Unit trusts are similar to companies in that when you die, your units in it will pass to your estate to be distributed according to your Wil. You cannot dictate who gets what specific assets owned by the unit trust in your will. You may be able to include a special clause in the will as to who can control the unit trust after you die but this will again depend on the wording of the trust deed.
A company is recognised as a separate legal entity, distinct from its shareholders/owners or directors. A company does not die when you do. It will continues to exist when you die.
As such, assets held by the company are not considered part of an individual’s estate and are not covered by your will since they belong to the company itself.
The assets owned by a company are not your assets, even if you are the sole director and/or sole shareholder.
However, if shares in the company are owned by you personally, those shares can form part of the estate and can be given away in your will. However, you cannot dictate in your will who is to receive particular assets owned by the company when you die.
In a partnership, assets remain within the business structure when you die. When a partner passes away, they can transfer only their share in the partnership, not individual assets. Unless otherwise specified in a Partnership Agreement, the deceased’s share and any outstanding payments due to them will be handled in accordance with their will to the person who is gifted the partnership interest. An interest in a partnership is really just an interest to a percentage value of the partnership assets.
If you have a rural farming business in a partnership, it is common for the land to be owned by a partnership. Therefore you cannot gift the interest in the farm and land to anyone in particular in your will.
It is important to obtain legal advice and check the partnership balance sheet and partnership agreement to see what assets are included in the partnership and those which may just be lent to the partnership but owned by the individual.
A single will can potentially cover assets in multiple jurisdictions/countries, but the law in the other country may not recognise an Australian will and even if it does, it might be more effective to create separate wills for each country, especially if the laws differ significantly.
You should obtain specific legal advice before making a will if you own assets in countries other than Australia.
Assets not covered by your will cannot be included in the estate asset pool if the will is contested. This may be prove to be a benefit of having some assets held outside your will and estate when you die.
Property and assets can be owned jointly in two forms: as Joint tenants or tenants in common.
Real estate can be owned as joint tenants. People can have joint bank accounts or shares owned as joint tenants. Joint bank accounts are typically set up as joint tenants.
Property, assets or accounts with ownership set up as joint tenants come with rights of survivorship. This means if one joint owner/account holder passes away, the surviving owner/account holder automatically takes full ownership of the property/asset or account no matter what the will says.
If you own property as joint tenants, legally you both have an entitlement to the whole property and thus property owned as joint tenants does not come under your will until the last surviving joint tenant dies.
However, if you acquired the property/asset as tenants in common in specified shares (e.g. 50/50), your portion forms part of your estate and can be distributed through your will.
Superannuation is often a very valuable asset, especially if it contains life insurance known as death cover (as part of their super account). (Most people do not even realise they have death cover life insurance attached to their superannuation account.)
Most people do not realise that you cannot gift your superannuation balance (and any attached death cover life insurance) in your Will.
Superannuation is not an estate asset and does not automatically come under your will. Superannuation does not pass under your will, unless you direct it into your will by making a binding death benefit nomination form.
Not all superannuation funds allow you to nominate a beneficiary of your superannuation.
If you do not have a valid binding death benefit nomination form, your super fund trustee will have a discretion and power to decide who to pay your superannuation account to.
I always recommend to people to have a binding death benefit nomination in place.
Life insurance operates in a similar way to superannuation. If your life insurance is held separately from your super, it's important to make a beneficiary nomination specifying who you'd like to receive the life insurance benefit upon your passing.
Who you nominate as beneficiaries or owners of your life insurance policy will receive the insurance proceeds directly upon your death, bypassing your will.
Generally the proceeds of a life insurance policy are paid directly to the beneficiary or owner of the policy. If the owner or beneficiary of the life insurance policy has died, usually it will be paid to your estate and come under your will.
You can sometimes direct your life insurance to be paid to your estate and come under your will by nominating your estate/legal personal representative as the owner or beneficiary of the policy. In such a case you need to consider whether you require your life insurance to be used to pay your debts and if so a special clause needs to be included in the will to allow the life insurance paid to your estate to be used to pay debts.
You should seek professional legal advice from an experienced will and estate planning lawyer as to the pros and cons of including life insurance and superannuation in your estate and will versus directing they be paid direct to your intended beneficiaries.
These are like life insurance are paid to the nominated beneficiaries. You may be able to direct them to be payable to the estate depending on the circumstances.
Do you have a trust, or are you listed as a beneficiary of a trust?
A Trust, through its trustee, is like a company, ie. a separate legal entity in its own right. Trusts and companies do not die/end when the owner or controller dies. Rather they continue to exist until they are wound up. A company and trust are not automatically wound up upon your death.
The assets held within a trust cannot be distributed through your will. Assets and property in a trust are distributed as per the trust deed when you die. However, you may be able to pass the control of the trust itself in your will if you held a position of appointor/principal/controller of the trust when you die and the successor of that position has not already been listed in the trust deed.
