The importance of a will – more than 13 reasons why
- January 17, 2018
Nobody wants to think about their own death, however, dying is one of the unavoidable aspects of living, and so as Shakespeare once wrote: "Let’s choose executors and talk of wills."
It is true that, in many cases, dying without a will (legally known as “dying intestate”) will not create any significant issues for your estate. However, there are still plenty of issues which can arise that will only cause further headaches and heartbreak for your loved ones.
Whilst there certainly are more than 13 things that can go wrong, we don't have time to cover them all here; so we will just highlight a few of the major issues and the reasons why you seriously need to stop putting it off and make proper arrangements:
- Without a will, your assets may not be given to the people that you want them given to.
- Without a will, your family may not be adequately provided for after your death.
- Without a will, your loved ones may have to go through significant stress and hardship to close off your estate.
- Without a will, you may unnecessarily lose much of your financial assets in either additional costs or charges.
- Without a will, it may not be clear who you would like your smaller or more sentimental assets given to.
For the most part, this is straight forward - you own your car, your house, and the money in your bank account, and you can leave these assets to whomever you choose. However, there can be a few surprises when it comes to both ownership of certain assets and your ability to leave certain assets to specific people, including:
Accounts or assets held in joint names
Whether it is your car, house, bank account, or small business, anything that is held in joint names comes with an added layer of complexity: will your share in the asset be distributed in accordance with your will, or will it automatically be given to the other joint owner(s)? The answer to this question often depends on many factors, including the type of asset and the manner of ownership, and needs to be considered on a case by case basis.
Superannuation funds (and other forms of trust funds)
You do not actually own your superannuation fund. Without going into the detail, essentially, you are entitled to the benefit of the fund, but the trustee of the fund is the actual owner. This means that, when you pass away, the fund is actually distributed in accordance with the terms of the relevant superannuation fund or trust deed. In the case of a superannuation fund, you can often complete a form known as a Binding Death Nomination to resolve this issue.
Every country has their own laws regarding estates and succession, some of which are vastly different. For this reason, many foreign jurisdictions will not recognise an Australian made will, and the same can be true in reverse. Accordingly, it may be best to seek advice from a lawyer in each jurisdiction where you own assets.
In the event that you pass away without a binding will, your assets will most likely go to your spouse, children, or parents. However, you need to make a will if you want to control this with any degree of certainty.
In particular, you need to make a will if you wish to leave any specific gifts to any relatives, friends, or any charitable or religious organisations; or if you want to place a condition on any gifts (e.g. requiring a young person to attain a certain age of maturity before they receive their entitlement).
It is also important that you consider who you want to be appointed as the guardian of your children (or pets!) in the event that both you and the other parent (or owner) should pass away at the same time. This should include careful consideration in choosing someone who is financially stable, mature, willing, and living in an appropriate location.
The executor is the person in charge of gathering up your assets and distributing them to whomever is entitled to them. For the most part, the executor is bound by the will, and does not have much room for discretion. However, there are still many important factors to consider in choosing the right executor:
- Do you trust them with your money and property?
- Will they carry out your wishes honestly?
- Do they understand financial issues, or will they need to use your assets to pay for professional advice?
- Are they mature enough to carry out their duties sensibly and assertively?
- Are they strong enough to deal with any issues or disputes?
- If your first choice of executor dies, who would you like to be the backup executor in their stead?
The technical requirements for a will to be valid and binding can be surprisingly both strict and lenient. For example, a 10 page will that has only one witness (instead of two) is invalid, whereas a will written in pen on a napkin may very well be valid. You can even find a Do-It-Yourself will kit in various stores around Australia that can create perfectly acceptable and valid wills, however it is just as easy for you to make a small mistake that may render the entire will pointless.
However, even then, a will that is not technically valid can often be used in interpreting a deceased person’s intentions. In order to avoid this hugely complex and confusing issue, it is best that you ensure that your will is correct from the outset.
In some cases, your friends or relatives may wish to contest your will if they believe that you owe them something, or if they believe that you have not sufficiently provided for them in your will. You can minimise the risk of this happening by giving careful thought and consideration to any possible claimants, and by wording your will accordingly.
Ideally, you should seek professional advice every few years to ensure that your will is still appropriate to your situation. However, even if you choose not to pay for advice, you should at least stop and think about whether your situation has changed at all.
In particular, there are several very important events which have a huge impact on your estate planning, and you should seek professional advice immediately upon any of the following:
- Getting married or entering into a de facto relationship;
- Getting divorced or separating from your partner;
- Having a child or grandchild;
- The death of a spouse, loved one, or any other person who is mentioned in your will; or
- Your retirement.