Where there’s a Will, there’s a (simple) way (to distribute the deceased’s estate. Ha!) However, not every asset is considered part of a deceased’s estate. Instead, there are ‘estate assets’ which can be included in a Will and ‘non-estate assets’ which cannot. Knowing which assets are estate or non-estate will help the will-maker undertake the best estate planning possible, and will also help a will-disputer to determine whether they have an adequate claim.
Estate Assets vs Non-Estate Assets
Estate Assets as a broad rule of thumb include anything the deceased has sole ownership over. This includes:
- Any type of real property, i.e. real estate, land and buildings.
- Unproductive property, i.e. valuables such as motor vehicles, jewellery, furniture.
- Cash of any kind, i.e. savings, term deposits.
- Intangible personal property – items which cannot be held but are of worth, i.e. stocks, business ownership and digital assets (Facebook, Twitter, Instagram).
- Intellectual property, i.e. patents, copyrights, royalties.
Non-estate assets on the other hand are things that the deceased does not have legal ownership over, or has joint ownership over with another party. Examples of such assets are discussed below.
Jointly owned Assets
Jointly owned property will pass automatically to the other joint owner(s) after death, irrespective of the deceased’s Will. For example, if you own a home with your spouse as joint tenants, upon death of a spouse full ownership will automatically revert to the surviving spouse.
The exception are assets owned jointly as ‘tenants in common’. Here the tenants are free to dispose of their shares of the land as they see fit under their Will. The difference being that tenants in common have defined shares and interests in the asset as appear on the Certificate of Title. For example, if you own a property with another as tenants in common and both have equal shares, then upon your death your 50% ownership of that property will flow to your estate and then to your beneficiaries as set out under your will.
Any discretionary/family trusts controlled by the deceased do not form part their estate as they are owned by the trust and considered a separate legal entity.
The only way to ensure that the trust can be dealt with by the deceased’s Will is if their trust deed allows for the control of the trust to be passed on under a Will. Unless that is the case, the trust will be continued to be managed by whoever is nominated on the deed.
Although the company may be the deceased, they do not directly own its assets. The company, like trusts are considered a separate legal entity.
The only part of the company which form part of the deceased’s estate and therefore can be allocated under the Will are their shares in it.
Life insurance policies operate so that the insured person nominates the beneficiary of their policy. The policy is then paid directly to the stipulated beneficiary or beneficiaries and do not form part of the deceased’s estate.
To enable the life insurance policy to become part of the deceased’s estate, they must nominate their estate as the beneficiary of the policy so that the proceeds can be managed by their Will.
If the deceased did not stipulate who is to benefit from their policy after death, then the proceeds will not pass through the estate as it is owned by the fund. The fund will then act with discretion in accordance with the terms of the fund deed.
Superannuation monies are tied to a superannuation fund which has a trustee who decides on payments. Thus superannuation funds act as separate legal entities and do not automatically form part of the deceased’s estate.
Superannuation will only be dealt with as an estate asset via the deceased’s Will if a binding death benefit nomination form (“BDBN”) has been completed. Here, they have the right to nominate a particular person to be the recipient of their superannuation fund. However, if a BDBN has not been completed then it is left to the trustee’s discretion to decide on the recipient of the funds. A BDBN to be valid must be updated every three years.
So, what can you as the will maker do?
As shown, significant assets may not automatically form part of your estate. Thus, it is important to make an inventory and consider how each asset is owned. To avoid mistakes, consider your succession plan today.
So, what can you as a potential will disputer do?
If you feel you have not been adequately provided for within the deceased’s Will, then the team at Hentys Lawyers would look to launching a Part IV claim. Nevertheless, a Part IV claim can only affect estate assets. You are not entitled to dispute the deceased’s division of non-estate assets through a Part IV claim, as aforementioned, they do not form part of the Will.
However never fear – you can still dispute entitlements to some non-estate assets, independent to Part IV claims. Seeking provision for such assets is simply governed by matters outside Wills or intestate scheme of distribution. See next week for an analysis of those you can dispute and how.
The next step? Contact the team at Hentys Lawyers and engage in a free consultation to get your claim moving.