When a person makes a will detailing how they want their assets to be distributed after they die, and by whom, they often think that’s the end of the matter.
In fact, this important legal document should be updated whenever there is a significant change in your life circumstances, such as marriage or divorce, entering or exiting a de facto relationship, when children or grandchildren are born, when an executor or beneficiary dies, and when your financial situation substantially changes.
That last point is particularly relevant if you either sell or buy a property after you made the original will, given this is the most significant asset most people will hold in their lifetime. By updating your will to reflect the changed situation with this important financial asset, you provide clarity and certainty to your beneficiaries should you suddenly become incapacitated or die.
A key question in terms of estate planning, including making or updating a will, is how you intend to hold the property – whether you are a joint tenant with your partner or tenants in common. This distinction is important and can affect what happens to the property if you suddenly pass away.
Joint tenants versus tenants in common
Perhaps you bought a property with a spouse or de facto partner and owned it as joint tenants, essentially meaning you are co-owners but whom the law views as one owner. Most married couples hold property like this. But if the relationship later ends, and then you die, your share of the property will automatically pass to your former partner regardless of what it says in your will (also known as the ‘right of survivorship’).
For this reason, people are often advised to sever any joint tenancy and instead hold the property as ‘tenants in common’, where a percentage interest in the property is specified for each party. By doing so, your share of the property can be included in your estate and passed to a beneficiary nominated in your will, rather than an ex-partner through survivorship.
The process of changing a joint tenancy to tenants in common, or changing each party’s percentage interest in the property, is a fairly easy one through the Titles Office and does not require the consent of your former spouse. And while severing joint tenancy does not attract stamp duty, change of ownership of property can have taxation implications which should be considered as part of updating your estate plan with a legal expert in this area.
When buying a property, discussing whether it will be held as joint tenants or tenants in common is an important issue to decide and should be reflected in your will to prevent any confusion or uncertainty should you die.
Equally, if you decide to sell property, put it in trust or into a partnership, or do anything else which changes its character in terms of your ownership, this change should be reflected in an update to your will so that you are not bequeathing something to a beneficiary that in essence no longer exists.
What needs to be done to update a will?
Estate planning experts advise that you should re-assess and potentially revise your will every two or three years. Any changes need to be properly documented and witnessed so that your will remains valid.
At Big Law, we have years of experience advising people on making a will as part of estate planning, as well as guiding them through the process of updating the will when appropriate. Contact us today on 1800 431 592 to ensure your will accurately reflects your wishes, is properly drafted and legally executed.