What is a ‘Will’?
A properly executed Will is a legally binding document in which you indicate how your assets and debts are to be dealt with after you have died, and how other things should be managed.
When speaking in terms of Wills, assets and debts are referred to as your ‘estate’. Superannuation (and attached benefits like a death insurance payout) will not necessarily form part of your estate, even if your Will seeks to deal with your superannuation. Superannuation is discussed in more detail below.
Wills can also contain additional provisions which don’t necessarily relate to your assets and debts – for instance your Will might specify that you are to be cremated, or that your child is to be cared for by your parents.
How do Wills Work?
Wills typically nominate an executor (or executors) and a beneficiary (or beneficiaries).
The executor is the person who will carry out the wishes you specify in your Will. An executor is also sometimes referred to as a ‘legal personal representative’.
The beneficiaries are the people who will receive some asset and/or a benefit from your estate.
Usually, to carry out the terms of your Will, the executor first distributes to your beneficiaries whatever items you have specifically gifted to them in your Will. The executor then converts your assets to cash, uses that cash to pay out your debts, and distributes the remaining cash to your beneficiaries as you have directed in your Will. This “remaining cash” is sometimes referred to as your ‘residuary estate’ or the ‘rest and residue’ of your estate.
What about Superannuation?
Superannuation and death benefits (like a death insurance payout attaching to superannuation) may be paid by your super fund in one of three ways, being:
- to a dependant (your husband/wife, de facto partner, child or a person you were interdependent with at the time of death);
- to your legal personal representative (that is, your estate); or
- to a person you have nominated as your beneficiary.
An important thing to note is that your super fund can decide on who, out of the abovementioned people, to pay your superannuation and death benefits to. It can even ignore your nomination, provided the nomination is just a regular nomination.
The only time a super fund has no choice about who it may pay your superannuation and attached benefits to is if you have within the three years prior to your death sent a completed ‘Binding Death Nomination’ to your super fund whereby you nominate as the beneficiary of your superannuation entitlements your legal personal representative and/or dependant(s).
Most people we come across don’t have Binding Death Nominations, and don’t realise that their super fund actually has control over who their super and death benefits are to be paid to. If you are unsure, you should call your fund.
What happens if you die without a Will?
If you die without a Will, your estate will be distributed in accordance with the laws set out in the Succession Act 1981 (Qld). In a nutshell, those laws provide that your residuary estate will be distributed to your husband/wife, de facto partner, and children/grandchildren. If you don’t have a husband/wife, de facto partner or child/grandchild when you die, your estate will be distributed to the following persons in the following order and priority:
- your parents;
- your siblings;
- your nieces and nephews;
- your grandparents;
- your aunts and uncles;
- your aunts’ and uncles’ children (being your first cousins);
- the Crown (State of Queensland).
Can we help you?
If you wish to have a say about how your estate is distributed when you die, it’s essential you have a properly drafted Will. Self-drafted Wills and Will kits invite trouble! Our fee to compile a straightforward Will is just $220 – a small price to pay for peace of mind.
Article published by Kyle Barram, solicitor on 23 February 2016. Kyle is a Wills and Estates Lawyer practising out of our Townsville office.