Estate vs Non-Estate Assets

It is common knowledge that when a person passes away they leave behind an estate, but did you know that not all of the deceased’s property forms part of the estate?

Only the assets that can be distributed by the wishes set out in a will are estate assets and any property which is not an estate asset is dealt with separately to the will.

How can the deceased’s family ascertain what is an estate asset and what is a non-estate asset?

There are some common assets which form part of the estate. These are as follows.

Real Estate

Property owned solely by one person is an estate asset. In cases where the property is owned as joint tenants, the property does not automatically form part of the estate. Where joint tenants are concerned, the deceased’s share will transfer into the name of the surviving owner.

Where the deceased owned a property with another party or parties as tenants in common, the deceased’s share of the property is an estate asset, which can be distributed by the will.

Cash in Bank Accounts

Cash held in bank accounts in one name only is considered estate assets and the balance(s) of the account(s) can be directed to a beneficiary in the will. The estate executor will usually be required to provide documents including the deceased’s death certificate to release the accounts’ contents to the estate.

A bank account owned jointly with someone else is not an estate asset. After the bank is notified of the deceased’s passing the balance will be owned solely by the surviving owner.

Superannuation

Superannuation does not automatically form part of an estate unless a binding nomination in favour of your legal personal representative has been completed. Where a valid binding nomination exists if favour of your estate, your superannuation can be distributed by the estate’s executor (your legal personal representative) in accordance with the directions in your will.

To nominate a legal personal representative, an individual must first sign a Binding Death Benefit Nomination, which can usually be found on the superannuation fund’s website (if they accept Binding Death Benefit Nominations). It is important to note that most Binding Death Benefit Nominations will need to be renewed every three years for it to remain binding.

If none of the aforementioned is completed at the time the deceased passes, their superannuation will be considered a non-estate asset, which cannot be distributed by the terms of a will unless the trustee of the superannuation fund makes a determination to paid the superannuation death benefits to the estate.  If there is no specific clause in the will dealing with superannuation benefits the proceeds will form part of the residuary of your estate and be distributed to the nominated residuary beneficiaries.

Depending on the superannuation fund, it is possible to simply sign a Binding Death Benefit Nomination in favour of a beneficiary which can be dealt with outside of a will.  Superannuation legislation provides that to make a Binding Death Benefit Nomination to a nominated individual can only be made to an eligible person which includes a spouse, children or other person who is in an interdependent relationship with you.

Motor Vehicles and Personal Effects

Motor vehicles (if owned solely) as well as household goods, personal effects and even pets are considered estate assets and may all be included in a will.

Shares

Shares owned solely by the deceased are estate assets. It is typical for shares to be transferred directly to a beneficiary or sold with the proceeds forming part of the estate.

Shares are not estate assets if they are owned jointly with another party. Shares owned jointly will be transferred into the name(s) of the surviving shareholder(s) once the share registry has been informed that the deceased has passed.

Cryptocurrency

As cryptocurrency and other digital assets become more popular they are beginning to form part of people’s estates.

Websites and social media accounts (particularly those which generate income) may also be considered estate assets (it is critical to review the service provider’s terms and conditions) and where the terms and conditions expressly provide for these assets to be transferred, they may be transferred to a beneficiary under the terms of the will. It is important that the passwords for these accounts are readily available to the estate’s executor as some providers may block access to anyone but the deceased.

Where cryptocurrency is concerned, the executor must be able to access the deceased’s digital wallet otherwise the asset may never be retrieved.

If you would like to draft a will or update your existing will, our wills and estates lawyers can assist, including by advising you on which of your assets are considered estate and non-estate assets.