Dying is no laughing matter - especially if you do it without a will. As today's complicated family arrangements proliferate, it is becoming more important to ensure you have a legal will that clearly stipulates how your estate will be divided.

And it is not just a question of having a legal will. Lawyers stress that a will should be just one element in an all-embracing financial package to guarantee - as much as anything can be - that your estate is distributed according to your wishes.

A consultant with law firm SJQ Legal, Wendy Quay, says it is "absolutely imperative" that a person making a will understands what they own and how they own those assets.

She says wills can exclude certain assets. And three of the largest - the family home, superannuation and trusts - often fall outside the will.

"A house jointly owned by a husband and wife will be excluded from the will of the first one to die as ownership automatically transfers to the partner," Ms Quay says.

"With this asset it's a simple case of the last person standing that determines whose will is relevant.

"Superannuation assets - the retirement benefit and death and disability benefit - are often excluded from a will. Yet they are often the biggest asset on death and in most cases their distribution is at the discretion of the trustee of the superannuation fund."

Ms Quay says that where the will maker's super fund allows them to make a "binding" nomination, they can choose their beneficiaries - but this is fraught with problems. Things can get complicated if circumstances suddenly change.

Assets in a trust are also excluded from a will.

Ms Quay's colleague Allan Swan says the fact that some assets are excluded from the will should prompt lawyers drawing them up to cooperate more closely with their clients' financial advisers and accountants.

Assessing your assets is the first step. Then you need to determine likely beneficiaries of the will, as well as their circumstances.

Ms Quay says lawyers must be alert to special circumstances such as:

• Blended families and the difficulties they can present.
• Children in difficult relationships - for example, those involved in divorce proceedings.
• Beneficiaries in a "risk" occupation, such as a company director who could be sued.
• Vulnerable beneficiaries, including those with intellectual disabilities or problems such as a gambling or drinking addiction.
• Children under 18. Wills involving minors can have tax implications.

In 1998, the Wills Act in Victoria was amended to extend the number of people who could make a legal claim. Before the change, only spouses and children, including adopted children but not stepchildren, could make a claim, says McNab, McNab & Starke partner Ken Starke. Now anyone who can show that the deceased had a moral duty to support them can make a claim.

The change has resulted in more wills being challenged, especially as family structures and responsibilities are becoming increasingly complicated.

McKean & Park partner Geoff Park says claims against wills are generally made for three reasons:

• The person making the will lacked the mental capacity to do so. This could include when a person is suffering dementia, taking legally prescribed drugs, under the influence of other drugs or intellectually disabled. If a will is declared invalid on these grounds, the previous will becomes the valid will. If there was no previous will, the person dies intestate (without a will).
• Somebody, such as a beneficiary, unduly influenced the person making the will. If the will becomes invalid, then any prior will has legal standing. Mr Park says undue influence can be difficult to prove.
• The deceased did not provide for someone for whom they had a duty of care. The court can order that provision be made out of an estate to maintain and support a person for whom the deceased had responsibility. Two conditions are essential for a successful claim: the deceased had a moral duty towards the claimant; and the claimant has genuine need. Mr Park says claims without both are unlikely to succeed.

Ms Quay believes a will should be reviewed at least every three to five years.

"Events happen in our lives - such as getting married, divorced, having children, changed financial circumstances - that all have potential consequences for your estate," she says. "Indeed,

I think it's not a bad thing to look at your will every year when you do your tax return just to make sure it is still achieving what you want."

The law does offer certain protection: if you get married, any previous will is revoked unless it is made explicitly anticipating that marriage. The components of a will that benefit a former spouse are null and void after divorce. However, complications arise in a situation where a couple is separated and the will has not been changed.

Many people still die intestate, including millionaires.

"You get situations where the patriarch, who has fallen out with one of his five children, dies without a will," Ms Quay says. "He simply didn't want to address the issue. The tragedy is he sets the scene for a bitter family brawl."

If you die intestate your assets are distributed according to government dictate. In Victoria, your assets will be distributed under a formula in the Administration and Probate Act.

Under this formula, if the deceased has a partner and children, the surviving partner receives all personal belongings and the first $100,000 in assets, plus a third of any amount above that. The remaining amount goes to the children.

Another key reason for reviewing your will is to ensure it is tax-effective.

Mr Starke says high-net-worth individuals, particularly those with extended families, should take the opportunity to get sophisticated tax-planning advice when drafting their wills.

"There are very substantial tax concessions available for trust holdings and income earned via trusts for the benefit of minor children," he says. "There is the opportunity to create in wills tax-effective trusts for the benefit of the next two generations."

Mr Starke advises his clients against using will kits because these do not deal with the tax implications.

"It's an extraordinary thing that a large financial planning organisation advertises a $5 will kit to its clientele, most of whom could be expected to be high-net-worth individuals," he says. "But you won't get advice (about trusts) in a $5 kit.

"While the kit might save you a couple of hundred dollars, a will drawn after considering all the financial issues might save the family tens of thousands of dollars over many years. It's the old adage: you get what you pay for."

Ms Quay agrees. "(Will kits) can cause problems when people do not fill them out properly," she says. "I've had examples where people have dealt with their favourite guitar and stamp collection in their will but left out all their other assets. It just sets the stage for a fight between the possible beneficiaries."

WILL-MAKING PITFALLS: WHAT TO AVOID For individuals:

• Failing to appoint any or appropriate executors.
• Failing to execute the will in accordance with the Wills Act. (This includes failing to sign the will in the presence of two witnesses who also sign in the presence of each other.)
• Failing to plan for the entire estate, resulting in partial intestacy.
• Failing to anticipate a situation where beneficiaries might die first.
• Failing to plan for superannuation or insurance benefits.

• Failing to identify whether property is jointly owned or owned as tenants in common.
• Failing to identify assets owned by family structures instead of the deceased. Trust assets cannot be dealt with in a will.
• Failing to consider the possibility of super benefits and whether they will be paid into the estate or to beneficiaries.
• Failing to anticipate possible challenges to the distribution of assets in the will.
• Failing to ensure protection for disadvantaged beneficiaries, such as the physically or intellectually disabled.

The Will of the law

While this has led to more wills being contested, the following example, provided by legal firm McNab, McNab & Starke, shows why the amendment has made the system more equitable.

In the late 1980s, a man in his early 60s suddenly lost his partner of 30 years to cancer. They had never married, but because they owned their house in joint names he got the property because of "survivorship".

When the woman became ill she had resigned from work and drew down her $200,000 superannuation payout (her retirement nest egg) and put it in a rollover fund. This decision was to have dire consequences: it put the money outside the discretion of the super trustee, who could have paid it to her partner.

Because their relationship was de facto and the woman had not made a will, her partner had no rights to the $200,000 under the then intestacy law. The same law also required an investigation to determine whether the woman had any surviving relatives.

The woman was an illegitimate child and because of the social mores of the day was sent to an orphanage in another state. She finally settled in Victoria and never met any of her relatives. When inquiries were made about any surviving relatives after her death, it was discovered that she had an aunt in her late 70s living in Tasmania.

Legally, the $200,000 was the aunt's money - and she claimed it, arguing that the money should remain in the family. McNab, McNab & Starke partner Ken Starke says: "This was an appalling result."

After negotiations and threats of legal action, which Mr Starke concedes would not have succeeded, the woman's partner got $100,000.

Today, the partner would have been able make a claim and, while there would be legal costs and he might have had to make a monetary concession to competing claimants to settle the issue, the law would assist him.

Of course, if the woman had made a will in favour of her partner there would have been no problem.

The big picture

Aware that any money left to his son will be at risk, the father places $120,000 into a protective trust so that the money will not be spent on drugs. However, he neglects to address his $600,000 superannuation payout.

When he dies, the trustees of the fund, ignorant of the son's drug dependency, promptly pays it to his son. It is believed the son's drug dealer drove him to the fund's administrative offices to pick up the cheque for $600,000.

SLQ Legal partner Allan Swan, who tells this anecdote when he speaks about wills and probate, says this is a prime example of the maker of a will ignoring the bigger picture.

But, despite regular warnings, there are still instances of trust in a financial adviser or accountant wiping out life savings with a stroke of a pen.

One firm rule for protecting your super is to never sign a blank form for anything that gives a fund manager or financial adviser the authority to shift your money from one account to another, no matter how long you have known, nor how well you think you know, your adviser. Because you never know where it will end up.

This was brought home by a recent Federal Court decision involving a retiree, Barry Maher, and Asgard Capital Management.

Asgard appealed against a decision made by the Superannuation Complaints Tribunal in favour of Maher when $245,000 of Maher's money went missing after he signed a blank transfer form.

In the end Maher recovered his funds but it took three years of legal battles through the tribunal and then the Federal Court. And it may not yet be over as Asgard is considering taking the decision to the full Federal Court.

Maher instructed his financial adviser, Kerry Burke of KBA Financial Services on the NSW Far North Coast, to apply his existing super fund entitlement to three purposes.

Maher, who had about $280,000 with Asgard, asked Burke to re-organise his super accounts.

He wanted Burke to transfer $30,000 to a joint bank account held by Maher and his wife, use $5000 to purchase Coles Myer shares and establish a new joint investment account in the name of Maher and his wife by an internal transfer of $245,000 within Asgard.

To effect this third transfer, Maher signed and dated a blank form headed "Asgard Superannuation Account payment request", apparently at the direction of Burke. No other handwriting of Maher's appears on the document.

After Maher had signed the form and left the office, Burke filled in the sum $280,000 and ticked the box "cash withdrawal". Then he added the details of his own account. The $280,000 was transferred to Burke's bank account.

Although the first and second instructions were followed, Burke filled out a further Asgard printed form, evidently never produced to Maher, headed "the ASGARD Investment Funds Account Application" for $245,000.

Asgard asked Burke's office about a dishonoured cheque for $245,000 but was told his office had been damaged by fire.

The end result was that the court found that Maher was defrauded by Burke.

Last year Burke pleaded guilty in the Tweed Heads local court to 39 counts of obtaining $4.5 million by deception and 11 counts of using false documents to withdraw $923,150.

Maher's solicitors wrote to Asgard in July last year. He failed to resolve the matter with Asgard so he took it to the Superannuation Complaints Tribunal.

Asgard told the tribunal it acted in good faith and without any want of prudence or diligence on its part. The tribunal declined to accept Asgard's contentions and relied also on the Superannuation Industry Supervision Regulations, which provide rules limiting the cashing of benefits.

It found that Maher did not authorise the payment or transfer out of his super account conducted by Asgard or any money into the control of Burke, other than for the $35,000 to establish the joint account and buy the Coles Myer shares.

Maher successfully argued he did not ask for $245,000 to be paid to his financial adviser and said it was simply to be transferred by Asgard from one account to another.

The tribunal and the court decided that Asgard's action failed to attract the statutory notion of being fair and reasonable in the circumstances and it must compensate him for his loss. He also got his costs paid.

It would have been easier and cheaper, though, if he had simply filled in the whole form for the internal Asgard transfer before signing it.

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