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Estate planning – What happens to assets?

It takes a long time and a lot of effort to build up assets over a lifetime. Whilst most of us have very firm ideas about what we want to happen to those assets after we die, it is essential to ensure that all your assets, not just most, are passed on according to your intentions.

The majority of your assets are covered by your will including possessions, property, money in bank accounts, shares and managed funds solely held in your name. However, there are some assets that are not automatically looked after by your will. If you die without a will or not specifically nominated them, these assets will be distributed according to the laws of the state or territory in which you lived at the time of your death. Some of these may be substantial.

In our previous article in this series, we looked at some of the complications involved in superannuation; one significant asset that may need special attention. In this article, we look at some others.

But what is not covered?

Joint tenancy and tenancy in common: Jointly owned assets or property can generally be held in one of two ways – either as joint tenants or as tenants in common. If an asset is held as joint tenants, on your death, the surviving joint tenant automatically acquires ownership of your share of the asset. This is generally not a concern where a family home is jointly owned by a husband and wife. However, complications can arise when a property is jointly owned by siblings or friends and retained when circumstances change, e.g. marriage of one or more of the owners. In this case, the asset won’t form part of the estate and can’t be dealt with under your will.

However, if an asset is held as “Tenants in Common”, your share of the asset becomes part of your estate and can be dealt with under your will. Tenants in common status needs to be included in the Certificate of Title, specifying how much each tenant owns. For example it might be stated that one tenant owns 40% of the value and the other tenant owns 60%. You will need to consult your legal representative to ensure that your certificate records the correct information.

Assets owned by a company or held in trust: If you own assets via a company or trust, you need to address how the control will be passed onto your beneficiaries. In the case of a company, you will have to consider who will be entitled to your shares and how the company constitution handles your rights to appoint directors.

In the case of a trust, you will need to examine any rights you may have under the trust deed to appoint a replacement trustee or to wind up the trust and direct how its assets should be disposed of. If the trustee is a company, it will also involve considering who would be entitled to any shares you own in that company.

Life insurance: If you have a personal life insurance policy outside your super, you should have the option to nominate a beneficiary of the policy proceeds. This nomination bypasses your estate so we recommend that you factor the policy proceeds into your estate planning.

Thinking ahead

Whilst some of the above scenarios will not affect everyone, we suggest that if you think they may apply to you, please contact us. A quick chat, even over the phone could save a lot of stress and disappointment for those you leave behind.

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