common problems with Wills & Estates distributions

9 common problems with Wills & Estates distributions

9 common problems with Wills & Estates distributions

One of the main reasons people plan their estates is to avoid problems and disputes between family members and other intended beneficiaries after they pass away. Unfortunately, it is sometimes the estate planning documents that cause problems and disputes. This is why it is always best to have the documents prepared by a Wills and Estates Lawyer.

We’ve compiled nine of the common problems we see when it comes to wills and estates distributions.

Not appointing someone to be executor or an alternate executor

The Executor is the person who administers your estate and ensures that your wishes are upheld after your death. They will have a number of responsibilities including identifying and collecting your assets and ensuring your debts are satisfied before the distribution of your assets. They may even be required to sell your property, or arrange care for any minor children.

If you do not appoint an executor or your executor passes way before you update your will, any of your beneficiaries are able to apply to the court to administer the estate. This can cause problems if the beneficiaries do not agree on who is best to take on the role.

Also, in such a situation, if none of the beneficiaries is 18 years old or older and fit for the task,  the Court can appoint the Public Trustees for the role.

This is why it is always best to choose more than one, if not multiple Executors for your estate.

Joint executors not agreeing

We often see many people jointly appointing two or more people to jointly act as executors for their Will. This can be a really good idea as it ensures that no single executor can make decisions in their own interest without the oversight of the other executor(s).

The problem arises when the joint executors do not agree on what is best for the estate. This can cause large delays and even cost the estate money in extensive legal fees.

If the joint executors cannot come to an agreement on what to do, one executor may need to apply to the Supreme Court to have the court decide on the best steps for the Estate. This can be a long and costly process, which will reduce the funds in the estate and also delay any beneficiaries receiving their share. It is always best to appoint joint executors only if they are likely to cooperate with each other.   If you cannot do this then it is better to appoint a single Executor, followed by an alternative back up Executor.

Including assets in your will that do not fall into your estate

Not all assets that you control can be distributed under your Will. It is essential that when making a Will you know what assets and property will comprise your estate after you pass. For example, any joint property will automatically pass to the other party who has joint ownership of land or bank accounts, and not form part of your deceased estate.

Similar issues can arise with assets owned by companies or trusts which may not be deemed assets that can be transferred via will after the Will maker’s death as they were not assets technically owned by the deceased, only controlled via trusteeship, directorship etc.  Depending on the type of legal entity and it’s constitution, there may be other means for those assets to be transferred after death but not via the Will.

Beneficiaries often get really upset when the Will instructs that they are to receive an asset that is not legally entitled to be transferred under the Will. This is also more likely to result in your beneficiaries contesting your estate for a share of what was given to other beneficiaries.

This issue also arises when specific items are given as gifts under your Will, but prior to your death they are sold or lost. If you leave your 2016 Silver Holden Commodore to your son under your Will, but then you sell that car and buy a new car, does your son get your new car?

It is always best to speak to a Wills and Estates lawyer before giving specific gifts under a Will to ensure that they actually form part of the estate and to receive advice regarding the legal wording of specific gifts and bequests. You may even need to do title searches to determine exactly how a property is held in shares or jointly before you include it in your Will.

Beneficiaries do not agree with executors

As a standard rule, the executor does not need the beneficiary’s permission with making decisions. The executor is specifically appointed to make the decisions provided that those decisions are in accordance with the directions in the Will.

Of course, if the executor proposes that the assets be distributed in a different way than set out in the Will,  the executor will firstly need to get the permission of the beneficiaries. This also applies if the executor wishes to enter into an agreement that may amount to a conflict of interest between the executor and the estate.

If the beneficiaries are concerned that the executor is not following the Will or is involved in misconduct, they can apply to the court for directions on the administration of the estate or to even have the executor removed and replaced.

Executors not providing information to beneficiaries

We often hear from beneficiaries who are upset because the executor is not giving them any information.

An executor is required to provide a beneficiary with a copy of the current and any previous wills only if they are requested by the beneficiaries. Other than that, the executor is not required to provide any information or documents to the beneficiaries until the executor is ready to distribute the funds. The main exception to this is if there are delays in administering and distribution of the estate.  In such a case the executor should provide the beneficiaries with an explanation for the delay.

Executors are usually encouraged by their solicitors to be open and honest with the beneficiaries, as disputes between executors and beneficiaries can cause delays and estate funds on legal fees to resolve.

Not including a residue clause

Not all wills include individual clauses to deal with each and every one of the assets to give away in Will. If you leave your house, car and bank accounts to specific people, who gets your jewellery,  your couches and appliances?

It is always best to have a “residue clause” in your Will to ensure that you are distributing all your assets through your Will by rounding up all other items not specifically mentioned first. This also means that you don’t have to update your Will every time you buy new assets or move house.

Failing to include this clause could result in some assets needing to be distributed according to the relevant intestacy laws (formula to distribute as if there was no will) causing delays and more money in legal fees to sort it all out.

It is always best to speak to a Wills and Estate Planning lawyer to ensure you have a properly worded residue clause to ensure all your assets are distributed according to your wishes.

Children not being content with their share and contesting the estate

It is becoming more and more common that children of the deceased are not content with what is left to them from the estate, so they contest the estate for a greater share. This can often result in long drawn out legal fights costing upwards of $50,000- $100,000 which inevitably will come out of or be reimbursed from the estate funds.

If you are intending to leave less to one of your children(or no inheritance at all) or to leave your partner or spouse out of your Will, it is best to get advice on ways to minimise the risk of them contesting the estate.

There are many ways that you can minimise this risk including by leaving them a small share and explaining in your Will or in an attached letter why you think they should not receive a greater share. Reasons may include a waived loan which they did not repay to you, benefits already having been provided during your lifetime, providing more for a disadvantaged child and other reasons which show why unequal distribution should not be legally challenged.

A Wills and Estates Planning lawyer will be able to explain to you the best ways to minimise the risk of having someone contest the estate.

Not making a will

This is the biggest problem. There are too many cases of people dying without a will and their loved ones having to sort out a mess.  The best way that you can ensure that your estate is distributed in the manner that you chose is to ensure you have a valid Will. There are many legal requirements to ensure a will is validly made. If these formalities have not complied with your Will then it may not be considered to be your wishes and is usually completely ignored in the distribution process. If this happens it will result in your estate being distributed as if you have no Will (via a legislative formula).

To avoid this happening it is important that you have your Will prepared by a lawyer who is able to ensure that all the formalities are followed so the will is actually legally valid.  You may not be able to do this with a will kit and no legal advice and legal assistance.  Many wills prepared from will kits have had validity problems successfully challenged.

Not reviewing your will after major life events

It is often seen that people prepare a Will once and then never go back and update it despite the many changes in their life.

Some wills don’t include the youngest children as it was prepared before they were born, or leave everything to a person who is now their ex-spouse. It is important that your Will is updated regularly to ensure your Will is still valid and that your assets are distributed in accordance with your wishes.

One thing that a lot of people do not realise is that if they separate from their spouse, but have not yet divorced, their spouse will still be entitled to everything they are left in the Will.

There is no hard and fast rule about when you need to update your Will, but it is important to update your Will with any major life events. Some examples might be:

  • Marriage
  • Divorce or separation
  • Entering or ending a de facto relationship
  • Birth of a child
  • A major change in your financial situation
  • The death of someone named in your Will.

We recommend you at least update your Will every 10 years at the very lease to ensure your Will reflects your current life situation and current wishes.

It is extremely important that you properly prepare your Will and ensure you have thought it through to avoid leaving behind a pile of problems for your family to deal with after you pass away. The main point of preparing a will is to make the process easier for your family and loved ones when you are gone.  The best way to do it is to have a Wills and Estates lawyer advise and prepare your will for you.

Alternatively, you can start the process online as well here.

If you would like to know more about getting your will sorted take advantage of our free half hour legal consults. They can be done in person or via Skype or telephone conference. 

Call 03 8742 3199 or email info@rigolilawyers.com.au to make a booking and mention this article to claim your free booking.