One common question that I encounter when advising
estate-planning clients is what assets will be part of a deceased
estate. These clients often want to know if their Will is
sufficient for estate planning purposes or if some other form of
estate planning document is required.
Your Will controls the property that is included in your
deceased estate. Your deceased estate is made up of all of the
property that you owned individually at the time of your death.
When determining whether you own an asset individually at the time
of your death we must look at the asset closely to make a
determination. For example:
When a parcel of property is owned by more than one person, it
can be owned as joint tenants or as tenants in common. If a
property is owned as joint tenants, the co-owners have a right of
survivorship. What this means is that on the death of one joint
tenant, their interest in the property is transferred automatically
to the other joint tenant. This transfer bypasses the estate of the
deceased. In such a situation, property owned in a joint tenancy
will not be considered an asset of the deceased controlled by the
Will. If a property is owned by more than one owner as tenants in
common, the result is quite different. There is no right of
survivorship associated with a tenancy in common. Therefore if one
party to the co-tenancy dies, the property does not pass to the
other co-tenant. In such a situation, the deceased co-tenant's
share would flow into their estate and would be controlled by the
Often times in married or de facto relationships, the parties to
the relationship own bank accounts jointly. Sometimes bank accounts
are held with other loved ones such as children or parents. In the
case of jointly owned bank accounts, the accounts pass to the
survivor upon death. The Will does not control these assets. It
must be noted that the power to co-sign on an account is not
necessarily indicative of co-ownership of that account.
Life Insurance policies
If you have named a beneficiary on a life insurance policy with
a death benefit, that beneficiary will receive the death benefit
directly from the insurance company when you die. In such a
situation, none of the funds paid out by the insurance policy will
be controlled by the Will. This fact often is not known by our
clients, who believe, mistakenly, that their deceased estate will
have far more funds available for distribution because of the
payment of insurance proceeds. In reality, the nominated
beneficiary or beneficiaries receive the death benefit directly and
independent of the Will. Only on the occasions where there is no
beneficiary nominated will these assets be part of the deceased
estate and controlled by the Will.
Funds held in superannuation for payment as a death benefit
will, in most cases, be distributed by the superannuation fund
directly to a spouse or children of the deceased. The
superannuation trustee will be responsible for this determination.
Only in some cases will these funds be paid into the deceased
estate and be controlled by the Will. The owner of the
superannuation can, in their lifetime, nominate the death benefit
beneficiary in a way that binds the superannuation trustee to
comply with that nomination.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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