Ensure your assets go to the people you love

Author: John Loughnan

Publish Date: March 18, 2009

Most people want to decide who will inherit their estate when they die. Usually a named beneficiary must survive the Will maker to qualify; an exception relates to lineal descent (the Will maker’s direct children and grandchildren).

Section 41 of the relatively new Succession Act removes what was previously considered, by some, to be a trap. Under the previous legislation, if the Will maker had a child who died before him or her, the existence of a grandchild could trigger the saving of the gift intended for the child. The gift then went to the pre-deceased child’s estate, meaning the gift would not necessarily have been received by the Will maker’s grandchild. This could be overcome by a properly worded Will, to ensure the Will maker’s wishes were met.

Consider this situation: Margaret’s son Chris died before her. Under Margaret’s Will, Chris was given half of her estate. Under Chris’ Will, his entire estate was left to his second wife, who is not the mother of Margaret’s grandchild. Under the old law, the gift for Chris, under Margaret’s Will, would be received by the second wife and not Margaret’s grandchild. That may not have been Margaret’s preference.

Section 41 of the new Act removes that trap and provides that Chris’ intended share goes to Margaret’s grandchild (or grandchildren) unless the Will expressly states otherwise. A carefully drafted Will prevails over the legislative scheme.

It is important that the question of substitution of grandchildren be addressed, included or excluded. All scenarios should be canvassed when considering the provisions of the Will, so that the Will maker’s preferences, wishes or directions in "what if" scenarios are met, with the Will prevailing over what the legislation might otherwise prescribe. If the Will maker is happy to go along with what the law prescribes, in the absence of an overriding provision in the Will, it is better to spell it out in the Will so that there is no misunderstanding or confusion by or for the executors and beneficiaries.

For further information please contact John Loughnan, Skye Morrison or Kathryn Halyburton on 02 4907 6300.

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