Insights from Property, Straight Up with accredited wills and estates specialist Tracy Collins of Collins Lawyers and Consultants

Behind every property transaction there is a story, a big decision and usually more emotion than people expect. Most of the conversations on Property, Straight Up are about building a property position: buying well, selling well, financing sensibly and reading the market. This episode turned to the part of the journey that tends to get pushed to the bottom of the list. What happens to everything you have built when you are no longer here to manage it?

Host Mel Dennis sat down with Tracy Collins of Collins Lawyers and Consultants, a Law Institute of Victoria Accredited Specialist in wills and estates law. Tracy works across the full arc of estate matters, from planning and trust deed reviews before death, through estate administration after it, and into litigation and VCAT disputes over powers of attorney when things go wrong. Her practice gives her a clear view of the pitfalls that trip up property owners again and again, and the conversation is a practical guide to avoiding them.

 

Half of Australians have no will at all

Tracy’s estimate is that only around half of Australians have a will. The figure climbs to roughly 88 per cent among older Australians, who are typically thinking about retirement and how their affairs will be handled. But that still leaves a large number of property owners, including many with mortgages, investments and families, with nothing in place.

The reasons people give are familiar. Mel described a couple with no children who told her they did not need a will because there was nobody to leave things to. Her response was to ask what would happen when one of them died before the other, which is by far the most likely outcome. Without a will, the surviving partner is left to prove everything from scratch while grieving. The couple had simply never thought about it.

Tracy explained that dying without a will means dying intestate, and every state and territory has intestacy legislation setting out a hierarchy of who inherits. If you have a spouse, it is likely they will receive everything. But the absence of a will means there is no document naming an executor or setting out where the estate should go. The surviving spouse is left doing significant administration and proving their entitlement at the worst possible time. A will does not cost a great deal to prepare, and it removes an enormous amount of that stress.

The will you made years ago may no longer be valid

One of the most surprising points in the conversation concerned people who do have a will but have not looked at it in years. Tracy sees a lot of what she calls sit and forget clients, and many are unaware of a critical rule in the Victorian Wills Act: marriage revokes a will, subject to certain exceptions. A will prepared while single, followed by a marriage that does not satisfy those exceptions, is no longer valid. Most people in that position have no idea their will has been revoked.

Even where a will remains technically valid, it may no longer reflect the person’s circumstances. Separation, divorce, new children, new relationships and new property all change what a sensible will should say. Tracy’s rule of thumb is that a will should be reviewed every three to five years, and always after a major life event. Mel’s suggestion was to treat it like regrouting the shower: if you are doing one every few years, do the other at the same time.

The DIY will trap

Will kits from the post office or newsagent still get used, and Tracy was candid about their limits. In very simple situations they can work. Once there is any complexity, and blended families, trusts and multiple properties all count as complexity, they tend not to operate the way people expect.

A central problem is that most people do not understand that not all their assets form part of their estate. A will kit does not walk you through the foundations: what you own, what you owe, how each asset is held and where it will actually go. People assume everything flows through the will when a significant portion may sit outside it entirely.

Tracy described a current matter that shows how easily things unravel. A client prepared a will kit will many years ago, then later prepared a second one. The second document stated that it revoked the earlier will, but then went on to say that, in addition to the previous will, certain other things should happen. In effect, it revoked the first will and revived it in the same breath. Because the two documents make very different gifts, the matter now has to go to court to sort out what was intended. The irony, as Mel observed, is that the person thought they were making things easier for their family.

Joint tenants or tenants in common: why the choice matters

This is the section every buyer should read twice. When you purchase property with another person, whether a spouse, a sibling or business partners, the way you are registered on title determines what happens to that property when you die. Tracy explained the two options and why the distinction is so important.

If you are registered as joint proprietors, more commonly called joint tenants, the property passes automatically to the surviving owner on your death. Your will has no bearing on it. There is no scenario in which any intention you express in a will about that property will take effect, because the title itself has already determined the outcome.

If instead you are registered as tenants in common, whether in equal halves with a partner or in thirds with two other people, your share of the property is dealt with in accordance with your will. It does not pass automatically to the other owners. Tenancy in common is the only way to retain control over what happens to your portion.

Which option is right depends on your circumstances. A couple who share all their children and are comfortable with the survivor inheriting everything may sensibly choose joint tenancy. But Tracy’s caution was that circumstances change, and nobody knows who will die first. The practical message for buyers is that this decision should be made deliberately, with advice, at the time the contract is signed and before settlement. Once the transfer has been registered, changing the manner of holding is possible but it will cost you.

Mel noted that many buyers never give their conveyancer any instruction on this point at all. That silence means the decision is effectively being made by default, which is rarely a good way to determine what happens to your largest asset.

You may not own your property the way you think you do

Tracy made a striking claim: around half the time, when a client tells her a property is held jointly, a title search reveals that it is not. Her practice routinely searches the titles of every property a client owns rather than relying on the client’s recollection, because memory and paperwork so often diverge.

She gave the example of a client whose wife had died and who came in to update his own will. He was confident that everything had been held jointly and would pass to him automatically, so he saw no need to deal with his wife’s estate. A title search showed the property was not jointly held. He needed to obtain a grant of probate to transfer her half into his name. Fortunately his wife had a will leaving everything to him, so the outcome was manageable, but he had no idea the step was required and could easily have left it unresolved for years.

Mel shared a similar experience with a client who believed half a dozen properties were held in their superannuation fund. Quick title searches showed none of them were.

Tracy added a Victorian wrinkle that catches many self managed super fund owners. When you hold a property as trustee, which is exactly what happens when a super fund buys real estate, the title does not say so. It simply shows your name. Working out whether a property is genuinely a super fund asset requires digging into the fund’s financial statements, asking when and how the property was purchased, and checking the notice of acquisition lodged with the State Revenue Office. Sometimes even those records have not been completed correctly and need to be fixed.

Superannuation does not automatically follow your will

Superannuation is one of the most misunderstood assets in estate planning, and often one of the largest. Tracy explained that super is not really your asset in the way your house is. You are a member of a fund, and the fund is governed by its trust deed and by the Superannuation Industry (Supervision) Act. Your will does not control it.

The only way to direct where your super goes on death is a binding death benefit nomination, made in accordance with the fund’s rules. The legislation restricts who can receive superannuation death benefits to certain categories of dependants and other eligible people, so the nomination needs to be considered carefully. Without a valid binding nomination, the trustee of the fund decides. A line in your will saying you would like your super to go to a particular person is not binding, because it has not been done under the rules that govern that asset.

It is possible to bring superannuation into the estate by nominating your legal personal representative, but Tracy stressed that this has to be done properly, and there are tax consequences attached to where super benefits end up. This is one of the reasons she tells the great majority of her clients, somewhere between 80 and 90 per cent, to obtain financial planning advice alongside their estate plan. Many clients want to move assets around or are thinking about pensions, and a lawyer cannot give that advice. Estate planning done well is a team effort between your lawyer, your financial planner and your accountant.

Property in more than one state

Investors with property across state borders face an additional layer of complexity. Wills legislation is state and territory based, although a will can operate nationally. The catch arises on death. If you own real estate in both Victoria and New South Wales, your executor will need a grant of representation in Victoria and will also need that grant resealed in New South Wales before the interstate property can be dealt with. In practical terms there are two probate processes rather than one.

Tracy’s approach in the planning stage is to take a full list of assets and liabilities, prepare the will, and then map out what the executor will need to do in each jurisdiction. Family provision legislation, which governs who can challenge a will and on what basis, also differs between states and territories, which is another reason the right advice matters for anyone with an interstate portfolio.

The most common mistakes Tracy sees

Asked to sum up the errors that come across her desk most often, Tracy listed the following.

• Not knowing how your property is held. People focus on the will and never check the titles.
• Ignoring assets that sit outside the will. Trust assets and superannuation are not governed by your will, and many people have never turned their minds to them.
• Assuming a new spouse will look after everyone. Leaving an entire estate to a third spouse in a blended family, on the expectation they will provide for children from earlier relationships, rarely works out. Tracy’s blunt observation was that the third spouse often goes on to find another spouse.
• Failing to update after a major life event. Marriage, divorce, separation and the birth of children should all trigger a review.
• No planning for assets across multiple jurisdictions.

When should you make a will?

Younger listeners may feel this conversation does not apply to them yet. Tracy’s answer was that nobody gets out of life alive, and you should have had a will yesterday. She acknowledged that at eighteen most people feel they have nothing to leave, but the moment you buy your first property the picture changes. Marriage and the arrival of children are the other clear triggers. From that point, the three to five year review cycle applies.

Mel mentioned that her own son has just bought his first property and that this conversation was a prompt to sit down with him about it. It is a scenario many parents will recognise.

Choosing the right professional

Given the pitfalls of doing it yourself, the obvious question is how to choose someone to do it properly. Tracy’s advice was to look for a succession planning professional and, specifically, an accredited specialist. Accredited specialisation is a nationally recognised program administered in Victoria by the Law Institute of Victoria. It identifies lawyers with substantial experience and expertise in their field who have passed a rigorous assessment process. For anyone with multiple asset structures, interstate property or a blended family, which Tracy noted describes most people these days, an accredited specialist in wills and estates is the person best placed to help.

 

Key takeaways for property owners

• Check how every property you own is actually held. Do not rely on memory. A title search is quick and often surprising.
• If you own property through a self managed super fund, confirm the paperwork supports that, because the title will not tell you.
• Understand that superannuation and trust assets sit outside your will. Put a valid binding death benefit nomination in place if you want to control where your super goes.
• If you married after making your will, assume it may have been revoked and get it reviewed.
• Review your will every three to five years and after every major life event.
• Bring your financial planner and accountant into the process. Tax and pension consequences are real.

Key takeaways for buyers

• Decide how you will hold the property before you sign the contract. Joint tenants means it passes automatically to the surviving owner. Tenants in common means your share follows your will.
• Instruct your conveyancer or lawyer explicitly. Do not let the decision be made by default.
• Get advice on the manner of holding if you are buying with anyone other than a spouse, or if either of you has children from a previous relationship.
• Buying your first property is the moment to make a will if you have not already done so.
• Choose an accredited specialist in wills and estates rather than a will kit.

 

This article is based on an episode of Property, Straight Up featuring Tracy Collins of Collins Lawyers and Consultants. It is general information only and does not constitute legal or financial advice. If you are thinking about your property position more broadly, whether buying, selling or planning ahead, the Domain & Co is always happy to help.