“Downsizing” and “possession divesting” can cause anxiety as people decide the fate of a lifetime worth of assets and personal possessions. Many people can’t face the prospect of giving away, or dumping into landfill, possessions that are no longer needed.
Increasingly, older people are deciding they wish to proactively deal with their life possession BEFORE they die, rather than burden their loved ones with the task of clean-up and disposal after death. This approach allows the person to give sentimental treasures to those they love, with the opportunity to discuss and reminisce about the possession being gifted with the loved one receiving it.
This is where you can benefit from the voice of an impartial third party with years of legal and social service experience to help you make difficult decisions and put your intentions for your assets in your Will, including your actions regarding gifting assets before your death. This helps prevent family disputes over what assets form part of your Estate.
If you decide to proactively deal with unwanted possessions before you die, and need help with that, contact Faileen James who can support you, including donating to charity and listing possibly valuable pieces on popular internet selling sites or with selling agents.
Dealing with Assets after Death
If you do die without dealing with your life possessions, then they will all have to be distributed by the Executors of your Will. Some possessions will form part of your Estate after death, but others will not. You may be surprised to learn that not everything you own will go to the beneficiaries in your Will. After your death, what you own is legally considered an Estate “liability” or “asset”. Liabilities are debts you owe, such as a home mortgage, a credit card debt, or unpaid personal taxes, all of which still have to be paid.
“Assets” are possessions that can be sold or converted into money to pay those liabilities, with any remaining balance distributed to the beneficiaries of your Will. If the amount of liabilities within your Estate exceeds the dollar amount of assets, then there will be nothing available to distribute to beneficiaries.
Assets that form part of a deceased Estate
- Assets owned personally – houses, artwork, jewellery, clothes, vehicles and furniture.
- Shares in a company
- A share of any asset owned as tenants in common (a legal term relating to a form of ownership) – if you owned property as a “tenant in common”, you legally share that property with someone else and your Estate’s share is the percentage your legally owned.
- Superannuation death benefits paid to your Estate (however, see below for when such benefits are not part of the Estate).
- Life insurance policies paid to your Estate (also see below for when such policy benefits are not part of the Estate).
- Your share of any partnership assets – for example, if you were in a business partnership with someone, then your share of the net assets of that partnership form part of your Estate.
- Unpaid loans and other debts owed to you.
- Any rights you may have under a contract – a good example of this is copyright royalty payments made to a musician every time a song they wrote is played.
There are several assets that are not part of a deceased Estate. With this knowledge, you may wish to consider whether you would like those assets in the Estate, in which case you need to address this before you die.
Assets that are NOT part of a deceased Estate
- Assets owned as joint tenants (a legal term relating to a form of ownership) – unlike tenants-in-common ownership (see above), if you own property in joint tenancy with someone else, that person will automatically be entitled to all of that asset when you die. However, if there is a debt over that asset, then the institution claiming that debt will require the debt to be paid, or renegotiated by that person, before the property can be dealt with.
- Assets held in Trusts – you may be a beneficiary of a Trust fund, and any Trust payment that you are owed forms part of your Estate. However, the Trust itself is a separate legal structure, and so any assets it owns do not personally belong to you or your Estate.
- Assets owned by a company – you may hold shares in, and even control (as a Director) a family company. However, similar to Trusts, a company is a separate legal structure, and so any assets it owns do not personally belong to you or your Estate.
- Superannuation death and life insurance policies paid to a nominated beneficiary – When establishing your superannuation or any life insurance policy, there is the ability to nominate who you wish to receive pay-outs in the event of your death. In such cases, the benefits are paid to that person, who may not be a beneficiary in your Will. Those funds’ trustees (and not your Executor) decide who the funds will be paid to – this can cause considerable anger amongst beneficiaries if they disagree with the trustees’ decisions.
Contact Faileen James for professional assistance in Dealing with Life Possessions.