What can (and cannot) be gifted in a will?

In the realm of estate planning, a Last Will and Testament (the will) serves as a crucial legal document that outlines an individual's wishes regarding the distribution of their assets after their passing. However, not everything can be freely gifted in a will under Australian law. Understanding the limitations and guidelines surrounding testamentary gifts is essential for individuals navigating the estate planning process. In this blog post, we'll delve into what can and cannot be gifted in a will within the Australian legal jurisdiction.

Assets That Can Be Gifted

Real Estate: Real property, including houses, land, and commercial buildings, can typically be gifted in a will. The testator (the person making the will) can specify who will inherit specific real estate assets and any conditions or restrictions attached to these gifts.

Personal Property: This category encompasses a wide range of movable assets, such as vehicles, jewellery, artwork, furniture, and other tangible items. Testators can designate beneficiaries for these personal belongings in their wills.

Financial Assets: Bank accounts, investments, stocks, shares, bonds, retirement funds, and other financial instruments can be gifted through a will. Testators can specify how these assets should be distributed among their chosen beneficiaries.

Business Interests: If the testator owns a business or shares in a company, they can include provisions in their will regarding the transfer or distribution of these business interests to designated heirs or partners.

Digital Assets: In the digital age, assets like online accounts, intellectual property rights, and digital media can also be addressed in a will. Testators can specify who will have access to and ownership of these digital assets.

Assets That Cannot Be Gifted

Superannuation: Superannuation, although yours, is property typically held in a trust by a superannuation fund and is subject to separate superannuation laws. However, an individual can direct the funds be transferred to their Residual Estate for the purpose of the distribution of the assets under a will. This topic was covered in a previous blog post ‘Can I Leave My Super Benefits In My Will?.

Assets Held in Joint Tenancy: Assets owned jointly with rights of survivorship, such as joint bank accounts or properties held as joint tenants, generally pass directly to the surviving co-owner(s) and are not governed by the terms of a will.

Certain Trust Assets: Assets held in certain types of trusts, such as discretionary trusts or testamentary trusts established by someone else, may not be directly gifted through a will. However, the testator can designate beneficiaries for their interest in these trusts.

Illegal or Unlawful Assets: It's important to note that assets acquired through illegal or unlawful means cannot be gifted in a will. This includes assets obtained through criminal activities or assets subject to legal disputes or challenges.

Assets with Specific Designations: Assets that have specific beneficiary designations or are governed by contractual arrangements, such as life insurance policies or superannuation funds with binding nominations, generally pass outside of the estate and are not controlled by the terms of a will.

Certain Family Provision Claims: In some cases, family members or dependents may be entitled to make family provision claims against an estate if they believe they have not been adequately provided for in the will. This can impact the distribution of assets as determined by the court.

Understanding the limitations and exceptions in gifting assets empowers testators to make informed decisions, creating legally sound estate plans that reflect their wishes and safeguard assets for future generations. Seeking professional legal advice is crucial for individuals creating a will in Australia, as it ensures that their testamentary intentions align with legal requirements.

Please note, this article is general in nature and does not take into account your personal situation or circumstances. For further information please contact Kenney Legal at info@kenneylegal.com.au or contact us via our social media networks.