Wills and how they work

A will is a document that records your testamentary wishes – that is, your instructions and wishes for the settlement of your estate after you die. Specifically, your will records three instructions:

• who you want to be your executor (the person authorised to plan your funeral, distribute your personal belongings and your estate)

• who you would like to appoint as your children’s guardian (to raise and care for them if they’re under 18 years of age) and

• who you want to receive your assets, including gifts of specific personal items.

When you make a will, you are known as the ‘testator’.

How do you make a will?

Any document may be considered a will if it records those three instructions. However, there is a difference between a ‘formal will’ and an ‘informal will.’

A formal will is one that meets certain legal requirements. Apart from a few complex exceptions, the requirements for a document to be considered a formal will are that:

• it must be in writing, either typed or handwritten

• it must be signed by the testator with the intention of executing a will

• the testator must sign in the presence of two witnesses

• the two witnesses must also sign the will to confirm that they saw the testator sign in their presence.

It’s also recommended that:

• the testator and witnesses sign on every page of the will in the footer and initial any alterations

• the two witnesses sign immediately after each other, in each other’s presence and using the same pen as the testator

• the two witnesses should not be a beneficiary in the will or married to a beneficiary

• the will include an attestation clause that sets out the circumstances of signing, such as, ‘Signed by the Testator in the presence of us both present at the same time and attested by us in the presence of the Testator and of each other.’

An informal will is a ‘document’ that is intended to record your testamentary wishes but doesn’t comply with the legal requirements of a formal will. (In law, a ‘document’ can be written or in some other form: a text message, audio or video recording, or drawing etc.)

Informal wills can cause significant stress to the executors as well as financial cost and delay in the settlement of the estate. For this reason, you should seek legal advice and assistance when you execute (that is, make) your will, to ensure that what you write is a formal will that complies with the legal requirements and is drafted in a way that avoids any uncertainty or room to contest the will.

Why does your capacity matter?

‘Capacity’ refers to a person’s mental competence and cognitive ability to make decisions.

Being able to express a decision or opinion verbally does not necessarily mean a person has capacity. It’s assessed on a combination of:

• the ability to understand the specific situation and identify the relevant facts that need to be considered

• the ability to evaluate the reasonable implications or consequences of the choices

• the ability to use reasoning to weight the benefits and risks of the choices, and

• the ability to communicate your choice consistently.

Capacity will vary depending on the type and complexity of the decision to be made. For instance, a young child might have capacity to decide what they want to have for dinner but not what job they want to do in the future.

Having ‘capacity’

‘Capacity’ is a term often used when talking about a person’s ability to make decisions for themselves and understand the consequences of those decisions.

More information

‘Testamentary capacity’ refers to a person’s capacity to make a will. Legally, an assessment of testamentary capacity requires the person to have:

• the ability to understand that nature and effect of making a will

• awareness of the nature and value of the assets and property that will form part of the deceased estate

• appreciation of the claims that dependents and family members could make on the estate and of the obligation to make provision for certain persons, and

• an absence of any disorder of mind or insane delusion.

The will may be found to be void if any of the above is lacking and it can be shown that the lack resulted in a will that the testator would otherwise have not made.

A diagnosis of dementia does not necessarily mean that a person lacks testamentary capacity, provided that the above criteria can still be met.

If there is any chance that a person’s capacity to make a will may later be challenged, the testator should engage a solicitor to prepare and witness the will and also get a medical report of testamentary capacity. Ideally, the solicitor should write to the doctor to specify the method for assessing testamentary capacity, in particular, and the information required to be in the medical report. The solicitor will also do their own assessment of testamentary capacity from a legal perspective, following the requirements listed above.

If, following the testator’s death, someone challenges the validity of the will claiming of the testator lacked capacity, the medical records and file notes of the solicitor will help to refute the claim.

Can you be pressured into making a will?

For a Will to be valid, it must satisfy 4 requirements:

1. The testator must have capacity (see “Challenges to Capacity to Make a Will”)

2. The testator must have the intention to make a will

3. The testator must have knowledge of and approve of the contents of the will

4. The proper formalities of execution must be followed (see “How do you create a Will”)

If the testator did not have knowledge and approve the contents of the will it can be struck down for being invalid.

All or part of a will may be found to be invalid if it can be proven that the will was made subject to fraud, coercion, mistake, or influence such that the will does not reflect the true intention and wishes of the testator. This can include a third-party using intimation, trickery, deception, flattery, or undue influence to direct the actions of the testator.

A will may be contested if it has been made under these or other suspicious circumstances.

The Suspicious Circumstance Rule
The suspicious circumstances rule is where a will is prepared under circumstances which raise a reasonable suspicion that it does not express the true intentions of the testator. If a well-founded suspicion is raised, the suspicion must be removed before the will can be declared to be valid.

Examples of suspicious circumstances include:

• Where a person who is to gain a benefit under the will (or is married to a person who will benefit under the will) drafts the will or arranges for the will to be made,

• Where someone other than the testator gave the instructions for the will,

• Where the testator is blind or illiterate and there is no evidence that the will was read to them,

• Where the testator did not read English and there is no evidence that the will was translated into the testator’s language or read to them in a language they understand,

• Where a person is omitted from the will without reasonable explanation,

• Where the will is complex and there is evidence the testator may not have had the capacity to understand the complexity of the will,

• Where the will is made influenced by a mistaken belief, pressure, threat or duress.

This can give rise to the suspicious circumstances rule.

If there are suspicious circumstances and these are raised in legal proceedings, evidence will need to be produced to prove that the testator not only knew the contents of the will, but also approved of them. Failing that, the will may be deemed to be invalid.

What does an executor do?

The appointed executor’s job is to:

• make arrangements for the funeral or cremation

• locate the last original will of the deceased person

• notify family and friends of the death

• notify all relevant organisations, including the person’s employer, bank and superannuation fund, Services Australia, Centrelink, Medicare, Child Support, Australian Tax Office and Department of Veterans’ Affairs

• obtain a grant of probate (see below)

• see to the payment of any of the deceased’s debts or estate costs and liabilities

• sell or transfer assets as required by the terms of the will

• close or otherwise manage the deceased person’s social media accounts and other accounts (such as entertainment subscriptions, gaming accounts, E-Toll accounts, etc)

• file final tax returns and an estate tax return, if appropriate

• distribute the person’s personal belongings, including clothing, jewellery, ornaments and artwork

• distribute the rest of the estate in accordance with the terms of the will.

As well as being required to administer the estate in accordance with the terms of the will, the executor also owes a duty to act in the best interests of the beneficiaries of the estate and of the estate itself. This includes gathering in and distributing the estate without avoidable delay.

Grant of probate

A ‘grant of probate’ is what gives the executor the authority to deal with the assets and liabilities of the estate in accordance with the terms of the will. Depending on the assets and value of the estate, the executor may need to get of a grant of probate before they can collect the estate’s assets, deal with any debts or accounts of the deceased person, and distribute the estate.

Renouncing an executorship

If a person is appointed as executor of a deceased estate but does not want to act as executor, they may be able to renounce their position by filing a Renunciation of Probate with the Supreme Court in the relevant State or Territory.

Before renouncing their position, the appointed executor should check the will to see if another person is appointed to act as substitute executor in their place. If there is not a substitute executor appointed, the appointed executor can still renounce their position and the Court may appoint a solicitor, accountant, appropriate family member or friend, or statutory authority (for example, the New South Wales Trustee and Guardian, State Trustees VIC, or Public Trustee in Queensland) as the executor.

Timing is important! An executor must renounce their position before they have done anything in relation to the administration of the estate or anything that the executor is meant to do, such as making funeral arrangements or paying estate debts. Once they have acted as the executor or interfered with the estate, they will need to seek the Court’s permission to step down.

What must the executor not do?

This might seem obvious, but an executor does not have any authority to deal with the estate before the testator has died. For example, being named as executor in the will does not mean that the appointed person is entitled to know the terms of the will or to know the testator’s private information before they die.

The executor cannot change the will or go against the terms of the will. If the executor is unsure of their duties or how an estate is to be administered, they can seek legal advice rather than guess at an interpretation of the testator’s wishes.

The executor must not do anything that recklessly devalues the estate or puts the estate assets at risk. This includes:

• selling estate assets for less than fair market value without the agreement of the beneficiaries (if they do so, they may be liable to compensate the estate for the financial loss)

• damaging or losing estate assets

• failing to protect estate assets (for example, by not staying up to date with mortgage payments, insurance or maintenance, or by making risky investments with estate funds).

The executor can be removed or face legal consequences if they act in breach of their duties while administering the estate.

Executors must not take any assets from the estate for their own use or gain unless authorised to do so. The will may stipulate that the executor is to be paid for their work and by what amount; alternatively, the executor can apply to the Court to receive a commission from the estate for their work. However, an executor may not pay themselves from the estate without any other authorisation to do so.

What happens if multiple executors cannot agree?

If more than one executor is appointed and they cannot agree on how the estate is to be administered and how they are to perform their duties, one or all of the executors should get legal advice. This is especially important if the disagreement is delaying the administration of the estate.

Any one or more of the appointed executors can still apply for a grant of probate and invite the other executor(s) to either join their application or otherwise respond within a specified time.

What should you do once you have a will?

Once you have done your will, the original copy should be stored in a safe place. Many people ask their lawyer to hold the original copy while they keep a certified copy. Alternatively, you might store the original copy at your bank or in a home safe.

It’s a good idea to keep a copy of the will among your personal papers in your home, as well as a note or directions for where the original copy is located. This will make it easier for your executor to locate the will when they need to. You should also let your executor know where both the original and the copy at your home are located.

There is no legal requirement that a will must be registered, but there are some options for registering your will if you choose to do so. Depending on which state or territory you live in, you may be able to register and/or store your original will with:

• the relevant state Supreme Court

• the relevant Law Society

• the relevant government trustee organisation (e.g. the New South Wales Trustee and Guardian, State Trustees in Victoria)

• a registry such as the Australian Registry of Wills, Deeds and Documents.

Note that fees will most likely apply for registration and storage.

What is a ‘statement of wishes’ and why should you have one?

A statement of wishes – also called a ‘memorandum of wishes’ or ‘letter of wishes’ – is a document that can supplement your will. In the statement, you provide your executor with guidance on how you would like them to perform their duties and any information they need to do so.

The statement of wishes can include:

• information such as the name and contact details for your lawyer, accountant and any other parties to be notified of your death

• the names and contact details of your beneficiaries and any family members or friends who should be notified of your death

• information and details of your assets and liabilities, such location and reference/account numbers for any bank accounts, shares, investment portfolios, superannuation, real estate and registered assets

• information about digital assets and accounts, including passwords and what you would like to happen to your social media accounts

• any wishes you may have in relation to burial, cremation and funeral arrangements

• detailed instructions for how you would like your personal belongings divided (for example, ‘I would like my paintings to go to my daughter, Annie’)

• instructions on what distributions you would like the executor to make for a younger beneficiary’s benefit, if any funds are held in trust on their behalf (for example, you would like the executor to pay for school fees, music lessons, sports equipment, etc from the funds held).

You can also include wishes you would want the guardian of any minor children to consider when raising the children, particularly regarding education, religious and cultural practices and maintaining relationships with extended family members.

A statement of wishes is not a legally binding document. This means that your executor is not compelled to follow the instructions in the statement, and there will usually be no repercussions for their failure to comply with your wishes. However, this comes with some advantages:

• Easy updates. While your will needs to be formally executed and, generally, you should use a solicitor when you update it, this is not the case for a statement of wishes. You can update your statement or draft a new statement at any time and as many times as you like, without needing to engage a solicitor.

• Flexibility. The statement being not legally binding takes away the pressure on the executor to follow the instructions you made in it if it’s not possible or desirable to do so. For example, your statement may include a wish that your granddaughter receives a particular piece of artwork, but by the time of your death that artwork has been damaged. The executor can substitute another artwork instead of the original gift.

• Confidentiality. Beneficiaries named in the will and certain family members are eligible to see a copy of your will after your death, and if the executor needs to apply for a grant of probate, the will becomes a public document. In contrast, the statement of wishes remains confidential. Beneficiaries are not entitled to a copy (although making it available may settle disputes), and it does not need to be filed with the Court. Overall, a statement of wishes has many benefits that make it an essential part of estate planning.

How to write a statement of wishes

There are a few key things to remember when writing your statement.

• A statement of wishes can be written anywhere: on a single page of paper, on a napkin, in a notebook or a diary, in a text message or an email etc. However, to avoid the document being lost or overlooked, we recommend that the statement be written on loose pages of paper and stored with a copy of the Will.

• The statement can be handwritten or typed, so long as it is understandable.

• Clearly date the document. If you have multiple versions of the statement, dating will make it easier to identify which is the current version.

• Sign it on every page. If you sign only on the last page, anyone could substitute some of the pages with their own.

Store the original signed statement with your original will or with the copy of the will that you hold. You might also like to send a copy to your solicitor for their records.

What are the common misconceptions about wills?

MYTH #1: If you don’t have a will, your family decides what happens with your assets.

WRONG.

Dying without a will doesn’t mean that your family or next of kin can decide what happens with your assets and property. It’s known as ‘dying intestate’, and the rules of intestacy in your state or territory will dictate what happens with your assets and property.

According to those rules, if a person dies leaving behind a surviving spouse (which includes a husband, wife, de facto partner or civil partner) and children, the spouse is entitled to the entire estate. If the person dies without a spouse but with children, the children are entitled to the estate in equal shares. These scenarios are relatively straightforward.

However, the situation becomes more complex when a person dies leaving behind both a current spouse and children from a previous relationship. The rules of intestacy differ across the states and territories but, predominantly, the spouse is entitled to a ‘statutory legacy’ (in New South Wales, for example, this legacy is approximately $490,000 as at July 2021) and a share of the remainder of the estate. The other share of the remainder of the estate is divided equally between the deceased person’s children. If the estate is not greater than the statutory legacy, there may be nothing left for the deceased person’s children.

Normally, this will mean that the spouse is entitled to the greater share of the estate, which makes them (not the children or any other family member) the person most eligible to be appointed as the administrator of the estate. (Remember that if there was no will, there was no executor appointed, so an administrator would be needed instead.)

MYTH #2: Telling someone what you want or recording it somewhere will be sufficient.

WRONG. In fact, it can cause significant costs and delay to your estate.

Simply telling someone your testamentary wishes instead of making a formal will is problematic for several reasons:

• It relies on that person to relay your wishes to others and seek to enforce them, which is not guaranteed.

• If the person does seek to enforce your wishes, they must prove what you actually said, which can be difficult to do, especially if it is contested by another person.

• Seeking to enforce your verbal testamentary wishes will normally require an application to the relevant state’s Supreme Court and court proceedings to determine whether you did express those wishes and whether the Court should make orders reflecting them. These legal proceedings will be substantially more costly and time-consuming than normal probate proceedings.

With advances in technology, there are now more formats available in which a person might record their testamentary wishes. They could make an audio recording, a text message, a note saved on a mobile phone, or a video, to name a few.

However, this is one of those situations where simple is better. The ideal will is one that is a written document. A record of your wishes in some other format may constitute an informal will, but there would need to be an application to the Supreme Court to confirm whether the audio recording, text message, note or video is in fact a testamentary document and was intended to be your last will. Again, this process will cost your estate dearly in both time and legal fees.

If you would like to read more articles like this subscribe to our newsletter by clicking here.

Disclaimer: The information provided on this website is not a substitute for individual legal advice.