Crafting Your Legacy: A Detailed Look at Last Wills & Testaments

Estate planning, frequently postponed, remains vital for the financial and personal well-being of Victorians. It offers security and clarity, charting a course for your assets and wishes beyond your lifetime. While a Will’s fundamental principles endure, the legal landscape constantly shifts. Significant changes in federal taxation policy and ongoing adjustments to Victorian regulations mean that yesterday’s optimal strategy may not suit today. This article examines the core components of estate planning in Victoria as of July 2026, highlighting crucial updates and advising how to ensure your legacy aligns with your current intentions and the latest legal framework.

Why Your Will Matters More Than Ever

A Will stands as the cornerstone of any effective estate plan. This legally binding document outlines how your assets, your ‘estate,’ will be distributed after your death. Beyond merely dividing property, a thoughtfully drafted Will provides critical directives and peace of mind.

It allows you to designate an Executor, the trusted individual or entity responsible for carrying out your wishes and managing your estate’s administration. You decide who will benefit from your hard-earned assets – from real estate and investments to cherished personal items – by naming beneficiaries. For those with minor children or dependants needing ongoing support, a Will enables the establishment of trusts. Crucially, you can nominate a guardian for your minor children, ensuring their care aligns with your values should both parents pass away. A clear Will also significantly reduces the potential for family disputes and legal challenges. This prevents unnecessary emotional and financial strain during an already difficult time.

What Happens If You Die Without a Will in Victoria?

Dying without a valid Will means you’ve died ‘intestate.’ In such cases, the Victorian legal system, specifically the Administration and Probate Act 1958 (Vic), dictates how your assets are distributed. This formula is rigid, potentially leading to outcomes far removed from your true desires.

As of July 2026, the Victorian rules of intestacy generally provide for distribution as follows:

• Partner and Children (with that partner): Your partner receives the entire estate.
• Partner and Children (from a previous relationship): This scenario involves a ‘statutory legacy.’ Your partner is entitled to all personal chattels, a fixed initial amount, and half of the remaining estate. The other half is divided among your children from the previous relationship. For deaths occurring between 1 July 2026 and 30 June 2027, this statutory legacy amount is $591,390.00.
• No Partner, but Children: Your estate is divided equally among your children.
• No Partner and No Children: The estate passes to your parents, then siblings, and so on, following a predetermined hierarchy.

This inflexible system often fails to account for modern family structures, estranged relatives, or charitable intentions. Relying on intestacy rules can result in unintended beneficiaries, prolonged legal processes, and increased costs for your loved ones.

How Powers of Attorney Safeguard Your Future While You’re Alive

Estate planning extends beyond your death, addressing situations where you might lose the capacity to manage your own affairs. In Victoria, an Enduring Power of Attorney (EPOA) serves as the critical document for this.

Governed by the Powers of Attorney Act 2014 (Vic), an EPOA allows you to appoint one or more people, known as your ‘attorneys,’ to make decisions on your behalf. It’s ‘enduring’ because its authority continues even if you lose decision-making capacity due to illness, accident, or age.

An EPOA can cover:

• Financial Matters: This includes managing bank accounts, paying bills, buying or selling property, and handling investments.
• Personal Matters: Decisions about your living arrangements (e.g., whether you live at home or in aged care), who you associate with, and other lifestyle choices fall into this category.

You specify when your attorney’s power begins. For financial matters, it can be immediate or contingent upon losing capacity. For personal matters, the power only commences once you’re unable to make decisions yourself.

Choosing an attorney is a profound act of trust. This individual will hold significant control over your life. Therefore, they must be trustworthy, financially responsible, willing, and capable of fulfilling the role. You can appoint multiple attorneys, specifying whether they must act jointly (all agree) or severally (each can act independently). Professionals like solicitors or trustee companies are also viable options, particularly for complex financial affairs.

The Powers of Attorney Regulations 2025 (Vic), which commenced on August 10, 2025, brought updated prescribed forms and witnessing requirements. While the core legislation remains, using the latest forms is essential for validity. These regulations also include provisions for electronic and remote witnessing for certain aspects, though for Advance Care Directives, witnessing must still be done in person.

Your Medical Wishes: Medical Treatment Decision Makers and Advance Care Directives

Your voice in medical decisions, even if you can’t speak for yourself, is a fundamental right in Victoria. The Medical Treatment Planning and Decisions Act 2016 (Vic) is the key legislation ensuring your values and preferences are respected.

This Act provides for two primary documents:

1. Appointing a Medical Treatment Decision Maker: This allows you to legally appoint a specific person to make medical treatment decisions for you if you lose capacity. This individual can consent to or refuse treatment, guided by what they believe your wishes would be. Your chosen decision-maker should be someone with whom you’ve openly discussed your values, and who you trust to advocate on your behalf.
2. Advance Care Directive (ACD): An ACD formally records your preferences for future medical treatment. It can contain an ‘Instructional Directive,’ a legally binding statement about treatments you consent to or refuse. It can also include a ‘Values Directive,’ outlining your broader values to guide your Medical Treatment Decision Maker. For example, you might state you would refuse life-sustaining treatment if in a terminal phase with no prospect of recovery. This clarity provides comfort to your family and medical team, alleviating the burden of difficult choices.

The framework established by the Medical Treatment Planning and Decisions Act 2016 creates clear obligations for health practitioners and ensures medical decision-making aligns with an individual’s preferences.

Federal Policy Shifts: Capital Gains Tax and Trusts

Recent federal budget changes, with effective dates in July 2026 and 2027, represent significant structural reforms to the taxation of private wealth in Australia, directly impacting estate planning.

Capital Gains Tax (CGT) Overhaul: From July 2027

From 1 July 2027, the long-standing 50% CGT discount for assets held over 12 months is set to be replaced with a cost base indexation model. Additionally, a 30% minimum tax will apply to realised capital gains. These changes will affect a wide range of assets, including inherited investment properties, shares, and business interests.

For assets acquired before 1985 (pre-CGT assets), the current exemption will be limited. Gains accrued before 1 July 2027 will remain exempt, but those accruing after this date will be subject to the new indexation and minimum tax rules. This is a material change for many long-held estates. The main residence exemption for one’s primary home is generally unaffected, especially if sold within two years of death.

Navigating the “Right to Occupy” and CGT for Inherited Homes

A critical development impacting inherited property and CGT is the Australian Taxation Office’s (ATO) Draft Taxation Determination TD 2026/D1, released in January 2026. This draft determination tightens the criteria for accessing the main residence exemption for inherited properties, specifically concerning the “right to occupy.”

Previously, a beneficiary living in a deceased’s home, even with a trustee’s discretion, was often assumed to maintain the main residence exemption. However, TD 2026/D1 now requires an express, unambiguous right to occupy the dwelling to be stated directly in the deceased’s Will for a named individual. Informal arrangements or broad discretionary powers granted to trustees (even in testamentary trusts) are unlikely to satisfy this requirement. Failing to meet this explicit wording could lead to significant Capital Gains Tax liabilities for beneficiaries, potentially costing estates hundreds of thousands of dollars. Estate planners must review existing Wills and testamentary trust structures to ensure they comply with this stricter interpretation, particularly before the 1 July 2026 tax-change window for many aspects.

Discretionary Trusts and the New 30% Minimum Tax

From 1 July 2028, a significant shift will occur for discretionary trusts. A 30% minimum tax will apply to the taxable income of these trusts at the trustee level. While individual beneficiaries will receive non-refundable credits for tax paid, those on lower marginal tax rates (below 30%) may effectively pay more tax, as excess credits will be lost. This significantly curtails the traditional income-splitting advantage of discretionary trusts.

Crucially for estate planning, this minimum tax will also apply to discretionary testamentary trusts created after 12 May 2026. This impacts the tax benefits previously enjoyed by beneficiaries like children or low-income earners within these structures. Existing discretionary testamentary trusts (in existence as of 12 May 2026) may have some protection, with income from assets already held within them remaining exempt from the new minimum tax rules. Deceased estates themselves and fixed trusts are currently excluded from this measure.

These changes highlight the importance of reviewing existing trust structures and considering their ongoing efficacy as estate planning tools. While trusts remain valuable for asset protection and control, their tax-driven flexibility is undeniably altered.

Updated Costs for Administering an Estate in Victoria

Administering an estate, particularly when probate is required, involves certain costs. It’s crucial to understand these, as they can impact the net value distributed to beneficiaries.

Probate Filing Fees (Updated for July 2026)

A Grant of Probate, issued by the Supreme Court of Victoria, formally validates a Will and authorises the Executor to act. Asset holders, like banks and Land Use Victoria, typically require this grant for significant assets, especially real estate.

Effective 1 July 2026, the Supreme Court of Victoria’s filing fees for probate applications have been updated. These fees are calculated on a sliding scale based on the gross value of the deceased’s Victorian estate. For instance:

• Estates valued at less than $250,000: Fee waived.
• Estates $250,000 or more, but less than $500,000: $544.00.
• Estates $500,000 or more, but less than $1,000,000: $1,088.00.
• Estates $1,000,000 or more, but less than $2,000,000: $2,538.70.
• For estates worth $7 million or more, the fee can now reach up to $17,770.80, a substantial increase compared to previous years.

The cost for advertising the intention to apply for Probate in Victoria has also increased to $38.00 as of 1 July 2026. This notice must run for 14 days on the Supreme Court of Victoria website. These court fees are separate from any legal fees charged by a solicitor to assist with the probate application.

Will Deposit Fees

From 1 July 2026, the prescribed fee for depositing a Will with the registrar under the Administration and Probate Act 1958 is 1.6 fee units. The fee for the delivery of a deposited Will by the registrar is 2.7 fee units. The value of a fee unit for the financial year commencing 1 July 2025 is $16.81, and fees are adjusted annually. However, no fee is payable if the deposit is due to a legal practitioner’s death or cessation of practice in Victoria.

Digital Assets in Modern Estate Planning

In our increasingly digital world, a significant portion of our lives, from sentimental photos to financial investments, exists online. These ‘digital assets’ are a new frontier in estate planning. Addressing them is essential. While the Wills Act 1997 (Vic) doesn’t explicitly define digital assets, they are generally considered property that can be included in a Will.

Digital assets can encompass:

• Financial Value: Cryptocurrencies, online bank accounts, share trading platforms, online payment systems (e.g., PayPal), and business assets like websites and domain names.
• Sentimental Value: Cloud-stored photos, emails, social media accounts, and online gaming profiles.

The challenge arises because accessing these assets after death can be complex due to privacy laws and platform terms of service. Without explicit instructions, executors may struggle to locate, access, manage, or close these accounts.

Therefore, a modern estate plan for July 2026 should:

• Create an Inventory: Document all digital assets, including user names and passwords, storing this information securely.
• Grant Explicit Authority: Your Will should include specific clauses authorising your Executor to access, manage, and distribute your digital assets. This should explicitly provide them the means to bypass terms of service and engage technical experts if needed.
• Address Powers of Attorney: An EPOA should also include specific clauses authorising your attorney to handle your digital accounts if you become incapacitated.

This proactive approach helps mitigate risks like identity theft, ensures your wishes are followed, and eases the burden on your loved ones.

Superannuation Death Benefits

Superannuation often represents one of an individual’s largest assets, yet it’s treated differently from other assets. While generally not governed directly by your Will (unless specifically directed via a binding death benefit nomination), changes to superannuation legislation can significantly impact the overall wealth transferred to beneficiaries.

From 1 July 2026, new rules are taking effect regarding the taxation of superannuation balances. An additional tax will apply to earnings attributable to total superannuation balances exceeding A$3 million. While the core principle of superannuation death benefits (tax-free for dependents, potentially taxed for non-dependents like adult children) remains, the evolving superannuation landscape impacts the overall value of this asset for estate planning purposes. Understanding these changes and their potential effect on your superannuation is a vital part of comprehensive estate planning.

Ensure Your Plan Remains Current

The dynamic nature of legislation, particularly evident in the federal and state budget changes impacting July 2026, means estate planning is not a one-off task. A Will and associated documents drafted even a few years ago might not fully capture your current wishes or apply the most effective legal and tax strategies. Changes in personal circumstances – marriage, divorce, births, deaths, or significant changes in assets – also necessitate a review.

Engaging with a specialist estate planning lawyer in Melbourne ensures your documents are valid, effective, and tailored to your circumstances, reflecting the legal position as of July 2026. This proactive approach is the most profound gift you can offer your family, providing clarity and security for the future. Act now to review your estate plan and safeguard your legacy.

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