While it’s always advisable to have a will, not every will is created equally.
Amateur wills are generally not worth the paper you’ve written them on, so you should always use a lawyer who specialises in the preparation of wills.
Fundamentally, the transfer of assets held in your name (which are also called estate assets) needs to be via a will.
But there could be significant tax or legal ramifications if your assets are simply transferred from one person’s name to another’s after you have died.
This is because assets transferred to the next generation in that person’s name can be exposed to litigation, family law court orders and, if income or capital gains are distributed to children under 18, a 60 per cent minor tax rate is applied on a sliding scale down to 45 per cent.
Most people aren’t happy to expose their loved ones to these risks or costs, which is why they opt to use a different type of will entirely.
The type of will I’m talking about assists with passing control, and not ownership, of your assets.
This is achieved via a testamentary trust, which will move the assets to the trust as dictated in your will, and then the appropriate person put in control of the testamentary trust via a company trustee.
Many people already control assets as opposed to owning them In other words the assets are not in their own names but held in their superannuation or in trusts.
Since you don’t “own” these non-estate assets they can’t be included in your will and as such need to be passed on with other documentation
Typically, your superannuation is passed via something called a binding death nomination which is a very technical and legal document so must be properly prepared.
If it’s not professionally prepared, it will just be a non-binding declaration and the trustees of the super fund or your self-managed superannuation fund can decide who gets your members’ death benefits instead.
Passing control of your trusts is also achieved outside of your will by different documentation such as a memorandum of wishes.
Why you also need a power of attorney
Another important document is your power of attorney.
Most people don’t understand that their will only comes into effect on death so if you have an accident and end up in a coma or suffer dementia then your will doesn’t help your current situation in the slightest.
Instead, you will need a Do I need a will?