What a will actually does, and what it doesn’t

Three jobs, and no more

A will appoints the person who will administer your estate, says who receives what, and appoints a guardian for children under eighteen. Every other clause in the document exists to support one of those three.

Funeral wishes can be written in, and usually are, but they bind nobody. Tell your executor as well.

• Appoints an executor, and a substitute if the first cannot act
• Directs who receives your estate assets
• Appoints a guardian for children under eighteen
• Can hold a gift in trust rather than pay it out at once

It only reaches what you own on your own

Your estate is the property held in your sole name: bank accounts, shares, the car, a house in your name alone, and your share of anything owned as tenants in common. Those are the assets a will distributes.

Property held as joint tenants is different. When one owner dies the whole of it passes to the survivor by operation of law, before the will is read and regardless of what it says. Most couples hold the family home that way without having been told which of the two arrangements they have. The certificate of title will say.

Superannuation is not yours to give

Superannuation does not form part of your estate. It is held by the trustee of your fund, and on death the trustee pays it under the fund’s rules rather than under your will. A valid binding death benefit nomination directs the trustee. Most of those nominations lapse after three years, and a lapsed one hands the decision back to the fund.

If you want your super distributed by your will, the nomination has to point at your legal personal representative. That is a deliberate choice with tax consequences worth talking through, because a death benefit paid to an adult child who was not your dependant is taxed, and the same money paid to a spouse is not.

The other things it does not reach

None of this is a problem in itself. It becomes one when the will assumes otherwise: when it leaves the house to one child and the superannuation to another, and the two amounts turn out to be nothing like each other.

• Life insurance paid to a nominated beneficiary rather than to the estate
• Assets inside a family trust, which you control but do not own
• Assets owned by a company, as distinct from your shares in it
• Anything you gave away while you were alive

It does nothing at all until you die

A will has no effect while you are alive. It gives your executor no authority, your family no standing, and nobody the power to sign anything for you. If you are alive but cannot make decisions, the document that matters is an enduring power of attorney, and a will is no substitute for one.

Until then you can change it as often as you like, provided you still have capacity. Two events change it without you. In Victoria, marriage revokes a will unless it was made in contemplation of that marriage, and divorce cancels the gifts to a former spouse. Both catch people out, and both are easy to fix while there is time.

Before you act on any of this

This is general information about the law in Victoria, not advice about your own affairs. Whether it applies to you depends on what you own and how you own it, and that usually takes about fifteen minutes to work out.

Call us on (03) 9000 1200. The first fifteen minutes are free, and if you do not need us we will tell you so.