Regardless of your income or assets, Estate planning is something everyone should consider.
If you don’t have a Will…
Many people don’t have a Will or realise the ramifications of this on their assets and family members. Having a valid Will can save your family and friends unnecessary emotional and financial stress at one of the hardest times in their lives.
If you die without leaving a valid Will then you are said to have died intestate. After the payment of the debts of your Estate, the law sets out the order of which family members will inherit your assets. This could mean that the family home is sold against your family’s wishes and the proceeds divided accordingly. People may think that if they don’t have a Will then all of their assets will automatically pass to their partner or children, but this is not necessarily the case. If you want control over who will inherit your assets, then having a Will is essential.
Without a valid Will, someone will need to step up to be the person to administer your Estate. They will have to apply to the Court for Letters of Administration in order to be legally entitled to this power. This is a costly process, when taking into account solicitor’s and Court filing fees, not to mention a burdensome task if multiple people disagree over who should hold this role.
Some people think that it’s easier to go to the Post Office and fill out a Will Kit rather than consulting with a lawyer. We strongly discourage the use of Will Kits or online DIY Wills. These options are often restrictive and don’t take into account all of the various considerations which a lawyer will put to mind when tailoring the provisions of your Will. A $30 Will Kit may seem appealing, but in the long run it could cost your Estate tens of thousands of dollars in legal fees to fix a potentially invalid Will.
A well-drafted Will sets out:
- the Executor who is responsible for winding up your affairs and assets;
- the guardian of any of your minor children;
- specific gifts you wish to leave to people;
- who you want to inherit your other assets and how; and
- your funeral wishes.
Some people hesitate in making a Will because they think it may cause conflict among family members. Remember, they are your assets to do with as you wish. If you don’t leave a Will then the assets of your Estate could potentially be exhausted on legal costs incurred by feuding family members. A Court will generally place greater weight on the wishes recorded in a Will compared to no Will being left at all.
On the other hand some people hesitate making a Will because they believe that if they leave someone out of their Will then it can just be challenged in Court, and it is therefore not worth bothering making a Will in the first place. This is incorrect. Whilst the law affords the right to some people to make claims against an Estate, there are strict tests for these people, who must justify their claim by showing that you failed to make adequate provision for their maintenance in your Will, or that you had a moral obligation to provide for them.
If you already have a Will…
If you already have a Will, then have you reviewed it recently?
Circumstances in a person’s life inevitably change after they make a Will. Whether it’s the end of a relationship or the beginning of a new one, the death of a loved one or a change in your asset pool, you should ensure that the instructions that you leave for your Estate are in accordance with your current circumstances. You don’t want to leave your family with the burden of an invalid Will.
Some things to think about:
- Have you married or begun a new relationship since you made your Will? Marriage will generally revoke a previous Will. Alternatively, you may now wish to cater for your new partner.
- Have you divorced? Divorce will partially revoke a Will in so far as it applied to your spouse.
- Is your Executor still capable of administering your Estate? The person who you listed as Executor in the past may no longer be in a position to properly manage your affairs due to old age, or there may be someone you now believe could better perform this task. You may also want to add a new back-up Executor.
- Have you had children? Who will be their guardian? Will your guardian receive money for your children’s upkeep? Will these children receive an inheritance when they grow up?
- If you prepared your Will when your children were young, have they now left the nest? Do you want to leave them with something in particular, or perhaps you may have grandchildren who you would like to cater for?
- Have your assets changed? If you have left a specific asset to someone in your Will but you no longer own that asset, then will that person now inherit anything? Will your newly acquired assets affect the way your Estate is taxed?
- Has the value in your gifts under the Will diminished? What could have been enough to cater for a beneficiary 10 years ago may not be sufficient to cater for the same needs in today’s economy.
- Do you have back-up beneficiaries? If a beneficiary is unable to inherit under your Will then is there anyone else in particular who you would like to inherit an asset?
- Would you like to leave a gift of money to a charity?
Superannuation is covered by my Will, right?
Many people mistakenly believe superannuation is covered by Wills. When you sign up with a superfund, you’ll be given the opportunity to nominate beneficiaries to receive your super when you die. This nomination isn’t binding on a superfund.
You need to take a further step of signing a document with the superfund called a Binding Death Benefit Nomination (BDBN). You can either nominate direct beneficiaries, or nominate that the executor under your Will receives your super and leave them to distribute it. A BDBN only remains valid for 3 years, therefore you’ll need to sign a new one every 3 years to keep it valid (unless it’s specially drafted to be ‘non-lapsing’).
If there’s no BDBN, then the trustee of the superfund will determine who will receive your super. They may pay it to the beneficiaries nominated on your policy, to your Estate for your executors to distribute, or they may distribute it between your dependants and/or next of kin. If you haven’t nominated a beneficiary on your superannuation policy or if you’ve nominated your executor as beneficiary to then distribute, then you may also wish to include a provision in your Will regarding superannuation. This will not be necessary if you would like your superannuation to be distributed with the residuary of your Estate, but alternatively you may wish to provide your executor with instructions to distribute your super to a specific beneficiary.
How we can help…
The Estate planning team at Salerno Law can work with you to tailor a Will to properly reflect your wishes. This also includes accompanying Enduring Power of Attorneys and Advanced Health Directives.
Reach out to us if you want more information on how we can assist.
Luke is experienced in guiding clients through their Estate planning needs. He has assisted many people prepare Wills and Enduring Power of Attorneys catering for a variety of life circumstances.
DISCLAIMER: This article is only meant to give you general information and should not be relied on as legal advice. Speak to one of our lawyers for more information.