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Leave a Legacy: Not a mess

Oct 20

4 min read

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My client, Jack, recently contacted me and advised me that his mother, Mrs Smith, passed away. His siblings were not quite comfortable with the way in which she bequeathed her assets to the beneficiaries under her Will. He sought my assistance in resolving this matter.

Some further investigations revealed that:


  1.  Mrs Smith ran a small café business under a family trust structure with she being the sole shareholder and sole director/secretary of the corporate trustee.

  2. The family trust owned commercial property, residential property and equipment to operate the café business.

  3. The family trust, through its corporate trustee, also operated a bank account.

  4. Mrs Smith had one residential property and one bank account in her individual name.


 After reviewing the Will I found obvious errors in the Will (prepared by another law firm) some of which were:


  1.   the Will incorrectly assumed that the assets held by the family trust were owned by Mrs Smith and set out provisions for bequeathing specific assets held by the family trust to specific beneficiaries;

  2. the Will incorrectly assumed that the equipment held by the family trust was owned by Mrs Smith and set out provisions for bequeathing them to a specific beneficiary; and

  3. the Will incorrectly set out the manner in which Mrs Smith’s superannuation monies were to be distributed between the beneficiaries.

 After identifying the assets held Mrs Smith in her individual name, and those held by the corporate trustee for the family trust I advised my client that:


  1.  the specific bequests of the assets that were held by Mrs Smith individually can be distributed to the specific beneficiaries set out in the Will;

  2.  the specific bequests of the assets that are held by corporate trustee cannot be distributed to the specific / nominated beneficiaries set out in the Will as the family trust (and not Mrs Smith) owns these assets and they ought not to have been included in the Will;

  3.  the superannuation monies are distributed by the trustee of a superfund subject to specific binding death nomination made by a member and they do not form a part of a person’s estate; and

  4.  subject to the provisions of the trust deed of the family trust, a deed of family arrangement may be agreed upon between Jack and his siblings in relation to the assets held by corporate trustee for the family trust.


 Jack and his siblings’ relentless efforts yielded a positive outcome in Mrs Smith’s accountant providing them with a copy of the trust deed for the family trust. The trust deed set out that Mrs Smith’s children were the only beneficiaries of the family trust. This information assisted us to a significant extent in negotiating the terms of the proposed family arrangement.


 I and the legal representatives representing John’s siblings extensively negotiated the terms and conditions of the proposed family arrangement with an aim to achieve an equitable distribution in value of the assets held by late Mrs Smith and the family trust to all beneficiaries in the Will.  


 Whilst negotiating the terms of the family arrangement, each beneficiary also took independent tax advice as to tax implications that he/she may encounter with the proposed distribution of the assets held by Mrs Smith and the family trust.

 After lengthy negotiations between each beneficiary’s legal representatives, Jack and his siblings agreed to sign a deed of family arrangement, which had minimal tax implications on each of them.


Takeaway message

 Before preparing your Will, seek independent legal advice to identify what You Own individually and what You Do Not Own (assets held by other structures like family trusts, self-managed superannuation funds). This ensures that your Will is limited to assets that You Own rendering it valid and accurate.

 Examples of assets that you Can Include in your Will are:


  1.  real and personal property that you own only in your individual name;

  2. real property that you own as a tenant in common with someone else and not as a joint tenant;

  3. shares that you own in your individual name; and

  4. subject to laws relating to international wills, any real and personal property held overseas only in your individual name.


 Examples of assets that you Cannot Include in your Will are:


  1.  any real property held by you as a joint tenant with someone else as it is governed by rules of survivorship;

  2. real and personal property held in a family trust as it is not owned by you but by the trust;

  3. superannuation monies as they do not form a part of your estate, but are to distributed pursuant to a binding death nomination provided to the Trustee of the Superfund;

  4. monies receivable under a life insurance policy as the proceeds of the policy are to be paid to a beneficiary nominated by the policy holder with the insurer.

  5. Before preparing a Will, every individual must accurately identify his/her assets to ensure that the Will is clear and valid. This minimises the likelihood of your beneficiaries incurring significant legal costs in administering and distributing your estate.

Please note that any information included in this article is general information only and does not constitute legal advice. Please contact us to discuss your particular circumstances.

Oct 20

4 min read

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