Few of us like to think about death, let alone plan for it. But far from being morbid, getting your affairs in order and drawing up a Will is one of the kindest and most caring things you can do for your loved ones.
Not only does a Will make your wishes clear but it ensures your family isn’t wrestling with legal red tape at a difficult and emotional time.
Yet despite the advantages, it’s estimated 45 per cent of Australians don’t have a Will.
Who needs a Will?
The short answer is everyone over 18. Even young adults have assets such as super, personal possessions, possibly a vehicle and some savings.
Once you reach an age where you have a partner and children, along with a home and perhaps other investments, the need for a Will becomes even more pressing.
What can be included in a Will?
Generally you can and should set out where you want your physical assets (property, cars, jewellery, furniture and collectibles), financial investments (bonds, shares, bank savings) and sentimental possessions (family heirlooms) to go.
Generally, assets you jointly own, such as a house bought with your partner, pass automatically to your co-owner. But if you own property under what is called a ‘tenancy in common’ you can distribute your share according to your Will.
Because superannuation is held in trust, it’s treated differently to other assets. The trustee of your super fund has the final say on where your money, formally referred to as a ‘death benefit’, ends up unless it is paid to your estate.
If you wish to be certain your death benefit goes to the person you want it to, you should fill out a ‘Binding Death Benefit Nomination’ form and lodge it with your super fund. You can nominate your estate as the beneficiary and your death benefits, including any life insurance, will be distributed according to your Will.
Individual life insurance payouts don’t automatically go through the policyholder’s Will, but if that’s what you would like you can nominate your estate as the beneficiary.
How watertight are Wills?
If you invest the necessary time, effort and expense into producing a well-drafted Will, you can be more confident your wishes will be respected.
The exception to this rule occurs when it can be argued a Will treats a dependant unfairly. Classic examples are a parent leaving more to one child than another or leaving everything to a new partner and excluding children from a previous marriage.
Assets don’t need to be split equally, especially if one dependant has previously received financial assistance, or has dedicated years to caring for you. But be aware a dependant who feels dudded may successfully contest your Will.
What happens when there’s not a Will?
If you die without a valid Will, legally referred to as dying intestate, the relevant state or territory laws will be left to sort things out.
Someone, typically your next-of-kin, will have to apply for a grant of Letters of Administration. An administrator will then be appointed. They will divide your estate according to set formula, which differs slightly in each state but generally goes to your surviving partner and children.
Even in a best-case scenario, dying intestate may mean one or more of your loved ones will have to go through an arduous bureaucratic process during a traumatic time. In a worst-case scenario, a partner, child or friend may receive far less than you would have wished.
There are essentially four conditions a Will needs to meet:
- It has to be made by someone over 18 who is mentally competent
- It has to properly dispose of all assets
- It needs to be signed and witnessed appropriately
- It needs to be properly drafted.
While DIY ‘Will kits’ may be better than nothing, if you have substantial assets, a complicated family situation, or you just want peace of mind, you’ll want to engage the services of a trusted solicitor.
A Will is just one part of the estate planning process. If you would like to know more, give us a call at our office on 1300 363 866.
McConachie Stedman Financial Planning is an Authorised Representative of Wealth Management Matters Pty Ltd | ABN 34 612 767 807 | AFSL 491619