fbpx

Why Planning and Consideration are Important When Writing a Will

Why Planning for your will is important

The Supreme Court of Western Australia recently handed down its decision in the case Ioppolo & Hesford v Conti. The case illustrates the importance for will makers to take proper legal advice when dealing with their estate and assets that they have an interest in but which they do not legally control. An example of such a situation would be attempting to bequeath entitlements in a self-managed superannuation fund (SMSF) pursuant to a will.

Background

Mrs Conti and her husband established a SMSF in 2002. Mrs Conti and her husband were the only members of the fund and Mrs Conti made a Will on 13 January 2005. Mrs Conti attempted to give her entitlements of her membership of the SMSF to her children. She specifically stated in her Will that she did not want any entitlements to be paid to her husband. By the time of her death on 5 August 2011, Mrs Conti had not made a binding written direction to the trustee of the SMSF, directing where to pay her SMSF entitlements. The sole remaining trustee of the SMSF was her husband. 

Following the death of Mrs Conti, the husband remained the sole trustee of the SMSF. Mr Conti exercised his powers under the terms of the SMSF and a new trustee company was appointed the sole trustee of the SMSF. Mr Conti was the sole shareholder and director of the new trustee company (Augusto Investments Pty Ltd). Augusto Investments Pty Ltd then resolved to pay the whole of Mrs Conti’s death benefit to Mr Conti in accordance with the rules of the SMSF. 

The executors of Mrs Conti’s estate filed proceedings with the Court seeking relief on 4 main points that:

  • Mr Conti was obliged to appoint one of the executors of Mrs Conti’s estate as a trustee of the SMSF;
  • Mr Conti – as sole remaining trustee of the SMSF – did not exercise his discretion in a bone fide manner as required by the SMSF deed
  • The Executor be appointed as a trustee of the SMSF; and
  • The Court should review the discretion exercised by Mr Conti in his capacity as sole remaining trustee of the SMSF.

The Court held that the sole surviving trustee of the SMSF was entitled to ignore the direction contained in the Will. The Trustees not being in anyway bound by the direction in a member’s Will.  The Executors claims were dismissed.

Conclusion

The case illustrates the importance for will makers to consider all aspects of their estate planning when preparing their Will. In particular what assets they have the power to deal with in their Will and to consider what legal steps they need to take to deal with other interests such as those in SMSF’s, trusts, assets within a company, or superannuation funds controlled by retail managers. Will makers should consider seeking professional legal advice.

When writing your will you need to know which assets can be dealt with inside the will. It is a complex area and needs professional advice. By not dealing with the assets correctly in the will your wishes will not be fulfilled. Call Etienne Lawyers today on 1300 882 032 for an expert opinion on your will. www.etiennelaw.com

Related

Fast Answers to 10 Questions About Wills

Executor Checklist

Surprise, You’re the Executor of the Will