Your will is one of the most important documents you will ever sign. It gives you the right to make decisions that affect your family and your assets when you pass away. Most importantly, a valid will gives you the right to:
- Nominate guardians for your minor children in the event of your death
- If both parents of minor children pass away without leaving a will that appoints guardians of those children, a dispute could arise as to who is to take care of those children. For example, if both sets of grandparents wish to become guardians and the issue cannot be resolved without the involvement of the family courts, a lengthy dispute could arise which could cause much additional trauma and uncertainty for your children at an already challenging time. There is also the risk that without your input under your will, someone else entirely may be appointed as guardians and it may not be someone you trust.
- Determine the interests your loved ones are to receive from your estate
- One of the main purposes of preparing a will is to determine who will receive what from your estate. If you die without a will, this is what estate planning solicitors call “dying intestate”, and the intestacy rules under the Succession Act are what will determine how your estate passes. To give an example, if a husband dies leaving a wife and two children, the wife will only receive the first $150,000 and the remainder of the husband’s estate will have to be split three ways between his wife and two children. Breaking the estate up in such a way can be very problematic if the assets in the estate are moderate. Situations like this may lead to the wife making what’s called a “family provision claim” which can cost anywhere between $50,000 and $100,000 per party in wills and estate solicitor fees. It is also awkward, as the it pits a parent against their children in litigation. Further, if the children are minors, they cannot represent themselves and will need a court-appointed litigation guardian to represent their interests which adds further costs, stress and complexity.
- Nominate those responsible for administering your estate
- Executors are the people you appoint in your will to deal with your estate when you pass away. Preparing a will with an estate planning solicitor gives you the right to appoint someone you trust to deal with your estate in accordance with the terms of your will. Without a will and with no direction as to who is to take charge, someone will need to apply to the court to be appointed as the “administrator”. In most cases, it is the deceased’s surviving spouse or children who will apply to be appointed. Failing that, another relative or someone else entirely may be appointed and it may not be someone you trust. Therefore, it is important to talk to your estate planning solicitor about appointing the right person as your executor.
- Provide asset protection and tax minimisation options for your beneficiaries
- You may not want you beneficiaries to receive a substantial lump sum inheritance and there may be a number of reasons for that, for example:
- you don’t trust your beneficiaries to use the funds wisely
- you don’t want your assets to be available to your beneficiaries’ creditors
- you don’t want your beneficiaries’ inheritance lost as part of a divorce settlement.
- These are things that can be avoided, usually through a testamentary trust which can have substantial tax benefits for beneficiaries over many years. They may also ensure that the impact on beneficiaries receiving social security payments is minimised. Please contact one of our wills and estates solicitors if you would like to know more about this.
- You may not want you beneficiaries to receive a substantial lump sum inheritance and there may be a number of reasons for that, for example:
- Ensure your estate planning is consistent with your superannuation, life insurance, business and trust structures
- These are assets that may not automatically form part of your estate but need to be considered when conducting your estate planning. Take super for example. To nominate a beneficiary under your superannuation policy, you need to prepare a binding death benefit nomination (talk to your estate planning solicitor about this) in which you can nominate your spouse, child, dependant, anyone you are in an interdependent relationship with or you can nominate the legal personal representative and have your super dropped into your estate. There are reasons for wanting to direct super directly to a beneficiary or to your estate. Paying super directly to a spouse or child who is a minor is usually tax free. On the other hand, nominating your estate has the benefit of allowing the funds of being distributed to adult beneficiaries via a testamentary trust which has substantial tax benefits. However, nominating your estate can substantially increase the size of your estate, making it more attractive for potential claimants to make a family provision claim. These are all factors that need to be considered when preparing your estate plan and should be discussed with your wills and estates solicitors.
Any one of these issues could affect you at any stage of life. Your will is not something that should be signed and forgotten. Your will is something that should be reviewed regularly with your estate planning solicitor and grow with you depending on your family circumstances and asset ownership.
If this is something you would like to discuss, please get in touch with our award-winning estate planning team to learn more.
Article by Lily Prasad, Wills and Estates Solicitor at Robbins Watson Solicitors