7 Mistakes When Making a Will

Understanding these distinctions is essential to consider that your estate plan reflects your true intentions. What does your will control? Your wills and estate planning applies to assets held in your soul name, with no special arrangements attached to them. These are often called estate assets and typically include real property.

That’s land and houses held in your soul name. Or is tenants in common with another bank accounts held in your soul name, shares and investments made in your soul name? Personal properties like vehicles, jewellery and household contents and business interests held personally or solely by you. These assets form your estate and will be distributed according to the terms of your will.

If you do not have a valid will, then the rules of intestacy in Western Australia will determine how your assets will pass. This may not be in accordance with your wishes. What your will does not control. Several assets fall outside of your estate entirely. These include jointly owned property if you own property as joint tenants with another person, which is common for married couples, that property automatically passes to the surviving joint tenant upon your passing.

Your interest does not form part of your estate and your will cannot redirect it. This applies to real estate, joint bank accounts and shares held in joint names. Superannuation is not an estate asset. It is held by the trustee of your superannuation fund and is distributed according to the fund’s rules and any valid binding death benefit nomination you have made.

Your will cannot override a valid binding nomination. Life insurance policies if your life insurance policy names a specific beneficiary, the insurer will pay them directly and the insurance policy will not form part of your estate. Only if the policy is payable to your estate or has no nominated beneficiary will it become an estate asset.

Assets held in trust if you hold assets as the trustee of a trust, including a family trust or a self-managed super funds, these assets are not owned by you personally. They belong to the trust and pass according to the trust deed, not your will. Assets with binding nominations, some investment accounts and financial products allow you to nominate beneficiaries.

These nominations operate outside your will. The debts your will cannot protect your estate from creditors. Any money you owe at the time of your death must be paid from your estate before any distribution is made to the beneficiaries. This includes mortgages and secured loans, credit card debts, personal loans, tax debts and funeral and estate administration expenses.

If the estate does not have sufficient cash to pay these debts, the executor may need to sell assets, including the family home, if necessary, to meet these obligations.