Understanding the difference between estate and non-estate assets is one of the necessities behind a good estate plan. It is of vital importance to understand which assets may be bequeathed by a will on death. Such assets are “deceased estate assets” to be managed by your executor and distributed according to your will. Poor estate planning could lead to unintended costs (eg tax, levies and legal fees), stress and frustration for your family, as well as a failure of your wishes. A guide as to typical estate and non-estate assets is below:
- Solely owned personal property eg. car, jewellery and artwork.
- Solely owned financial assets eg. shares, bank accounts.
- Real property either owned solely or as a tenant in common (as opposed to jointly) with someone else.
- Life insurance policies where your executor/estate is the nominated beneficiary.
- Certain other interests eg. partnerships, fixed trusts.
- Assets owned jointly eg. real property, bank accounts, shares.
- Assets held in a discretionary family trust or private company in which you have an interest.
- Superannuation (which is a trust of which you are a member).
- Reversionary pensions/annuities.
- Certain insurance policies where any proceeds are not paid to your executor/estate.
As always, the fine print needs to be reviewed and understood. Partnership agreements and life insurance policy documents, for example, need to be carefully reviewed to confirm exactly what will happen on death. Noting compulsory superannuation has been in place in Australia for over 25 years now, planning in respect of superannuation is important.
Binding death benefit nominations for example, are one of the potential planning tools available to achieve certainty as to how your superannuation death benefits will be distributed (and therefore whether those benefits remain a non-estate asset).
Our estate planning lawyers can assist you with the design and implementation of an estate plan. Working together to establish or update this plan will give you and your family peace of mind.