When is the best time to write a Will?
The quick answer is, “As soon as you can!” In New South Wales, anyone over the age of 18 and under special circumstances, even those below 18 could make a Will regardless of the size of their assets. Although having no Will could spell complications in the future, an estimated 12 million Australians don’t have a Will.
If you don’t have a Will yet, contact our expert Wills and Estate Planning Lawyers today to ensure that your wishes are respected.
The Importance of Making a Will
A Will is a legal instrument that specifies the distribution of your assets after your death. Without a Will, your estate will be subject to intestacy laws, which may not align with your wishes and could lead to disputes among your loved ones. For example, if you have remarried and have children from a previous relationship, the laws of intestacy might result in your former family receiving a larger share of your estate than you intended.
Estate planning is not just about deciding who gets what; it also involves navigating complex issues such as tax, superannuation, and Centrelink benefits, which vary across Australian states. Moreover, with an increasing number of Australians living longer, re-partnering later in life, and having children or assets overseas, the need for careful estate planning has never been more pressing.
Common Mistakes to Avoid When Making a Will
Failing to Update Your Will Regularly
That writing a Will is a once-in-a-lifetime event is a common misconception. Life is constantly changing, and your Will should reflect those changes, such as when you remarry or acquire new assets.
Failing to update your Will can lead to serious consequences. If your Will does not account for your current family structure or financial situation, it could lead to disputes among your beneficiaries or even result in an unintended distribution of your assets. It is recommended to review your Will at least every three to five years or whenever a significant life event occurs. This ensures that your Will aligns with your current wishes and circumstances.
Not Clearly Identifying Beneficiaries and Assets
Another common mistake is not clearly identifying beneficiaries and assets in your Will. Ambiguity in the wording of your Will can lead to confusion and disputes among your beneficiaries. For example, if you have children from different relationships, failing to specify how your assets should be divided could lead to a situation where one group of children receives more than you intended.
To avoid this, be as specific as possible when naming beneficiaries and identifying the assets they are to receive. Clearly state who gets what, and consider the tax implications and potential disputes that might arise from your decisions. Additionally, it is crucial to name alternative beneficiaries in case your primary beneficiary predeceases you or is unable to inherit.
Overlooking the Appointment of a Guardian for Minor Children
If you have minor children, appointing a guardian in your Will is crucial. Without a nominated guardian, the court will decide who will care for your children if you pass away before they reach the age of 18. This decision may not align with your wishes or your children’s best interests, potentially leading to a lengthy and emotionally taxing court process.
When choosing a guardian, consider factors such as the person’s ability to care for your children, their relationship with your children, and their willingness to take on this responsibility. It is also important to discuss your decision with the person you intend to appoint as a guardian to ensure they are willing and able to fulfil this role.
Ignoring the Impact of Taxes, Superannuation, and Debts on Your Estate
Failing to consider the impact of taxes, superannuation, and debts when drafting a Will can have significant consequences for your estate and beneficiaries. In Australia, while there’s no inheritance tax, capital gains tax and income tax can still apply, potentially reducing the assets available for distribution. Moreover, all debts must be cleared before any assets can be distributed. However, this might involve selling off estate assets, sometimes at a loss, leaving beneficiaries with much less than anticipated. To avoid this, proper tax planning and debt management are essential.
Superannuation is another critical element often overlooked in estate planning. If your superannuation fund is notified too soon of your death, it could lead to the immediate cessation of pension payments, causing significant financial strain on your dependents. Furthermore, superannuation benefits don’t automatically form part of your estate and can be distributed differently if not properly managed. To prevent these issues, it’s important to have a binding nomination for your superannuation beneficiaries and to carefully coordinate the timing of notifications with your executor to avoid unnecessary financial disruptions.
Another common misconception is the belief that an enduring power of attorney (EPA) remains active after death. In reality, the EPA’s authority ends when the donor dies, at which point the executor of the Will takes over the management of the estate. Misunderstanding this transition can lead to delays in estate administration and potential legal challenges. To ensure a smooth process, it’s crucial to clearly define the roles of your EPA and executor in your estate planning documents and prepare your executor to take over seamlessly upon your passing.
Attempting to DIY Your Will
With the availability of DIY Will kits and online templates, many people attempt to draft their own wills without seeking legal advice. While this may seem like a cost-effective solution, it can lead to significant issues down the road. To be considered valid, Wills must adhere to specific requirements. A poorly drafted Will can result in parts of your estate being distributed according to intestacy laws, rather than your wishes.
One of the most common problems with DIY Wills is the use of incorrect or unclear language. Legal terminology is precise, and even a small mistake can lead to unintended consequences. For example, if your Will contains ambiguous language, it may be open to interpretation, leading to disputes among your beneficiaries.
Another issue with DIY Wills is the failure to consider complex estate planning needs. If you have a blended family, own a business, or have significant assets, your estate planning needs are likely to be more complex than what a DIY Will can address. In these situations, it is crucial to seek legal advice to ensure that your Will adequately addresses your unique circumstances. Consult with one of our team today!
Conclusion
Making a Will is one of the most important things you can do to protect your loved ones and ensure that your wishes are honoured after your death. However, it is equally important to avoid common mistakes that can undermine the effectiveness of your Will.
Consult with one of our friendly and experienced Estate Planning Lawyers today to ensure your Will is thorough and secure.
Talk to us today to start writing a tailored estate plan that meets your unique needs.
