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Importance of Identifying Beneficiaries in Australia | Bell Legal

When you make a Will, you choose the people or entities (often charities) that you want to benefit from your estate. It’s a process that involves careful consideration of how you want your estate to be distributed, but what happens if a beneficiary can’t be located or correctly identified?

In this article, we’ll look at why it’s important to clearly identify your intended beneficiaries, the importance of your executor knowing how to contact your beneficiaries, and what happens if your beneficiaries can’t be identified or can’t be found.  

What Is a Beneficiary?

A beneficiary of your estate is the person or entity that receives a share of your estate after you pass away.

Your beneficiaries will be either chosen by you under your Will or, if you haven’t made a Will, the persons entitled to receive your estate under the intestacy laws of your state or territory. 

Why Is It Important to Clearly Identify Beneficiaries?

It isn’t uncommon for people within a family to have the same name. If your Will does not clearly indicate, for example, whether you meant the recipient of a gift to be your father, Thomas, or your eldest brother, also named Thomas, both of whom have the same surname, then it will be necessary for your executor to make enquiries to try to determine which person was your intended beneficiary at the time you made your Will. 

These enquiries can result in unnecessary delay and cost in the administration of your estate and, if there is insufficient information as to who you intended your beneficiary to be, may not result in your intended beneficiary receiving their gift.

Similarly, if you don’t use the correct name of the charity or organisation you intend to make a gift to, it may be necessary for your executor to apply to the Court to avoid the gift lapsing. 

What If a Beneficiary Can’t Be Located?

Identifying your beneficiaries clearly and providing your executor with the beneficiaries’ contact details will save your estate time and money. But, sometimes, even the best-laid plans go awry … so what happens if your executor can’t locate a beneficiary?

If a beneficiary can’t be located and it’s not known whether that beneficiary is still alive, an application to the Court for a Benjamin order may be necessary. A Benjamin order is an order where the Court determines how the share of the estate due to the missing beneficiary should be otherwise distributed, enabling the estate administration to be finalised. 

A Benjamin order protects the executor from liability if the person entitled to the share of the estate is later found. However, a Benjamin order does not prevent the missing beneficiary later claiming their gift back from person/s or organisation/s to whom it was distributed, which can leave the gift recipient in a state of uncertainty.

Before the Court makes a Benjamin order, it must be satisfied that every reasonable step has been taken to identify or locate the missing beneficiary. Undertaking the necessary enquiries is expensive and time-consuming, and will delay the administration of your estate.

To make the administration of your estate faster and more cost-effective, keep a list of up-to-date beneficiary contact details for use by your executor. This could be in the form of an address book or a digital document.  Ideally, a copy of those details should be kept with your Will. 

Example of a Benjamin Order

In the matter of Application by Peter John Clark (Estate of John Andrew Wardell) [2022] NSWSC 798, Mr Wardell died without a Will. The Court required the applicant, Mr Wardell’s uncle, to carry out all necessary investigations to identify potential beneficiaries of the estate, including identifying and locating the deceased’s father and his family. 

Extensive investigations were undertaken, including advertising in New Zealand newspapers seeking information to identify the deceased’s father, without success. After reviewing evidence of the investigations, the Court was satisfied all avenues of search had been exhausted and made a Benjamin order to enable the estate to be distributed. 

However, the fact that the potential beneficiaries of the estate were not easily identifiable incurred additional costs and delayed the estate administration.

Leaving Gifts to Non-resident Beneficiaries

If a beneficiary of your estate is not an Australian resident and/or is a “foreign person” at the time of your death, there may be tax implications. Foreign Investment Review Board approval may also be required (depending on what the gift is). To make sure a gift to your intended beneficiary doesn’t fail or result in additional costs to your estate, seek the advice of an experienced estate planning solicitor when making your Will.

Identifying Beneficiaries: Next Steps

Once you’ve made your Will, review it regularly.  Think about whether your wishes regarding your beneficiaries have changed, and keep the contact information for your beneficiaries up to date.  

The easiest way to make sure your Will is correct and legally binding is to seek the advice of an experienced estate planning solicitor.  They can work with you to make sure your beneficiaries are identifiable, and they’ll also help you identify any other issues with your Will.

The content of this page is for information only. The content does not constitute legal advice and should not be relied upon as such. You should obtain advice that is specific to your circumstances before taking any action.