Often when I see a client to discuss a new will they have a very clear picture in their mind about specific assets they own and who they will give those items to.
What people fail to sometimes realise is that while they believe they own particular property and they are able to dispose of it as they choose, on further discussion it turns out they do not own the property the way they think they own it and in some circumstances actually are not considered the owner at all. It can come as quite a shock.
There are a number of ways that people own property:
- Solely in their own name
- Through a Trust
- As part of a Company
- In a partnership
- Jointly or with a number of people
Any misunderstandings around ownership can create significant issues for estate planning and after death because the person to receive a gift ultimately misses out. Let’s look at each of these examples in turn.
Trust property is not owned by an individual and cannot be gifted in your Will, only those that are listed as beneficiaries are entitled to property owned by a Trust.
This is also the case for property owned by a company. A company is separate legal identity and owns property in its own right. The only property that you can give away in connection to a Company through a Will is individual shares, provided they are owned in your sole name.
In regard to property that is owned by more than one person (especially in relation to real estate) you need to be particularly careful about the characterisation of the ownership. Real estate that is owned jointly is not considered property which forms part of your Estate and the property will automatically be transferred to the other joint owner on your death. If, however, the property is owned as tenants in common, you are able to gift your share in your Will.
For any person estate planning is important but for those who have more complicated ownership structures it is essential to make sure that you have sought specific advice regarding your options. You need to know what you own, what you don’t own and what can be put in place to ensure that your loved ones are left the gifts and legacies that you choose to leave them. The Will & Powers of Attorney team at OFRM will be happy to assist you. Call 03 5445 1000 for an appointment.