The Impact of Excluding Someone from Your Will

If you're considering excluding a family member from your will or reducing their share of your estate, it’s crucial to understand the legal implications. In Australia, there is no uniform federal law governing wills and estates. Instead, each state and territory has its own Succession Act, which sets out the rules around family provision claims. This means that depending on where your assets are located, the legal landscape can differ significantly.

Family Provision Claims

A family provision claim allows someone who feels they have not been adequately provided for in your will to apply to the court for a redistribution of your estate. This could mean your intended distributions may be altered. The eligibility to make such a claim varies between states but generally includes spouses, children, and sometimes others who are financially dependent on you. An Inherit lawyer will assess the strength of any claim against your estate and provide guidance tailored to your situation, although legal advice can change as your circumstances evolve.

Assets Beyond the Estate

While family provision claims typically deal with estate assets, in some states, like New South Wales, the concept of a “notional estate” can extend claims to assets held in companies, trusts, or superannuation funds. This could mean that even assets you believe to be outside your will may still be subject to claims. It’s important to understand that despite the principle of testamentary freedom, Australian law can restrict how you distribute your estate if the courts determine you’ve breached moral obligations to those with potential claims.

Legal and Financial Implications

If a challenge to your will is successful, the court will redistribute your assets to ensure adequate provision for the claimant. Legal costs involved in these claims can be substantial and are often paid out of the estate, which reduces the overall value left for your beneficiaries. Even if you are estranged from the person you wish to exclude, this may not be enough to prevent a claim. Courts will consider evidence of estrangement, but it may not fully protect your will from being challenged.

Insurance Bonds as a Solution

One way to manage potential challenges is by using insurance bonds. Insurance bonds can serve both as a tax-efficient investment and a means to protect your assets from estate claims. The proceeds from an insurance bond are paid directly to a nominated beneficiary and do not form part of your estate for probate purposes. This can reduce the pool of assets available for a family provision claim and safeguard your wishes.

Action Items:

• Discuss potential family conflicts with your Inherit lawyer.

• Address guardianship and child-rearing arrangements.

• Plan for the management of companies and trusts.

• Consider provisions for family businesses.

• Determine the best approach for superannuation death benefits.

• Prepare for potential family provision claims.

• Document healthcare and end-of-life preferences.

• Appoint an independent executor to manage your estate.

• Establish a family constitution for larger estates.

By taking these steps, you can mitigate the risks associated with excluding someone from your will and better protect your estate and your beneficiaries. Always consult with both your lawyer and financial advisor to ensure your estate planning decisions are legally sound and financially efficient.