Knowledge Bank
What Assets Are Not Covered By A Will?
Quick Answer
A Will generally deals with assets you own personally and that form part of your estate after you pass.
Some important assets may follow other arrangements. These can include:
- superannuation;
- property owned as Joint Tenants;
- family trust assets;
- company-owned assets; and
- some life-insurance benefits.
The important question is not simply whether you have a Will.
It is whether each of your important assets will follow the pathway you intended.
Introduction
Preparing a Will is an important part of estate planning, but it does not necessarily control every asset connected with you.
Some assets form part of your estate and can be dealt with through your Will.
Others may pass according to:
- how they are owned;
- a beneficiary nomination;
- a trust deed;
- a company structure; or
- the terms of a policy.
Understanding those different pathways helps ensure that each part of your estate plan continues towards the same intended outcome.
What Assets Does A Will Control?
A Will generally deals with assets you own personally when you pass.
These may include:
- bank accounts in your own name;
- shares and investments held personally;
- vehicles and personal belongings;
- real estate owned solely by you; and
- your share of property owned as a Tenant in Common.
These assets can form part of your estate and be distributed under your Will.
Any arrangements contained in your Will, including a Testamentary Trust, can generally operate only on assets that actually pass through your estate.
Why Ownership Matters
The way an asset is owned often determines whether your Will can deal with it.
Two people may have similar assets and similar Wills, but receive very different outcomes because those assets are held in different ways.
Practical Point
When reviewing an important asset, do not ask only:
“What does my Will say?”
Also ask:
“Who or what owns this asset, and what arrangement determines where it goes?”
That second question often reveals whether the asset will actually follow the plan recorded in the Will.
Superannuation
Superannuation does not automatically form part of your estate.
Your super fund pays the benefit under its rules, superannuation law and any valid beneficiary nomination.
The benefit may be paid:
- directly to an eligible beneficiary; or
- to your estate, where it can then be dealt with under your Will.
This means your superannuation arrangements should be considered alongside your Will so that both support the same intended outcome.
The detailed rules are explained in the dedicated superannuation articles.
Property Owned With Someone Else
Whether jointly owned property passes through your Will depends on how it is owned.
Joint Tenants
When property is owned as Joint Tenants, the interest of the person who passes will usually move to the surviving owner.
It does not usually form part of the estate or pass under the Will.
Tenants In Common
When property is owned as Tenants in Common, each owner has a separate share.
That share can form part of the owner’s estate and may be dealt with through their Will.
The distinction can be particularly important for blended families, second relationships and anyone wanting their share of a property to pass to particular beneficiaries.
Family Trust Assets
Assets held in a family trust do not belong to you personally simply because you established the trust, control it or benefit from it.
They are held by the Trustee under the trust arrangements.
Your Will may deal with assets and interests you own personally, but it does not simply distribute the trust assets as though they were your own.
The trust deed and its succession arrangements determine who controls the trust and how its assets continue to be managed.
This is why family trust succession needs to be considered separately from the Will, while still supporting the same wider plan.
Company-Owned Assets And Business Interests
A company is separate from the people who own its shares.
If the company owns property, equipment, investments or intellectual property, those assets belong to the company.
Your Will may deal with shares you own personally, but it does not directly distribute the assets owned by the company.
Business owners may also need arrangements dealing with:
- who controls the company;
- what happens to personally owned shares; and
- how the business can continue after they pass.
The objective is to make sure the business arrangements and the Will lead towards the same intended outcome.
Life Insurance
Life-insurance proceeds may be paid to your estate or directly to another person, depending on:
- who owns the policy;
- any beneficiary nomination; and
- the policy terms.
The policy should therefore be checked rather than assuming that the Will controls the payment.
One Person, Different Asset Pathways
Consider someone who has:
- a personal savings account;
- a home owned jointly with their spouse;
- superannuation;
- shares in a family company;
- an investment property held through a family trust; and
- a life-insurance policy naming their spouse.
The personal savings account and personally owned company shares may pass through the estate under the Will.
The jointly owned home may pass to the surviving owner.
The superannuation may be paid under the fund rules and any valid nomination.
The investment property remains an asset of the family trust.
The life-insurance proceeds may be paid under the beneficiary arrangement in the policy.
The assets follow different pathways, but the planning objective remains the same:
Each arrangement should support the outcome the person intended.
Common Mistake
“My Will controls everything connected with me.”
A Will generally controls assets that form part of your estate.
Other assets may pass through ownership arrangements, beneficiary nominations, trust arrangements, company structures or policy terms.
Preparing a Will without checking those other pathways may leave parts of the estate plan moving in different directions.
Frequently Asked Questions
Does My Will Control My Superannuation?
Not automatically.
Your superannuation may be paid directly to an eligible beneficiary or to your estate, depending on the fund rules and any valid nomination.
Does My Will Control Jointly Owned Property?
It depends on how the property is owned.
Property owned as Joint Tenants will usually pass to the surviving owner. A share owned as a Tenant in Common can usually form part of the estate and be dealt with under the Will.
Does My Will Control Family Trust Assets?
Usually not directly.
The Trustee holds the assets under the trust arrangements. The trust deed and succession arrangements determine how control of the trust continues.
Does My Will Control Company-Owned Assets?
No.
The company owns its assets. Your Will may deal with shares you own personally, but it does not directly distribute property or investments owned by the company.
Final Thoughts
A Will remains an essential part of estate planning, but it can only deal with assets that fall within its reach.
Other assets may pass through joint ownership, superannuation arrangements, trusts, companies or insurance policies.
Those different pathways do not need to produce different intentions.
A well-designed estate plan identifies how each important asset will pass and makes sure the separate arrangements continue towards the same intended outcome.