Assets That Do Not Pass Through a Will in Victoria

Many people believe that once they make a will, it controls everything they own. In reality, this is not always the case. Certain types of property do not pass through your will and instead follow different legal rules.

Understanding which assets fall outside your estate is an important part of effective estate planning in Victoria. Without proper planning, some assets may pass in ways that do not reflect your wishes.

Below are some common examples of assets that may not be distributed according to your will.

1. Property You Do Not Yet Own

A basic principle of succession law is that a person can only leave property they legally own.

You cannot give away property in your will that you merely expect to receive in the future.

For example:

• you may expect to inherit property from your parents
• you may be named as a beneficiary in someone else’s will

However, until the inheritance is actually received, it remains only an expectation, sometimes referred to as spes successionis. Because there is no legal ownership yet, that property cannot be distributed through your will.

2. Property Held as Joint Tenants

One of the most common assets that does not pass through a will is jointly owned property.

When property is owned as joint tenants, it automatically passes to the surviving owner when one owner dies. This legal principle is known as the right of survivorship.

Examples include:

• a family home owned jointly by spouses
• joint bank accounts
• jointly owned investment properties

Because of the right of survivorship, the deceased person’s interest does not form part of their estate and cannot be gifted through their will.

Instead, the property transfers automatically to the surviving joint owner.

3. Property Held as Tenants in Common

Joint ownership does not always prevent property from passing through a will.

Where property is owned as tenants in common, each owner holds a separate share of the property.

For example:

• two people may each own 50% of a property
• three people may hold different percentages.

In this situation, each owner can leave their share of the property through their will.

This distinction between joint tenancy and tenancy in common is extremely important in estate planning and can significantly affect how property is inherited.

4. Joint Bank Accounts

Joint bank accounts can create uncertainty when a person dies.

Often, the surviving account holder becomes entitled to the funds in the account. However, the legal position may depend on several factors, including:

• who contributed the money
• the purpose of the account
• the intention of the account holders.

In some situations, the surviving account holder may hold the funds on trust for the estate, particularly if the account was created for convenience rather than as a true joint ownership arrangement.

Because disputes can arise in this area, joint accounts should be carefully considered when planning an estate.

5. Superannuation Death Benefits

Superannuation is one of the most misunderstood assets in estate planning.

In most cases, superannuation does not automatically form part of your estate. Instead, the superannuation fund trustee decides who receives the death benefit.

Under the Superannuation Industry (Supervision) Act 1993 (Cth), benefits may be paid to:

• a dependant
• a nominated beneficiary
• the deceased person’s legal personal representative.

Many superannuation funds allow members to make a binding death benefit nomination, which directs the trustee to pay the benefit to a specific person.

Without a valid nomination, the trustee may exercise discretion when deciding who receives the funds.

Because superannuation can be one of a person’s largest assets, it is critical that nominations are regularly reviewed as part of estate planning.

6. Life Insurance Policies

Life insurance policies may also fall outside the estate.

If a policyholder nominates a specific beneficiary under the policy, the insurance proceeds are generally paid directly to that beneficiary.

In this situation, the funds do not pass through the will.

However, if no beneficiary is nominated, the proceeds may be paid to the deceased person’s estate and then distributed according to the will.

7. Life Interests

Sometimes a person may have a life interest in property.

A life interest allows a person to use or benefit from property during their lifetime, but they do not own the property outright.

For example:

• a will may allow a surviving spouse to live in a home for the rest of their life
• after their death, the property passes to another beneficiary.

Because the person with the life interest does not own the property, they cannot dispose of it in their own will.

When the life tenant dies, the property passes to the remainderman, the person entitled to receive the property after the life interest ends.

8. Gifts Made in Contemplation of Death

In rare circumstances, property may be transferred through what is known as a gift in contemplation of death, or donatio mortis causa.

This occurs where a person gives property to another person because they believe death is imminent.

For such a gift to be valid:

• the gift must be made in contemplation of death
• the gift must take effect upon death
• control of the property must be transferred.

These cases are uncommon but demonstrate that not all property transfers occur through wills.

Why Estate Planning Is More Than Just a Will

While a will is an essential legal document, it is only one part of a complete estate plan.

A proper estate plan should also consider:

• how property is owned
• superannuation nominations
• insurance beneficiaries
• joint financial arrangements.

Without considering these factors, assets may pass in ways that do not reflect your intentions.

Getting Estate Planning Advice in Victoria

Because different assets are governed by different legal rules, obtaining professional advice is important when preparing your estate plan.

A solicitor can help ensure that:

• your will works effectively with your asset ownership structure
• superannuation nominations are properly completed
• your estate plan reflects your wishes
• potential disputes are minimised.

Proper planning today can help provide certainty and security for your loved ones in the future.