Written by: Scott Lorback
You may see or hear the term “deceased estate” (or just “estate”) when referring to someone who has died. But what exactly is a deceased estate and why is the definition important for those left behind?
In this article, we will look at what a deceased estate includes and why it matters for those creating or contesting a Will.
Assets Included in a Deceased Estate
Simply put, an estate is made up of all the assets, liabilities, income, and expenses the deceased person leaves behind.
The estate only includes those things personally owned or owed by the deceased. This may include:
• bank accounts;
• vehicles;
• unpaid wages;
• loan debts in the deceased’s name.
Assets Not Included in a Deceased Estate
Many things may be closely associated with a deceased person’s affairs but sit outside their estate. Items that are commonly excluded from deceased estates are assets held in a trust, superannuation, and anything the deceased jointly owned with other people.
Below, we look at each of these in detail and explain why being in or out of the estate matters.
Trusts
Most trusts exist to hold and manage assets on behalf of the trust’s beneficiaries.
The trustee, who might be a person or a company, owns the assets but must use them according to the trust’s rules (set out in the trust deed or by law). The trustee therefore does not own the assets for personal use.
So, if a trustee dies, the trust’s assets do not form part of his or her estate. Instead, those assets pass to a replacement trustee to continue to hold according to the trust’s rules.
The trust’s beneficiaries might be entitled to receive income or assets from the trust, but they do not own any of the trust assets. This means a beneficiary who dies passes no trust property or assets into his or her estate.
Superannuation
The law allows a person to nominate who will receive their super after they die. Only certain people can be nominated: the deceased’s spouse or partner, children (of any age), and their estate.
If the deceased made a valid nomination to a spouse or a child, the super is paid directly to the nominated person and does not become part of the estate. But if the nomination is made to the estate, the super then becomes an estate asset.
If there is no valid nomination in place, the superannuation fund can decide who is to receive the funds.
Jointly Owned Assets
If two or more people own an asset jointly, the surviving owners automatically receive a deceased owner’s share. This is the case even if the deceased owner’s Will says something else.
Say Homer and Marge jointly own their house and bank account. When Homer dies, Marge automatically becomes the sole owner of the house and the account. Marge receives these even though Homer’s Will promises the house to Bart and the bank account to Lisa.
Why is Asset Classification Important in Deceased Estates?
So why do you need to know what assets are in or out of a deceased estate?
Family Provision Claims
One of the most important reasons relates to family provision claims, commonly known as contesting a Will.
When someone contests a Will, they are trying to claim more of a deceased estate for themselves. Under Queensland law, only estate assets are susceptible to these types of claims.
This means, a person’s assets can be put out of reach by making sure they do not become part of the estate in the first place.
Smaller Estates are Easier to Deal With
Another reason asset classification is important is that smaller estates are easier for executors and administrators to deal with.
Assets held in super, trusts, and those jointly owned, can pass to the intended recipients more cost effectively and sooner than if they were part of the estate.
Plan Carefully to Achieve the Best Outcome
Careful planning can give certainty around what happens to your assets after death by placing those assets in or out of your estate.
And for those considering contesting a Will, knowing what is in the estate makes the decision much easier.
There are other important factors to consider when dealing with estates. We recommend discussing your situation with one of our experienced Wills & Estates lawyers to achieve the best outcome.
Need Assistance?
Greenhalgh Pickard Solicitors and Accountants provides trustworthy solicitors ready to assist you with creating a Will or disputing an estate. Talk to our experienced Wills and Estates Lawyers for further assistance. Contact us for an obligation free discussion.
Disclaimer:
The information contained in this newsletter is provided for informational purposes only and should not be construed as legal advice on any subject matter. Readers should not act or refrain from acting on the basis of any content included in this newsletter without seeking appropriate legal or other professional advice. The content of this newsletter contains general information and may not reflect current legal developments, verdicts, or settlements. We expressly disclaim all liability in respect to actions taken or not taken based on any or all the contents of this newsletter.
Greenhalgh Pickard’s Wills and Estates Team
