Wills and Probate Terms
A common law doctrine that applies when assets of the deceased are less than the debts to the creditors and those debts must be paid first. In order to pay those debts the gifts set out in the deceased’s will are reduced proportionately and in a certain order depending on the type of bequest. The gifts are said to abate.
A gift adeems when it is no longer available for distribution. For example, a testator’s main residence bequeathed to a child but has subsequently been sold to pay for an aged care facility; or shares in a company that has been taken over by another company. These gifts adeem or fail. Where specific gifts are bequeathed the common law says that the will maker knew that if the gift were to change the beneficiary would receive nothing. Ademption of gifts is often an unfair result that leads to Family Provisions applications to ensure the person is adequately provided for.
A person appointed by the Court, by an official document called Letters of Administration, to administer a deceased estate that has no executor . This may be because there is no will, the will did not appoint an executor, or a named executor is unwilling or unable to act.
A deceased’s assets are anything they own at their date of death. But not every asset can be disposed of by Will. Generally, assets that can be disposed of by Will include anything the deceased has sole ownership over, such as; real or personal property, business ownership, digital assets and intellectual property. Assets which cannot be disposed of by Will are things that the deceased does not have legal ownership over or has joint ownership with another party. Examples include discretionary/family trusts, company assets, life insurance, superannuation and property owned jointly with others.
To witness the wills execution by seeing the testator sign or acknowledge the will.
Is a person or thing, such as a charity, named in a will who will benefit from the deceased’s estate.
This is a special Court Order for when beneficiaries cannot be found that guides the Executors/Administrators on who should benefit in their absence.
These are the gifts outlined in the deceased’s will. There are four main types;
1. Fractional: a certain percentage of the estate given to a person, charity or organization.
2. Pecuniary: A specific gift such as a sum of money, stocks, property or shares.
3. Residual: The remainder of the estate, if any, after all liabilities have been paid and gifts given.
4. Whole Estate: The testator’s entire estate is given to one beneficiary
Binding Death Benefit Nomination (BDBN)
A Binding Death Benefit Nomination (BDBN) specifies who will receive a deceased individual’s super, or ‘death benefit’, in the event of their passing. A valid BDBN, either lapsing or non-lapsing, can be made at any time.
Capital Gains Tax (CGT)
A tax levied on the proceeds of sale of property. Generally if you inherit a dwelling or other property capital gains tax doesn’t apply. However, it may apply if you later sell the asset unless an exemption applies. For example, if you inherit the main residence, there can be an exemption either in whole or in part.
Unless the asset is fully exempt you will need to know the cost base to work out the capital gains when you sell the asset. The cost base might be the value of the asset when the deceased acquired it or when they died depending on the circumstances.
CGT is also a consideration when writing your will if there is property likely not to be exempted from CGT. Normally the beneficiary would be liable to pay CGT when they sell the asset which can lead to some unfair results. For example, if you had a main residence and a holiday home of equal value and gave the main residence to one beneficiary and the holiday home to the other beneficiary intending them to receive equal shares of the estate, then on the subsequent sale of the holiday home that beneficiary may, in effect, have received substantially less than what you intended.
CGT also applies to executors and administrators who sell the property as part of winding up the estate.
If there is any doubt as to possible the CGT implications you should consult your lawyer or accountant for advice.
A warning placed on the Court file by someone seeking to challenge the validity of a will and which prevents the Court from granting Probate or Administration.
Personal property, as distinct from real estate. Money, securities and property used for business purposes are excluded from the definition of chattels.
A change or addition to the will. The codicil must be executed in accordance with the statutory provisions or may not be considered valid. All codicils must accompany the will when making a probate application.
These are conditions placed in a will that must occur before an inheritance can be received. Examples include marrying outside of the family religion, giving up smoking, attending the funeral and so on. Conditions will not be upheld where they are uncertain or impossible to satisfy or where they are contrary to public policy. See the case of Hickin v Carroll & Ors (No 2)  NSWSC 1059.
The Court may imply a trust where it is claimed the testator made promises to a beneficiary but failed to make good on the promise and the beneficiary acted to their detriment in believing the promise would come to fruition. The Court then determines that the owner of the assets holds it on trust for the beneficiary. This situation often happens in family owned farms where the children work on the family farm on the promise by the testator that they would one day inherit the farm but this does not eventuate.
This is a flexible order of the Court where the Court grants an applicant a portable life interest in particular items of estate property. It could take the form of a life interest in the family home or a portion of the proceeds of sale of the home to be used for an aged care facility then later returned to the ultimate beneficiaries.
Deed of Family Arrangement
An agreement between all beneficiaries and potential claimants to distribute the assets of the estate in a manner different to the will. This often occurs in settling potential Family Provisions Claims.
Another word for bequeath
Elder Financial Abuse
“any illegal or immoral exploitation or use of the funds or resources of the older person”. For example: the asking for loans/loan guarantees which are never paid back, forgery of signatures, misuse of enduring powers of attorney, using an older person’s property to obtain a mortgage or finance, misrepresentation, emotional or mental manipulation.
This is all the property owned by a person at the time of their death and includes personal property such as cars, clothes, books etc and real property eg land and houses.
Estate in Fee Simple
This is a legal term and refers to the absolute ownership of land so that the owner may do as they please with the land.
A person appointed by document to make lifestyle, health and medical decisions on the behalf of an individual who no longer has the mental capacity to make these decisions.
Enduring Power of Attorney
The Enduring Power of Attorney is a legal document appointing a person to make legal decisions, including financial decisions on the behalf of an individual who is no longer capable of making these decisions.
This is a legal principle that prevents a person from acting in a way that is inconsistent with their prior conduct.
A person appointed by the will to administer the estate. A will may appoint more than one executor. Executor – male; Executrix – female.
An official extract of the grant issued with the Court’s seal. It is often required if the original grant is lost or a sealed copy is needed to deal with foreign assets.
Family Provisions Claim
This is a claim made by a person who believes they were not properly provided for under the will. In general the person must firstly establish they are an eligible person, secondly that the deceased had a moral duty to provide for their proper maintenance and support (e.g. that they were maintained by them at some point in time), thirdly they need to prove that the Will, or under the rules of intestacy, fails to make adequate provision for the proper maintenance and support.
An obligation on a person to act in the best interests of another party. For example, an executor has the fiduciary duty to always act in the best interest of the Estate, a trustee has a fiduciary duty to act in the best interest of the trust’s beneficiaries and a solicitor has a fiduciary duty to act in the best interest of a client.
A guardian is a person who you appoint in your Will to take legal responsibility for any dependent children you may have. The guardian will have control over important decisions in the children’s lives such as their care, residence and education but may not necessarily have the daily “care” for the children.
Grant of Letters of administration
A document issued by the Court where the deceased has not left a will.
Grant of probate
A document issued by the Court when there is a will. A grant of probate certifies that the will is the last and valid will of the deceased person and confirms the authority of the executor named in the will to administer the estate.
Grant of representation
A grant, by the Supreme Court, of probate or of letters of administration.
A document written by the testator purporting to be a will and is not witnessed. A suicide note is an example.
Administration of estate assets without a grant of representation.
This is a will that does not comply with the formal requirements for making a valid will. The formal legislative requirements are
· The document is written and signed by the testator
· Signed by two or more witnesses to the testator’s signature
· Created with the intention it would revoke any former will, and
· In the event of death the document was intended to express their wishes.
An informal will could be anything from a handwritten note, email, text message to a video recording. In some cases the document can be presented to the Court and accepted as a will if it can be shown that it is the clear testamentary intentions of the deceased and that the deceased believed it would function as their last will.
The deceased had debts in excess of the value of the Estate. Once the funeral, testamentary and administrative expenses are taken care of, then the creditors are repaid and the estate is finalised. In these cases there is nothing left for the potential beneficiaries.
Occurs when a person dies without having made a valid will, or where their will fails to effectively dispose of all of their property. Intestacy can be partial, where only some of the deceased person’s property is effectively disposed of by will, or total, where none of the deceased person’s property is effectively disposed of by will.
Inter vivos gifts
Gift(s)/property (real or otherwise) given during the life-time of the testator. If an item of property has been given to someone under the Will, but was already given to another person “inter vivos”, or before death, then the ademption rule applies and that gift no longer forms part of the testator’s estate.
A person’s children, grandchildren, great-grandchildren and other direct descendants down this ancestry line.
Common ownership of property when all co-owners (or co-tenants) together own the whole piece of property, each having an undivided share. Common examples are houses and bank accounts in joint names of spouses. When one person dies the property automatically reverts to survivor and is known as the “right of survivorship”. Jointly owned property is not and cannot be given under a will.
A legacy, or a bequest, is a specific gift of money or personal property. A gift of a specific amount of money is known as a pecuniary legacy, a gift of a specified item is a specific legacy and a gift of something that they do not actually own, such as shares, is a general legacy.
An old fashioned word for a person who receives a legacy or gift in the will.
Letters of Administration
In the case of intestacy the Court will appoint administrators under a grant of Letters of Administration to do essentially the same job as an Executor appointed under a Grant of Probate.
Next of kin
A person’s closest blood relatives. A deceased person’s estate is distributed to their surviving partner(s) and next of kin on intestacy.
A legal principle relied on by the Court when considering what the wise and just, rather than fond and foolish testator should have done in the circumstances. It is not to be understood as a legal right but as a moral value.
Movable and immovable property
Generally houses and land are considered immovable whereas everything else in considered moveable. This is important when it comes to property located in different States or overseas as immovable property will be governed by the jurisdiction where it is located whereas immovable property can be dealt with in the jurisdiction where the Grant of Probate is made.
This is a NSW rule only but can have wider ramifications. Basically if the deceased entered into a “relevant property transaction” in the 3 years prior to death for the purposes of avoiding a Family Provisions Claim the Court can order that property be returned to the estate for distribution to the beneficiaries. Even if the deceased lived and died in a different State any property in NSW is subject to the rule and may be declared notional Estate.
A photocopy of the original grant, endorsed by the Court.
The common term that refers to either an executor appointed by a will, or an administrator appointed by the Supreme Court, to administer the deceased person’s estate.
Where someone has died before the testator. It is important to appoint substitute executors and beneficiaries in order to avoid the problems of no executors and failed gifts.
The process by which the Court approves that the will is valid and that the executor(s) can act on the will.
Probate Online Advertising System
The Supreme Court’s online system for managing the legal requirement that a person applying for probate or administration must publish their intention to do so, to give other interested parties a chance to come forward.
Land and interests in land, otherwise known as real estate. It can also include houses, crops and mineral rights.
Registrar of Probates
An officer of the Supreme Court appointed to exercise the power of the Court in making grants of representation.
The remainder of the estate after debts and liabilities are paid, and specific gifts and legacies are distributed.
Small estates service
A service available from the Victorian Probate Office if a person dies leaving property and/or assets valued at less than a set amount. The person entitled to apply for probate or administration may ask the Probate Office to prepare and file the application, for a fee.
A will authorised by the Court for a person who is alive but lacks the testamentary capacity required to make a valid will for themselves.
Superannuation does not automatically form part of a testator’s estate. In the case of Stock (as Executor of the Will of Mandie, Deceased) v N.M. Superannuation Proprietary Limited  FCA 612, the Federal Court confirmed that because superannuation does not form part of a testator’s estate, it is not subject to the terms of their will; and, if there is no binding death nomination in place at the time of a testator’s death, the trustee of the fund has the discretion to decide who benefits from the deceased’s super. The trustee’s decision must be ‘fair and reasonable’.
Superannuation can form part of the residuary of the Estate if the trustee exercises its discretion in favour of the Estate, or the Estate is the pre-determined recipient under a binding nomination, or by operation of the trust deed.
Therefore, if the testator makes a Binding Death Nomination nominating the executor in as the beneficiary of the superannuation then, in the will, they may give the asset as they please. If no specific devise of the superannuation asset is made in the will the asset will fall to residue.
Superannuation Nominations: Binding and non-binding
A binding nomination, is binding and the super fund must follow the super fund holder’s instructions. The superannuation trustee does not have any discretion as to where the payment is to go. A binding nomination has no expiry date and does not need renewing
Non-binding nomination: The super fund is not forced to follow the super fund holder’s nomination but will take the nomination into consideration when making the distribution. When determining who to distribute the superannuation monies to, aside from the non-binding nomination, the superannuation trustee takes into consideration; the number of dependents, the relationship between the member and each of the dependent, the level of dependency between the member and each dependent, and anything outlined in the super fund holder’s Will. A non-binding nomination must be properly document and renewed every 3 years for it to remain valid
A right in relation to property held by two or more people as joint tenants. Where a co-owner (or co-tenant) dies, their share in the property passes to the surviving co-owner(s). Importantly, it cannot be given by will. See also joint tenancy.
Tenancy in common
A type of co-ownership where multiple parties own separate and distinct interests, or shares, in the same piece of property. The size of the share can be any amount as long as all shares equal 100%. The share owned by a tenant in common forms part of their estate and can be given to whomever the testator chooses.
The mental capacity required to make a valid will.
To have testamentary capacity, a person must be of sound mind, memory and understanding, and must understand the nature and effect of making a will.
All adults over the age of 18 years are presumed to have capacity. Capacity is challenged where the testator has dementia, insanity, is under the influence of a substance or is otherwise of unsound mind.
A testamentary trust is a trust created by your Will. A trust can be beneficial if you have significant assets, young children or other beneficiaries who need protection.
A trust can:
This is an entity appointed to hold property on trust for another. The trustee can be a person or a company. Generally in a will the trustee is also the executor but may not be. The most common form of trust arising under a will is where there are minor children and the testator wishes the gifts to be held in trust until the minor children reach a certain age. The trustee is usually given certain powers to enable them to make proper decisions for the interest of the children such as the power to sell or invest and distribute income or capital for the benefit of the children.
A Will is a written document (which can be revoked) that declares the will writer’s wishes to be carried out after death. It declares the executors and trustees who will control, manage and distribute the assets of your estate.
A will can also direct what is to happen with your body upon death, any specific funeral arrangements and choose who should perform these tasks.