Have you thought about how you would like your estate to be distributed? What do you want to happen to your assets when you’ve gone? Do you want your grandchildren to benefit… or do you have a favourite charity you would like to support?
We understand that death isn’t a topic that people like to dwell on, but it is important to be pragmatic when writing a Will and planning your estate. This task is often on the to-do list, but today we look at why you should action it sooner rather than later. You’ll find peace of mind once the process is complete, knowing that your loved ones will be well looked after.
Plus, clearly documenting your wishes now will save your family a lot of added stress and potential conflict when they are grieving.
What exactly is a Will?
The Australian Government’s Australia.gov.au website says
“A Will is a document that states how you would like your assets to be distributed when you die, and the person or organisation you would like to be responsible for carrying out your wishes.”
Each individual Australian state or territory has specific requirements that must be met in order for your Will to be legally recognised.
Ensuring the validity of your Will means that you can be confident that your assets will be distributed as you wish… and not left up to a government formula for administration.
Some of the basic criteria is that you have signed the document, it has been witnessed by two people and that you are over the age of 18 years. You also need to have the mental capacity to understand the decisions you are making.
While there are do-it-yourself Will kits available, there are complexities that need to be considered… so it’s advisable to seek the advice of a solicitor. It’s important to remember that a Will is one of the most meaningful legal documents you will ever create, so you want to make sure it’s done properly.
What happens if you die without one?
If you die without a valid Will – also known as ‘dying intestate’, the succession laws of your state or territory will apply. The process usually involves the Supreme Court appointing an administrator for your estate. This is often your next of kin.
It becomes their responsibility to arrange your funeral. They are also responsible for gathering and sorting your assets. They determine your extended family tree and eventually distribute your assets to each family member, after they have paid any of your outstanding debts. The distribution of your assets is dictated by a specific formula and there is a hierarchy across the family as to who receives a portion of your estate.
For example, your spouse is the first recipient, then any of your children. If you don’t have either of these, the order of relatives would usually be:
- Siblings (or their children)
- Aunts and uncles
- First cousins
However, there are some instances where others might also make a claim against your assets. For example, if you were an active volunteer at a charity or a regular donor, they could petition the court to access some of your estate.
Finally, if you die without a Will and you have no eligible family members to take over, your entire estate will pass to the state.
Managing your assets and their distribution
A formal Will is the only way to be sure that your specific wishes will be followed in the execution of your estate. If you want your oldest and dearest friend to have a treasured piece of jewellery or you want your library of books to be donated to a charity, you need to have this clearly outlined.
A thorough review of your assets will not only help you with your estate planning, but also give you a better idea of your financial position today. By taking stock of everything you have – both in financial assets and physical possessions – you will be able to appropriately plan for the years ahead.
Assessing your debts should also be part of this process. When you die, your assets are first used to pay any outstanding debts you have… so the value of your debts can impact the amount your loved ones receive. This is where you could consider other strategies, such as life insurance, to help retain your assets for your family. We recommend discussing this with a professional Financial Adviser.
What else should you know?
Another important consideration is your superannuation. Superannuation is not included as part of your assets within your estate. Because your super is managed by a trust on your behalf, it is governed by a different set of laws. Updating your nominated beneficiaries should be done separately to writing your Will.
While your Will is a legally binding document, it doesn’t mean you can’t update it or change the details. In fact, if you get married or divorced, your Will becomes invalid so you can have multiple versions over your lifetime. There are many reasons why you might amend parts of your Will and your stage of life can certainly influence its inclusions. Perhaps you have more children or your spouse passes away… each time you experience significant change in your life, you should review your Will accordingly.
A well planned Will can help reduce the stress of distributing your estate when your family is in the midst of their grief. The effort you make now can support them once you’ve gone. To find out more about how our team can help you with your estate planning, contact us today. Read more Financial Planning articles.