Did you know this? It comes as a surprise to many as people just assumed that their all of their assets will be distributed according to their wishes outlined in their will. Unfortunately this is not the case, you cannot leave assets in your will that are not legally owned by you.
Property Held in Trust (Family Trust or Super Fund ‘Trust’): Whoever controls the Trust will have the say as to what happens to the assets in the Trust. Family Trust or a Self-Managed Superannuation Fund with investment assets -these assets can’t be ‘left in your Will’ because under the law although you may be the controller and/or trustee of the Trust during your lifetime you are not regarded by the law as the legal owner of the assets held in the Trust.
A common problem can arise where control of a Trust passes to ‘the children’. Unless the Will or Trust Deed contains special provisions to ensure that all children share control by ‘unanimous consent’ it is possible that a simple majority of children will exercise control in their own interests by excluding some of their siblings.
Shares in Private Companies: Certain shares in private companies cannot effectively be given by Will. The Constitution of many Family Companies contains provisions which can restrict the right of a shareholder either to participate in control or to have a share transfer registered. Once again the terms of the Constitution of the Company needs to be examined to ensure that a gift shares in a Will is capable of achieving the Will maker’s intentions.
Business Partnership property: If you are in a business partnership you can’t leave assets belonging to the partnership in your Will. You can however leave your interests in the partnership in your Will however you need to examine what the Partnership Deed says happens on the death of a partner. Many partnership deeds allow for the surviving partners to take years to pay out the interest of a deceased partner.
The Proceeds of Life Insurance Policies: If the owner of the policy has nominated a beneficiary of the policy, the nomination takes precedence over the terms of the will. It follows that, where a nomination is made, the proceeds of the policy do not form part of the estate. If you wish the proceeds of the policy to go to someone other than the nominee, the nomination must be changed. Each policy should be checked to determine who has been nominated.
What now?
Contact our office to ensure your ‘corporate tree’ of all your entities and assets is up to date. Use the corporate tree to discuss your assets with a lawyer who can prepare the relevant documents to ensure your wishes for your assets can be documented to avoid any problems in the future.
Contact SMART Business Solutions on 03 5911 7000 or drop us an email on reception@smartbusinesssolutions.com.au.
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