Life is a vibrant and dynamic journey, with significant events altering its course frequently. These key life events, such as marriage, divorce, having children, or acquiring new assets, all have profound implications for your personal life, but did you know they also play a significant part in your estate planning? This article will shed light on the importance of regularly updating your will in response to these life changes and offers practical advice on how to make these necessary updates.
Your will is a legal document that sets out your wishes for the distribution of your property and the care of any minor children after your death. It's an essential part of your estate plan that ensures your intentions are carried out, offering peace of mind for both you and your loved ones. However, it's not a document to 'set and forget.' Changes in your personal circumstances necessitate revisions to your will and estate plan to ensure its continued relevance and validity.
Marriage
Contrary to popular belief, getting married doesn't automatically secure your spouse's entitlement to your estate. In fact, marriage can profoundly impact the validity of your existing will.
Section 14 of the Succession Act 1981 (Qld) provides that a will is generally revoked by the will-maker’s marriage. In other words, if you make a will and then get married, your will is deemed to be invalid unless it was expressly made in contemplation of that marriage. This could mean that if you pass away without updating your will after you marry, your assets may be distributed according to the laws of intestacy (i.e. dying without a will) which might not align with your wishes.
For example, if you die without a valid will in Queensland leaving your new spouse and two children from a prior relationship, your estate will be distributed as follows:
(a) First $150,000 to your new spouse; and(b) The remainder in equal 1/3 shares to your new spouse and children from a prior relationship.
Depending on your financial circumstances, this could leave your spouse in an extremely vulnerable situation. On the other hand, if your estate is substantial, your new spouse may receive a much larger share of your estate than you had envisioned, at a very early stage in your relationship.
The implication is that marrying without updating your will could seriously affect the shares taken by your loved ones and leave a legacy of emotional turmoil and expensive litigation. Hence, it's crucial to revise or create a new will whenever you marry, ensuring that your spouse and any stepchildren are appropriately provided for according to your wishes.
In summary, marriage is a key life event that necessitates an update to your will. By understanding the impact of marriage on your estate planning and enlisting professional legal help, you can ensure that your will accurately reflects your intentions and safeguards your loved ones' future.
Divorce
Just as marriage significantly impacts your will, so too does divorce. In Queensland, divorce typically revokes any benefit that your ex-spouse was due to receive under your will, along with their appointment as executor, trustee, advisory trustee, or guardian. However, the rest of the will remains valid. This means that, unless you update your will, the gifts intended for your former spouse would be distributed as though they had predeceased you, potentially leading to unexpected and undesirable outcomes.
Despite the automatic revocation effect of divorce on your will, it's not advisable to rely solely on this. For example, if you separate but do not officially divorce, this will not apply, and your ex-spouse could still inherit under your will.
Furthermore, some individuals may wish for their ex-spouse to remain a beneficiary or act in a position of responsibility. If this is your intention post-divorce, it is essential to reaffirm these provisions in a new will, as the Succession Act mostly presumes the opposite.
Having Children
The arrival of a new child is another compelling reason to update your will to ensure your child is adequately provided for in the event that you pass way.
Furthermore, it is imperative that you appoint a trusted guardian to take care of your children should anything happen to you and the other parent. This also applies to adopted children. Keep in mind that unless explicitly stated, future-born or adopted children may not be included in an existing will, so it's crucial to revisit your will with each new addition to your family.
Acquiring New Assets
As you progress through life, you may acquire significant assets, such as real property, investments, or valuable possessions. Each time you do, your will should be updated to reflect these changes. Without explicit instructions in your will, these new assets might not be distributed according to your wishes.
A particularly crucial area to consider is jointly owned real property. This type of ownership is common among spouses, business partners, or close family members, and the way the property is held has significant implications for your estate.
Joint property ownership can be structured as either 'joint tenants' or 'tenants in common.' The distinction between the two can drastically impact what happens to your share of the property when you pass away.
Joint Tenancy: In a joint tenancy, all owners have equal rights to the entire property. One key feature of joint tenancy is the 'right of survivorship,' which means that if one owner dies, their interest in the property automatically passes to the surviving owner(s), regardless of what's stated in the deceased owner's will. This is common for couples as it allows the property to pass smoothly without the need for probate.
Tenants in Common: If you hold a property as tenants in common, each owner holds a separate and distinct share, which can be unequal. Upon death, a tenant in common's share doesn't automatically go to the surviving owners. Instead, it forms part of the deceased owner's estate and is distributed according to their will. This form of ownership can provide greater flexibility, especially if you want your share of the property to go to someone other than the co-owner(s).
When acquiring new property, it's crucial to consider which form of joint ownership aligns best with your estate planning goals. Regularly revisiting your will is important to ensure it accurately reflects your wishes regarding your assets. Your solicitor can provide tailored advice to suit your situation and ensure your property and other assets are distributed exactly as you intend.
How to Update Your Will
Creating a new will is often the best course of action when there are substantial changes to your life circumstances, such as marriage, divorce, the birth of children, or significant changes in assets. A new will offers a clean slate, providing clarity and reducing the risk of potential confusion or disputes. Here are the essential steps to take when creating a new will:
1. Inventory Your Assets: First, take stock of everything you own – your home, car, savings, investments, personal belongings, and any other assets. You should also consider your digital assets, like social media accounts or digital currencies.
2. Decide on Your Beneficiaries: Determine who you want to inherit your assets. Beneficiaries can include family members, friends, or organisations like charities. Be as specific as possible when identifying them in your will.
3. Appoint an Executor: This is the person who will be responsible for carrying out the instructions in your will. The role of an executor can be complex and time-consuming, so choose someone trustworthy, organized, and capable.
4. Choose a Guardian for Minor Children: If you have minor children, it’s vital to designate a guardian in your will. This person would be responsible for their upbringing if both parents were to pass away before the children reach the age of majority.
5. Draft the Will: You should enlist an expert estate planning solicitor to draft a will that accords with your testamentary intentions. In your new will, you should clearly state that it revokes all previous wills and codicils to avoid any potential confusion or legal disputes.
6. Sign Your Will: Once your will is drafted, it needs to be signed in the presence of two witnesses, who also need to sign it. These witnesses must be over the age of 18 and should not be beneficiaries or the spouse of a beneficiary, as this could make the will invalid.
7. Store Your Will Safely: Store your will in a safe, secure location and let your executor know where it's kept.
Even with these steps, drafting a will can be complex, especially when substantial assets or complicated family situations are involved. Therefore, consulting with an estate planning solicitor is always the best course of action to ensure your will meets all legal requirements and truly reflects your wishes.
Conclusion
Updating your will in line with significant life events is not just a legal necessity – it’s a duty.
Article by Lily Prasad
Wills & Estates Solicitor at Robbins Watson Solicitors
https://robbinswatson.com.au/our-people/lily-prasad