What Assets Can You Give Away on Death Under Your Will?

A Guide to Estate and Non-Estate Assets

Drafting a Will is a crucial aspect of an effective estate plan as it ensures your assets are distributed according to your wishes on your death. However, there are some rules on what assets can be, and cannot be, disposed of under your Will.

So, what assets can you give away on death under your Will?   

Your Will can only dispose of assets called “Estate Assets”. Typically, this term encompasses all the possessions, properties, and financial holdings that you own in your own name at the time of your death. These assets form your estate and are subject to distribution in accordance with your Will or the Laws of Intestacy if you do not have a valid Will at the date of your death.

Examining some of these Estate Assets in greater detail:

Real Estate:  

This includes any land, houses, apartments, or commercial buildings you own, including jointly owned property, which is held as “tenants in common”.  

Financial Accounts:

This includes bank accounts, savings, term deposits, and shares in, generally, listed companies.

Personal Assets:

These are called “tangible personal possessions” meaning items that can be touched which are not real estate, such as jewellery, artwork, furniture, vehicles, electronics, and family heirlooms.

Digital Assets:

Don’t overlook your online accounts, including email, social media profiles, digital photos, and cryptocurrency holdings. Provide instructions on how to access, manage, or close these accounts in your Will. Some social media platforms now operate a legacy feature, allowing a nominated person to access your account on death. 

Debts and Obligations:

You also need to address any debts in your estate at the date of your death. Things such as mortgages, credit cards, and other debts are treated differently depending on whether they are secured or unsecured. Not all assets can be used to pay debt of an estate, so take legal advice on how best to discharge debts, and what assets can be, and should be, used.

Now that we have dealt with what Estate Assets are, what about everything else? Well, the answer is, it depends. And it depends on the nature of the asset.

Life Insurance Policies:

These are initially a Non-Estate Asset meaning that they pass in accordance with other documents or law. It will also depend on who the owner of the policy is, and who the life insured is.

The Life Insurance Act 1995 (Cth), provides for how death benefit payments can be paid, and to who.  is common for insurance providers to allow the policy owner to nominate a beneficiary using a nomination. These nominations will either nominate a specific eligible beneficiary, or the Legal Personal Representative. If the latter, and providing the nomination is valid, the benefit payable will be an Estate Asset and disposed of under your Will.

Life Insurance is also one of those assets where strict rules exist under legislation relating to the payment of debts.

Superannuation: 

Superannuation is a very similar asset to life insurance; and there can be retail, industry or self-managed superannuation funds. This is a general overview of the general rules that can apply to all three, but specific advice will need to be taken depending on your own fund.

The Superannuation Industry (Supervision) Act 1993 (Cth) and the Superannuation Industry (Supervision) Regulations 1994 both set out the rules for the payment of death benefit to eligible beneficiaries under legislation.

However, again it is common for funds to allow members to nominate beneficiaries. The SIS Act sets out eligible beneficiaries as being either “SIS Dependants” or Tax Dependants”, and the tax treatment for both is different. If a valid nomination exists, it can either direct the trustees of the fund to pay the death benefits to an eligible beneficiary, or your Legal Personal Representative.

If your “Legal Personal Representative” is the nominated beneficiary, the proceeds of any superannuation become part of your estate and is subject to distribution in accordance with your Will. 

Just like life insurance, strict rules exist in relation to the payment of debt using death benefits.

Business & Trust Interests:

How interests in companies and trusts can be disposed of will depend on the terms of the Constitution (or Corporations Act 2000 if no constitution) or the Trust Deed.

Jointly Owned Property as Joint Tenants:  

Assets held jointly as joint tenants with another pass to the other owner on your death through am operation of law called “Rights of Survivorship”. You can own different assets jointly with another, such as joint bank accounts or real estate. These will never form part of your estate unless the joint ownership is severed.

Conclusion:

Drafting a comprehensive Will requires careful consideration of all your assets and their respective beneficiaries. By identifying and including your estate assets in your Will, you can ensure that your beneficiaries receive the inheritance you intend for them without unnecessary delays or disputes. Regularly review and update your Will to reflect any changes in your assets or personal circumstances, ensuring that your final wishes are always accurately documented and legally binding.

At Solari & Stock, we can provide invaluable guidance in navigating this process and ensuring the efficacy of your estate plan.  To speak with one of our experienced Solicitors from our Wills and Estate’s Team contact us on 02 8525 2700 or click here to request an appointment.

For more information on Estate Planning please see the article What is Estate Planning and Why is it so important? by Rebecca Exley.

Article by Valentina Abouzeid
Photo by Helena Lopes on Unsplash