Beyond the Basic Will: When You Need a More Complex Estate Plan

Beyond the Basic Will: When You Need a More Complex Estate Plan

A Will is one of the most important documents you will ever sign. For many Australians, a simple Will, leaving everything outright to a spouse or dividing it equally among the children does the job adequately. It provides clarity and avoids the uncertainty of dying intestate (without a Will).

However, life is rarely simple. As your family structure, assets, and circumstances become more complex, your basic Will may no longer be sufficient. Relying on a standard document in these situations can create legal and financial challenges down the track, especially for your family.

This article outlines some common scenarios where you might consider looking beyond a basic Will to a more detailed, robust estate plan. The information is general only and does not constitute legal advice. For guidance specific to your personal circumstances, please consult a qualified legal professional.

What a Basic Will Usually Covers (and What It Doesn’t)

A standard or basic Will generally covers:

• Executors: Naming the person or people responsible for administering your estate and carrying out your wishes.
• Guardians: Naming who will care for any minor children.
• Beneficiaries: Stating who receives your assets.

While this may be sufficient for many Australians, a basic Will can sometimes create problems. Complex family structures and evolving financial and other circumstances can mean that a one‑size‑fits‑all approach may not fully support your intentions or protect your beneficiaries.

A Will that does not address potential complications can lead to family disputes, delays in estate administration, and unintended asset distributions.

Key Situations Where a Simple Will May Not Be Enough

1. You Have a Blended Family

Blended families , where one or both partners have children from a previous relationship, can significantly complicate estate planning.

• The risk: Leaving everything to your current spouse in the hope they will later “do the right thing” by your children provides no legal protection. Your partner can legally change their own Will after your death and exclude your children entirely.
• The solution: A lawyer can integrate strategies such as:
• Life interests: Allowing your partner to live in your home or access estate income for life, with assets later passing to your children.
• Testamentary trusts: Providing longer-term control, asset protection, and flexibility in distributing inheritances, especially in blended families.

These structures help balance fairness between a surviving partner and children from previous relationships.

2. You Want to Protect Assets from Creditors or Divorce

If you leave assets outright to a beneficiary, the assets become that person’s property. This means their inheritance can be exposed if they face bankruptcy or family law proceedings.

• The risk: If your child receives a lump sum inheritance and then faces bankruptcy or a divorce settlement, that money may be included in the assets available to be split with creditors or a former partner.
• The solution: A testamentary trust can hold assets on behalf of the beneficiary, helping to protect them from financial risks due to bankruptcy or relationship breakdowns.

3. Your Beneficiaries Have Special Needs or Lack Financial Maturity

An outright gift is not always in the best interests of the recipient.

• Risks for minors or young adults: A large inheritance can be quickly depleted without experience or guidance.
• Risks for beneficiaries with disabilities: Direct inheritance may affect their eligibility for government benefits.
• The solution: Your Will can include a trust to manage funds over time or establish a Special Disability Trust to support a person with a severe disability.

4. You Own a Business or Have Complex Investments

If your assets include a business, partnership interest, or complex investment structure, a basic Will may not provide sufficient direction.

• The risk: Without a clear succession plan, transferring the ownership or control of a business interest can cause delays, financial loss, or tax issues.
• The solution: Your estate plan should be complemented with a separate business succession plan (potentially incorporating a buy/sell agreement) prepared by your lawyer and accountant. This ensures the smooth ownership transition and protects the business’s value.

The Power of the Testamentary Trust

A testamentary trust is created under your Will and takes effect only after your death. The trust, rather than the individual beneficiary, holds the assets. This structure can offer several benefits:

• Asset protection: Trusts can help shield inheritances from financial claims, bankruptcy, and relationship breakdowns.
• Tax flexibility: Trusts can allow income to be distributed among beneficiaries in a tax-effective way – these matters should be discussed with your accountant.
• Control: Trusts enable you to appoint a trustee to manage funds responsibly and in accordance with your wishes.

Key Takeaways

Drafting a Will is a vital step in protecting your family and assets. However, for many people, a basic Will is just the beginning.

You may need a more detailed estate plan if:

• You have children from a previous relationship.
• You have minor or vulnerable beneficiaries.
• You are concerned about your beneficiaries’ financial exposure due to divorce or debt.
• You own a business or hold complex investments.

For advice on creating or updating your Will, please call 02 9790 7000 or email [email protected].