or lump sum payment to which they might be entitled for acting as executors/trustees.

7.4   Will the executors/trustees be entitled to a percentage commission or lump sum payment for administering the will?

If so, this will be in addition to any gifts that they may receive under the will and any fees to which they might be entitled for providing any professional services in relation to administering the will.

8.   Number of beneficiaries

8.1   How many specifically named individuals will be beneficiaries?

8.2   How many charitable organisations will be beneficiaries?

Minimum age

For an individual to be able to receive a gift under your Will, he/she must be living (including conceived but not yet born) on the date of your death, and survive you by at least 30 days, and attain a specified minimum age.   If an individual survives you by at least 30 days but has not yet attained the specified minimum age, the gift will be held on trust for that individual until he/she reaches the specified minimum age.

8.3   What is the minimum age that a beneficiary must reach?

9.   Relevant assets

Non-estate assets

Please note that the following assets will not form part of the estate, & will not be distributed under this will:  superannuation accounts / a self-managed superannuation fund; and/or a separate family trust

However, this Will gives the executor/trustee the power to adjust the proportionate distribution of the estate assets, taking into account both: (i) the proportionate distribution of such non-estate assets, and (ii) the overall tax implications.

You can also choose how to allocate the shares in any corporate trustee of a separate family trust later in this form.

Australian assets only

9.1  Does this Will only cover Australian assets?

If you have assets outside Australia, you must obtain legal & taxation advice about the implications of using this will for overseas assets.  You may need a separate will in each jurisdiction and, if so, the interplay between the separate wills must be considered.

10.   Automatic substitution of beneficiaries

Automatic substitution: lineal descendants

In this will, if a gift is given to a beneficiary who does not survive you, but that beneficiary leaves behind any children, grandchildren, great-grandchildren, etc; then that gift will be automatically allocated to those children, grandchildren etc.

Example:

Let’s say that a gift is given to Beneficiary “A” who has 3 children, “B”, “C” and “D”.  If A does not survive you, the gift will be automatically allocated to B, C and D one-third each.

Now let’s say that D does not survive you but has 2 children, “E” and “F”. The 1/3 that would have gone to D will then be split equally between E and F, who will end up with 1/6 each.

If none of B, C or D survive you, and neither B nor C has any surviving children, E and F (the children of D) will end up with 50% each. Now let’s say that C also has a surviving child (“G”) – in this scenario, G will receive 50% and E and F will receive 25% each.

Automatic substitution: gifts to multiple beneficiaries

In this will, if:

  • a gift is given to a beneficiary who does not survive you and that gift cannot be allocated to any lineal descendants of that beneficiary as described above; and
  • the gift is a proportionate share of any assets that were also gifted to multiple beneficiaries,

the proportionate share that would have gone to that non-surviving beneficiary will be allocated to the other surviving beneficiaries who were also given a share of those assets.

Over-riding the automatic substitution mechanics

The default substitution mechanics described above are the most common substitution mechanics used for gifts to family members.  In some cases, such as gifts to non-family members, you may wish to over-ride those default substitution mechanics.

Our Will gives you the option to over-ride the default substitution mechanics in respect of each individual beneficiary. You can specify first-level, second-level and even third-level substitutes for each beneficiary.

Substitution mechanics apply to all gifts

Please note that, whichever substitution mechanics you choose for a particular beneficiary, those mechanics will apply to all gifts given to that beneficiary.

Step-children and foster children

By default, in determining your lineal descendants for the purposes of the substitution mechanics described above, your children will include biological children and adopted children, but exclude step-children and foster children.

10.1   Do you want the definition of ‘children’ to include step-children and foster-children?

11.   Individual Beneficiary

11.1   Details of Individual Beneficiaries

  • Full legal name:
  • Address
  • Relationship to you:

12.   Reserve beneficiaries

If a beneficiary does not survive you and a gift to them cannot be allocated to any substitutes, then the gift will form part of the residual estate.  If the residual estate cannot be allocated to any of the beneficiaries or their substitutes, then you need to specify one or more “reserve beneficiaries” who can step in to receive the assets of the residual estate, to avoid intestacy.

A typical example is where the whole estate is left to your spouse (with automatic substitution to the lineal descendants of the spouse) but the spouse does not survive you and leaves behind no lineal descendants. In that case, the “reserve beneficiaries” may be your siblings and/or the siblings of your spouse.

12.1   Details of Your Reserve Beneficiaries

  • Full legal name:
  • Address:
  • Relationship to you:

13.  Control of separate trusts

13.1  Is there a chance that you might hold a controlling interest in any separate non-SMSF trust at the time of death?

14.  Guardianship

14.1  Are you the parent/guardian of any children under the age of 18?

14.2  If you are not survived (or may not be survived) by someone who shares guardianship, do you wish to appoint a guardian?

Separate list for guardian appointments

As the appointment of guardians and guardianship instruction are frequently changed, under this will, you will be able to create a separate list of preferred guardians, and a separate list of particular guardianship instruction requests.

15.   Family provision orders – excluded persons

What is a family provision order?

When you die, any “eligible person” may make an application for a family provision order if they believe there has been inadequate provision for them under your will.  If an order is made, interests under the will may be adjusted and the applicant may be able to obtain part of the estate – contrary to your intentions in your Will.

Who is an “eligible person”?

Broadly speaking, this may include anyone to whom you had a responsibility, potentially including a current or former spouse or de facto partner, children, grandchildren, other dependants and persons living in your home.

How can the likelihood of a successful family provision order be reduced?

The likelihood of a family provision order being successful might be reduced by expressly excluding people who may be eligible persons in the will (or in a separate document), outlining the reasons why they have been excluded.

What might be a valid reason to exclude someone?

There is no guarantee that any particular reasons will be acceptable.  The following are some examples of reasons that might potentially be considered valid:

  • sufficient provision was made for the excluded person during your lifetime such that further gifts would be unfair to the included beneficiaries;

  • the excluded person had no contact with you for a long time and no relationship of love/affection exists between you;

  • you have not had any responsibility for the welfare of the excluded person for many years;

  • the financial circumstances of the excluded person are much better than those of the included beneficiaries and the excluded person is being excluded in order to try to achieve a balance of financial welfare amongst all potentially interested parties; and/or

  • the excluded person has received, or is likely to receive, significant assets from the estate of another person (eg, a former spouse of the testator; a former spouse of the testator’s spouse, etc).

15.1   Do you want to expressly exclude anyone as a beneficiary?

15.2   Details of Excluded Persons

  • Full legal name:
  • Address:
  • Relationship to you:

16.   Governing law

16.1 Which state/territory will govern this will?

 

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