Glossary of Terms

A written statement of a person’s wishes, as to the distribution of his or her deceased estate on death. The statement must comply with strict formalities with respect to its preparation and signing in order to be valid.

Comprises the property of the deceased person available to pay debts and testamentary expenses and distribute amongst beneficiaries under a will.

The process of formulating and implementing strategies by an individual, supported by written documentation, to provide a transmission of that individual’s deceased estate, together with property owned or controlled outside the deceased estate, to selected other individuals or related entities. The planning process includes consideration of factors such as minimising the taxation consequences of transmitting ownership and control of assets and strategies to protect assets transmitted from future claims by creditors and gold diggers.

Means the person making a Will. A female making a Will is sometimes referred to as a Testatrix.

The person nominated in a person’s Will to administer the deceased’s affairs, including payment of debts and expenses and disposal of the deceased person’s property under the terms of the Will.

Is someone who has an interest in the assets of a deceased estate under a Will.

Is a gift made under a Will.

Occurs where a gift made under a Will fails because the asset no longer exists. Eg. A leaves B his stamp collection, but at the time A dies the stamp collection had been sold by A. This means it is not possible to make the gift.

Refers to a cash gift made under a Will.

A person appointed by the Court to administer the estate of a person that has died intestate.

Means the executor or administrator of a deceased person.

Is the official document certified by the Supreme Court stating that a Will has been proved valid and granting authority for the executors to administer the deceased estate.

Is where a person dies without a Will or the Will is invalid. In that case the deceased’s estate is managed by an administrator.

The Government’s formula for distribution of a person’s deceased estate where that person has died intestate.

Is an application made to a Court by a person that claims the deceased’s Will (or the application of the Intestacy Laws where there is no Will) fails to adequately provide for the maintenance and support of that person. Upon application, the Court has power to make orders that a successful claimant receive greater provision from a deceased person’s estate than the deceased had otherwise wished to provide (or the Intestacy Laws provide). The kinds of things a court may consider when examining a claim are:

1. the size and nature of the deceased’s estate;
2. the financial position of the person making the claim;
3. the relationship that existed between the person making the claim and the deceased; and
4. the relationship that existed between the person making the claim and other people that have legitimate claim to the deceased’s estate. Where a person specifically wishes to exclude a family member from taking a benefit under his or her Will and anticipates a Family Provision Application being made, strategies can be implemented during their life time to ensure their wishes are carried out irrespective of scrutiny by the Court system.

This may be defined differently from State to State, but generally means a person is incapable of:

1. understanding the nature and foreseeing the effects of a decision,
2. freely and voluntarily making decisions about a matter and
3. of communicating the decisions in some way.

There are any number of personal and business situations where giving someone else the power to act for you makes good common sense. For many situations a simple power of attorney is sufficient, but it ceases to have effect if you lose the capability to make financial decisions.

Additionally, while the appointed attorney (under a simple power of attorney) can manage your financial affairs such as operate your bank accounts, it does not allow them to make medical or life decisions on your behalf.

A simple power of attorney ceases to apply if the principal / donor loses their capacity.

An Enduring Power of Attorney gives the attorney the power to continue acting on the Donor’s behalf, even after the Donor has lost the capacity to make decisions for his or her own self.

Creating an Enduring Power of Attorney is a prudent estate planning tool as it continues to have effect after you lose capability to make financial decisions for yourself. It also enables your attorney to assist with making personal and health related decisions.

It is a common part of estate planning that, besides making a will a person also prepares an Enduring Power of Attorney, to make sure that should they become incapacitated their affairs can still be managed without the need for the intervention of the courts or government agencies.

It is often necessary to give to someone else the legal authority to act for us in certain circumstances. This can be done using a power of attorney, a legal document that appoints one person (the attorney) to act on behalf of another (the principal or donor) in relation to their property and financial affairs.

Sometimes we only need to do this for a short period of time e.g. during a major illness or operation, on a lengthy overseas trip where communication is difficult, etc.

Where two or more people own property together in such a way that they each have a separate fractional interest in the property. Where a tenant in common dies, his or her fractional interest in the property forms part of the deceased estate of that person i.e. it does not automatically go to the co-owners of the property.

Means that two people share ownership of a property in such a way that each has a legal interest in the entire property. If one joint tenant dies, the survivor becomes the sole owner of the property irrespective of what the deceased’s Will says.

A power of attorney where the Donor has placed restrictions on what the Donee is able to decide on the Donor’s behalf.

Is an arrangement whereby assets are held (by a trustee) on behalf of others (the beneficiaries). There are many different types of trusts such as fixed trusts (such as a unit trust) and discretionary trusts. A “trust” is not a legal personality itself and carries on business through the trustee. Accordingly, if the trust wishes to enter into a commercial or other transactions, it does so through and in the name of the trustee.

Are a form of trust most commonly governed by the terms of a trust deed and commonly with a life of 80 years from the date of establishment. The trustee is usually entitled to exercise a broad discretion in respect of the distribution of any income and capital of the trust. With this type of trust, generally speaking, none of the beneficiaries have a specific interest in any of the trust property but do have a right to ensure that the trustee properly administers the trust.

A trust that is formed under the terms of a Will or established by operation of legislative provisions in respect of the assets of a deceased estate. Income generated from property held in a testamentary trust is taxed at concessional rates allowing infant beneficiaries to be taxed at adult marginal rates of tax. This concession can result in significant tax savings for the beneficiaries of a deceased estate. Property held in testamentary trusts can also be protected against claims where a beneficiary of the deceased estate is made a bankrupt or undergoes a divorce.

The person nominated in a trust deed or Will as having the power to appoint or remove trustees of a trust. Sometimes known as the Principal.