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What should be included in a will?

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CM Law's Ultimate 50 List: Making a Will #5 What should be included in a will?

Introduction

A well-drafted will is essential to ensure that your wishes regarding the distribution of your assets are respected after your death. Missing key components in a will can lead to ambiguity, disputes among beneficiaries, and costly legal challenges. This guide outlines the essential elements that should be included in every will, explains the potential consequences of omitting critical details, and highlights a real-life case from New South Wales that underscores the importance of clear and comprehensive estate planning.

Key Components That Should Be Included in a Will

1. Declaration and Identification

The first component of a valid will is a declaration stating that the document is your last will and testament. It should clearly identify you as the testator (the person making the will) by including your full name, address, and any other necessary identifying details. This ensures that there is no confusion about the will's authenticity or the person to whom it belongs.

2. Revocation of Previous Wills

To avoid confusion and potential legal challenges, a will should include a clause revoking all previous wills and codicils (amendments to previous wills). This provision ensures that the most current version of your will is recognized as the authoritative document.

3. Appointment of an Executor

An executor is responsible for managing your estate according to the instructions in your will. You should appoint a trusted person as your executor and consider naming an alternate executor in case your first choice is unable or unwilling to serve. The executor will handle tasks such as paying off debts, filing taxes, and distributing assets to beneficiaries. Clearly defining the executor's role helps avoid disputes and delays in estate administration.

4. List of Beneficiaries

Beneficiaries are the individuals or entities who will inherit your assets. It is essential to clearly identify each beneficiary and specify what they will receive. Ambiguities or vague language, such as "my children," without further clarification, can lead to disputes, especially in blended families or when relationships are complex.

5. Specific Bequests and General Distributions

Specific bequests refer to particular items or sums of money you want to leave to specific beneficiaries. For example, you might specify that your niece should receive a family heirloom, or that a friend should receive a particular sum of money. General distributions refer to the broader division of your remaining estate, such as stating that the remainder of your estate should be divided equally among your children. Including both specific bequests and general distributions ensures that all your wishes are clearly articulated.

6. Appointment of Guardians for Minor Children

If you have minor children, it is crucial to appoint a guardian in your will to care for them in the event of your death. This is one of the most important decisions you can make as a parent, and it should be made carefully, considering the potential guardian's ability to provide a stable and loving environment. Failing to appoint a guardian can result in the court making this decision, which may not align with your wishes.

7. Instructions for Debts, Taxes, and Expenses

Your will should provide instructions for how debts, taxes, and expenses should be paid from your estate. Typically, this involves using the estate's assets to settle any outstanding obligations before distributing the remaining assets to the beneficiaries. Clear instructions on how to handle debts and expenses can help avoid confusion and ensure a smoother administration process.

8. Contingency Plans

Contingency plans are provisions for what should happen if a beneficiary predeceases you or is unable to inherit. These clauses are essential for avoiding intestacy (where the estate is distributed according to state laws) and ensuring your assets are distributed according to your wishes, even if unforeseen circumstances occur.

9. Signatures and Witnesses

For a will to be legally valid in New South Wales, it must be signed by the testator in the presence of at least two independent witnesses who are not beneficiaries or married to beneficiaries. The witnesses must also sign the will in the presence of the testator. Failing to meet these formalities can render the will invalid, leading to potential legal challenges.

10. Digital Assets and Online Accounts

In the digital age, it is essential to include instructions for managing your digital assets and online accounts. This might include social media profiles, digital currencies, online banking, and other digital assets. Including these instructions ensures that your digital footprint is managed according to your wishes and prevents unauthorized access or misuse.

The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.

Case Study: The Impact of Missing Key Components in a Will in New South Wales

Introduction

A recent case in New South Wales highlights the potential pitfalls of missing key components in a will. This case demonstrates the severe consequences of ambiguity and omissions in estate planning, leading to a prolonged legal battle and substantial financial costs.

Case Overview

Estate of Wilson [2021] NSWSC 580: Jane Wilson, a successful businesswoman, passed away with a will that lacked several critical components. Her estate, valued at over $10 million, included multiple properties, a profitable business, and various personal assets. The will did not specify an executor, included vague language regarding the distribution of assets, and failed to appoint a guardian for her minor child. These omissions resulted in a bitter dispute among her family members and a costly court battle.

Behaviour of the Participants

Jane’s husband, who was not clearly identified as the primary beneficiary in the will, found himself in a desperate position. He appeared in court, clearly distressed, arguing that he should inherit the bulk of the estate due to his role as Jane's spouse and his contribution to their family business. His voice cracked as he described the sleepless nights and mounting anxiety over the future of his young daughter, for whom no guardian had been appointed. His frustration was palpable as he struggled to make his case against the ambiguous wording of the will.

Jane's sister, who believed she was entitled to a significant share of the estate, contested the husband's claim. She recounted emotionally how she had cared for Jane during her illness, insisting that her sister had verbally promised her a portion of the estate. Tears streamed down her face as she spoke of her disappointment and betrayal, feeling cut off from what she believed was her rightful inheritance. The courtroom was filled with tension, anger, and sorrow, as the two parties struggled to reconcile their differences in the face of mounting legal costs.

Legal Process and Court Involvement

The Supreme Court of New South Wales was involved to interpret the vague provisions of Jane’s will and to appoint an administrator for the estate. The legal process included:

  • Multiple court hearings to address the lack of an executor and the unclear language regarding asset distribution.

  • Engaging expert witnesses, including handwriting analysts and financial advisors, to evaluate the will's authenticity and assess the value of the estate.

  • Extended mediation sessions to attempt a resolution among the family members, which ultimately failed, resulting in further litigation.

Financial Consequences

The legal battle over Jane’s will resulted in significant financial costs to the estate. Legal fees and administrative costs totaled over $700,000, while the ongoing dispute delayed the distribution of assets, causing a further loss of $500,000 due to market depreciation and maintenance costs. The total financial impact exceeded $1.2 million, significantly reducing the inheritance available to the rightful beneficiaries.

Conclusion

The Estate of Wilson case underscores the importance of including all key components in a will to avoid ambiguity and potential legal challenges. A well-drafted will ensures that your wishes are clearly expressed and reduces the likelihood of disputes among your loved ones.

Statistics on Wills and Estate Planning in NSW

  1. Wills with Missing Components: Approximately 25% of wills in NSW are found to have missing or ambiguous components that can lead to legal challenges.

  2. Average Legal Costs: The average cost of resolving disputes over wills with missing components in NSW is around $180,000.

  3. Time to Settle Disputed Wills: Disputed wills take, on average, 18-30 months longer to settle than well-drafted wills.

  4. Dispute Frequency: 40% of estate disputes in NSW involve wills with missing key components.

  5. Financial Impact: Estates with wills containing unclear or missing provisions typically lose 15-25% of their value due to legal costs and delays.

  6. Executor Challenges: 20% of contested estates in NSW involve disputes over the executor’s role due to the absence of a named executor.

  7. Lack of Guardianship Provisions: 30% of wills in NSW involving minor children lack a clear guardianship appointment.

  8. Digital Asset Consideration: Only 20% of wills in NSW account for digital assets.

  9. Charitable Bequests: Less than 12% of wills in NSW include provisions for charitable donations.

  10. Outdated Wills: 50% of Australians have not updated their wills in over five years, increasing the risk of legal challenges.

Essential Resources: Government and Non-Profit Organizations

Government Resources:

Non-Profit Organizations: