Unintended Beneficiaries Are Pocketing Millions

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By James Kelly, Elder Law specialist from Owen Hodge Lawyers


Millions of dollars are being pocketed by unintended beneficiaries as a direct result of people either not having a Will or not updating an existing one when personal circumstances change.


The NSW Trustee and Guardian highlighted current studies indicate 45 per cent of Australians do not have a valid Will. In the absence of a Will there is no guarantee that preferred beneficiaries will receive the deceased person’s assets.  In many instances probable non preferred beneficiaries are the ones who are benefiting.


In recent years three trends have emerged which have impacted on Wills. Firstly the divorce rate and separation is now higher than it was a decade or two ago resulting in more blended family relationships. In several instances there are remarriages, often more than one, as well as more children outside the first marriage.  Such situations highlight the need for more complex Will structures.


Secondly asset bases are now more complicated. A couple of decades back there was often just a house left behind whereas today there is often a super fund, life insurance and several other assets that need to be taken into consideration when preparing a Will.


Thirdly as a consequence of the important influence of financial planners, there is a greater awareness in the community of the significance of asset planning.


There are several factors that impact on Wills that need to be taken into consideration. These include the personalities of beneficiaries, asset and debt bases, provision for those with disabilities, and how solid relationships are within the family. It is also important to consider that if the beneficiary of a Will is under the age of 18, consideration needs to be given as to whether a Testamentary Trust should be established to help reduce taxes. Wills are not as straight forward as many people think.


The law permits people to challenge Wills and this has become more prevalent with an increase in the number of blended families. Unfortunately a significant proportion of the population under the age of 50 do not have a Will and the reality is that accidents and unexpected health issues can, and do, occur at any age. People need to make certain they have the security afforded by a Will to ensure they are covered in the event of changed circumstances.  These may relate to an imminent marriage or divorce or maybe a new addition to the family.  Wills need to be updated to reflect such changes; thereby ensuring the rightful beneficiaries receive their full estate entitlements.


Recently a client was undergoing invasive treatment for breast cancer. During this time her husband died suddenly. He left behind a credit card debt of $60,000 and a life insurance policy worth $600,000 and importantly a binding death benefit nomination which nominated his wife as the beneficiary of his entitlements. Consequently she received the full entitlements of the super and insurance policy which were not included in his estate because he did not have a Will.


If a person dies without a Will, matters are likely to become quite complicated. It generally works like a spider’s web.  The closer you are to the centre the more likely you are to obtain something, however that is not always the case. The reality is Wills provide a fair degree of certainty.


Consider the following when preparing a Will:


1) Confirm your Will is up-to-date. For older people this needs to occur whilst you are still cognisant of your surroundings and affairs.


2) Ensure you include all your assets including super. This is often overlooked.


3) Nominate a beneficiary as part of your life insurance policy. Nomination forms need to be completed as a matter of priority.


4) Review the Will when your personal situation changes.  For example when a partner becomes incapacitated, a marriage takes place or a new family member arrives.

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