Estate Planning Essentials - Your Will

Posted by Malcolm Campbell on 27 September 2017
Estate Planning Essentials - Your Will

Getting Estate Planning right not only helps put your mind at ease now but will also help you and your family during times of turmoil and emotional upheaval. There are a number of legal estate planning documents that may protect your interests.

Over the next few weeks, our Estate Planning blog series will help you to understand some key estate planning documents.

 

Your Will

A Will is a legal document that informs your Executor (the person who organises for your estate to be administered) and your family of your wishes upon your death. Such wishes include the distribution of assets, the guardianship of any surviving minor children and details as to why you may have specifically left somebody out of your Will.

Set out below is some general information to consider when making a Will. This is not a comprehensive guide, nor is it tailored to your circumstances. We suggest that you meet with us so that we can provide you with estate planning advice tailored to your personal situation.

Why is it important for me to have a Will?

It is important to have a Will to:

  • ensure that your wishes are clear;
  • decide what you want to happen with your hard earned money;
  • keep heirlooms in the family;
  • make sure that your children are looked after;
  • put in place appropriate financial and tax planning measures;
  • look after your family and loved ones;
  • avoid family squabbles and disputes;
  • avoid the time, stress and money caused by disputes;
  • reduce the heartache for your family; and
  • give you and your loved ones peace of mind.

What happens if I Don’t Have a Will?

When a person dies without a Will, the distribution of their estate is left to the system set out by the law. A clear, concise and well-drafted Will can reduce disputes and help ensure an estate is distributed in accordance with your wishes.

Can I Just Write Down What I want to Happen?

If you want to create any other Will-type document, no matter how informal, you should speak to us. Such documents can create confusion and added costs in your estate, especially now that the law allows informal dispositions and bequests under certain circumstances.

One word of caution – putting stickers on household items and jewellery nominating a recipient is generally futile unless all beneficiaries in your estate agree with the nominations.

Can’t I just use a "Legal Will Kit" from the Post Office?

You would use a Solicitor to prepare your estate planning documents for the same reason that you would engage a specialist surgeon to carry out your surgery. Solicitors are trained in the craft of writing and creating certainty through well drafted documents. They also have experience in dealing with family disputes about Wills and estate planning and they know what can go wrong and how to help avoid problems.

Throughout your lifetime you are likely to accumulate significant assets. You do not want to see all of that hard work wasted away as a result of a badly drafted Will, family squabbles or poor tax planning.

Minor Children and Guardianship

If you have a children under the age of 18 then your Will can appoint a Guardian for the children. A surviving parent will automatically be appointed guardian of any minor children and therefore you need not name your spouse or surviving parent as the Guardian. You may appoint a guardian to act jointly with the surviving parent.

We recommend that you discuss guardianship of minor children with the other parent so as to ensure that you are both aware of the appointments.

Keeping your Will Up-to-Date

You should make a new Will if your circumstances change, such as:

  • you change your name, or anyone named in the Will changes theirs;
  • you get engaged, marry or divorce;
  • you enter into or end a de-facto relationship; or
  • you have children (including adopted or foster children);
  • your children have children;
  • an executor dies, is unwilling to act, or becomes unsuitable because of ill-health, age or for any other reason;
  • a beneficiary under the Will dies;
  • a specific asset left under the Will ceases to exist, or you sell it or give it away, or put it into a trust or a partnership, or if it changes its character. This applies especially to specifically bequeathed shares in a company which restructures its share capital.

If you marry, your existing Will is revoked by that marriage, unless the Will is expressed to be made in contemplation of that marriage. Failure to make such a Will or a new Will after marriage will mean you would die intestate.

Divorce may affect your Will. The impact of divorce is complex and the law is not uniform throughout Australia. If you are contemplating divorce or have just divorced since making your last Will, you should contact us.

We recommend you review your Will at least every three years or whenever there is a major change within your family, assets or to the tax laws - this is one of the reasons we provide you with a copy of the Will. If you are in doubt about the status of your Will, please contact us.

If you have any reason to change your Will, revoke it or make a new Will without informing your spouse or de-facto partner, you may do so, but you should talk to us. Do not add to or delete from the Will after its execution. Any change can have disastrous results. If you want to change even the simplest item, you should consult us first.

To amend your Will you can either instruct us to prepare a "codicil" (document), which will be attached to your existing Will or prepare a new Will. Depending on the amount of amendments to be made, it is often best to prepare a new Will.

What happens to any Previous Wills?

Your new Will revokes all previous Wills. Provided your new Will has been correctly executed, you should arrange to note the revocation on your old Will(s) by ruling a line through each page of the old Will, and writing on it “Revoked by Will dated XX/XX/XX, presently held at XXX ”. You should file the old Will with the new Will or return it to us for filing. Revocation can also be effected by tearing up your old Will. However, you should record the fact that you have done this, and keep the record with your new Will.

TESTAMENTARY TRUSTS

Testamentary Trusts are sophisticated Wills used for tax planning and asset protection.

If you do not believe that a simple Will adequately addresses your family's tax and asset protection needs you may wish to consider a Testamentary Trust. However, the creation of a Testamentary Trust is much more complicated than a simple Will and involves additional time and cost.

If you have significant assets or complex family or business relationships it is advisable to consider a Testamentary Trust. Note: Testamentary Trusts are complex and involve considerable time, cost and detail.

A Testamentary Trust Will creates a Trust whereby the assets do not go directly to the beneficiaries but instead some or all the assets can be held in Trust for the benefit of the beneficiary. The benefits of a Will creating a testamentary trust include:

  • Asset protection

  • Tax minimisation by splitting income

  • Inheritance protected from family law disputes

  • Minimise capital gains tax and stamp duty liability

  • Protects inheritance for many generations

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