The passing of a family member or loved one is an emotional time for those close to the deceased. But matters can be that much more distressing when inheritance and beneficiaries are concerned, particularly if disputes arise over the estate.
This estate planning guide to inheritance and beneficiaries can help you understand what’s involved, to help minimise disputes later on.
What is a beneficiary?
A beneficiary is the person or people named in a Will, to be gifted items, or receive an inheritance, from an estate when someone dies. A beneficiary does not need to be an individual – it can be a person, group of people, or an organisation.
If you’re in the process of estate planning, making a Will and nominating a beneficiary, you’ll need to include some clear identifying information about them, including their full name and address. This will help the Executor of the Will find them when handing over their inheritance.
If a beneficiary predeceases you (dies before you), the common approach is to make a new Will naming a different beneficiary. Otherwise, any items gifted to a deceased beneficiary forms part of the remainder of your estate, known as your residuary estate.
Can I change my beneficiary?
If you wish to make changes to a Will after it has been signed and witnessed, it’s not as simple as crossing a few things out and adding a note in its place. To amend an existing Will, you will have to make an official alteration (called a codicil). This must be formally completed, signed and witnessed in the same way as a Will is executed, outlining the amendments you wish to make to your original Will.
However, it’s often safer to make a new Will altogether, as additional codicil pages may be become misplaced or separated from the original Will, particularly if you are adding multiple codicils as years go by. Additional codicils also leave room for error if they include conflicting bequests or instructions. A new Will immediately revokes all Wills made before it.
When should I update my Will?
Wills and estate plans shouldn’t be a ‘set and forget’ approach, but reviewed every few years or whenever there is a significant change to your personal or financial circumstances. For example, make a new Will, as soon as possible, if there is a change in your relationship: if you marry, divorce, separate, have children, or enter into or end a de facto relationship.
You should also update your Will if you buy or sell a major asset like a house or car. Any items that you’ve listed as specific bequests will need to be updated if they are no longer in your possession.
If you, or anyone else named in your Will changes their name or contact details, you should update your Will. Ensuring information is current and correct makes it easier for your executor to carry out your wishes.
How to disinherit relatives (by accident and intentionally)
If you want to disinherit a close relative or dependant out of your Will, such as a child or spouse, it’s not as easy as simply leaving their name out. Dependants who are left out of a Will, or who aren’t left as much as they expect, are able to apply for a proportion of your estate for their maintenance.
To discourage your Will being challenged, you should include a supplementary statement to explain that you are not providing for a dependant or close relative, for example: “I leave my son/daughter/spouse nothing in this Will”. Acknowledging you have intentionally left a close relative or dependent out of your Will won’t prevent that person from challenging the Will, but it means they can’t argue that they have simply been overlooked or forgotten.
Can an Executor change a beneficiary?
The Executor doesn't have authority to make any changes to a deceased person's Will, including changing a beneficiary. However, a Will can be contested if someone feels they have been unfairly left out as a beneficiary.
Can a Will be contested?
Yes, a Will can be contested if someone feels they were unfairly left out of a Will or not adequately provided for. The validity of a Will can also be challenged if there is a good reason. This can be based upon a number of factors including if the situation is grossly unfair; financial dependence; undue influence or a lack of mental capacity.
Regular reviews ensure a Will remains current and that the beneficiaries and assets remain correct. A review your Will at least every five years is the common approach, to ensure that all details are current and correct.
To learn more, visit the Bare Law website or chat with our estate team for a free consultation, on (03) 9917 3388.
This article is not legal advice. You should speak with your solicitor or accountant for specific advice on your personal or financial situation.