Estate planning: why you may need more than one will04 September 2023
The importance and practical benefits of having a will
The primary benefits of having a will are simple; it allows a person, the testator, to formally nominate who is to oversee and attend to the administration of their estate and who will inherit from their estate after their death.
The person overseeing and attending to the administration of an estate is formally referred to as the legal personal representative (LPR) of the estate. Where a person dies with a will, the LPR is known as the executor, whereas where a person dies intestate (without a valid will), the LPR is known as the administrator.
In Australia, each state and territory has its own laws dealing with wills and deceased estates.
In NSW, Chapter 4 of the Succession Act 2006 (NSW) (Succession Act) deals with intestacy and provides who will be the administrator and who is entitled to a distribution of the estate.
In many cases, to be able to deal with the assets and debts of the estate, the LPR must obtain a grant from the local jurisdiction’s Supreme Court. With some exceptions, an executor typically applies for a grant of probate, while an administrator applies for a grant of letters of administration.
To obtain letters of administration, additional evidentiary burdens are placed on the LPR, including that the LPR must provide evidence confirming adequate searches for a will have been made, the persons entitled in distribution pursuant to the Succession Act, and, in some cases, an application for letters of administration must be accompanied by an administration bond and two sureties must be provided.
A valid will not only ensures a testator has control of how their estate is distributed and who oversees the administration, it also typically means the administration of the estate can be dealt with more quickly because the additional evidence required to obtain letters of administration is not required. This can be less stressful for all parties involved.
When dealing with multiple jurisdictions
If the deceased person had one will but held assets in multiple Australian states or territories (i.e., multiple jurisdictions), depending on the nature of the assets, the executor may be required to apply for probate in one jurisdiction and a subsequent application for a ‘reseal’ of the original grant of probate in the second jurisdiction to be able to adequately deal with the assets in both jurisdictions.
A similar process may apply where the deceased had one will but held assets in multiple Commonwealth countries. In those circumstances, it may be possible for the executor to obtain a reseal of the original grant in the second country.
However, where the deceased had one will but held assets in Australia and a non-Commonwealth country, obtaining a reseal in the second country may not be possible.
For instance, where the deceased lived in the USA at the date of their death, had a USA will, but held assets in both the USA and NSW, the deceased’s LPR cannot apply to the Supreme Court of NSW for a reseal of the USA grant to deal with the NSW assets. Instead, the USA LPR must appoint at least one person ordinarily resident in NSW as their attorney in accordance with the Probate and Administration Act 1898 (NSW). Once appointed, the attorney(s) must make an application for ‘letters of administration with the [USA] will annexed’ and overcome additional evidentiary hurdles in addition to the Court’s typical requirements.
When drafting a will for a person with assets in multiple jurisdictions, careful consideration needs to be given to the laws of those jurisdictions. Returning to the NSW-USA example, while no death duty has applied in NSW for approximately 40 years, the USA still imposes a number of taxes applicable to deceased estates.
Accordingly, it may be most effective for a testator to have more than one will; one for each jurisdiction in which the person has assets.
Convention on international wills
In some cases, a valid alternative may also be to have a will prepared in accordance with the Convention providing a Uniform Law on the Form of an International Will 1973 (Convention), which provides an internationally recognised uniform law on wills. Australia is a signatory to the Convention and all Australian states and territories have passed legislation giving effect to the Convention. Other countries that subscribe to the Convention include Canada, France and the USA.
While the Convention provides for an internationally agreed position on the drafting of wills, it does not account for other laws in different countries which should be considered in estate planning (for example, taxation laws). As such, separate wills may still be preferable.
Sparke Helmore has assisted many clients with the preparation of their estate planning documents and the administration of estates, including a number of matters where the deceased person was domiciled in the USA at their death with assets in the USA and Australia.