Today’s society is increasingly characterised by small families (one-child families) and a redefinition of the family itself (such as single parents and childless families), with this happening it is probable that a person may die in circumstances where there is no surviving next of kin. In such a case the estate will pass to the Crown. This trend is becoming more common and is of great concern.
Today we take some time to chat with our trusted solicitor at Econ Legal, George Halikiotis, regarding the importance of a will and what you need to think about to ensure that all estate planning matters are covered
What is a will?
A Will is a legal document in which you state how you want your assets to be distributed after your death. A Will also allows you to choose an Executor who will be responsible for making sure your wishes are met.
What happens if I don’t have a will?
If you die with assets in your name, and without a will:
- The division and distribution of your estate is governed by a statute, called an “intestate” law. If you are survived by a spouse and children, your estate is usually divided between your spouse and children. If you have only children (or grandchildren), the estate is divided among your children (and grandchildren). If you have neither spouse, children, nor grandchildren, the estate is distributed to your parents, brothers and sisters, grandparents, aunts and uncles, or cousins, depending on who survives you.
- The person (or persons) who inherits your estate is usually appointed to serve as the administrator of your estate, to collect your assets and settle your estate.
- If you have minor children who inherit from you, a court will appoint a guardian for their estates until they reach the age of eighteen.
- If you have minor children and your husband or wife did not survive you, a court will appoint a guardian for their persons.
These laws do not always cause problems, but there are many situations in which you will want to arrange things differently by your will.
What if I don’t want the courts to determine how my assets are split?
In order to prevent uncertainty or misunderstanding, the creation of a will is essential as it will state who both the primary and substitute beneficiaries are, rather than allow the law to determine who they are and what they should take.
Can you leave specific gifts to anyone you choose?
If you wish to make gifts or leave a portion of you assets to your children, step-children, grandchildren, relatives, friends, charities or a trust, a professionally drafted will determine the various parties’ property rights and appoint an administrator to make decisions and ensure your estate is distributed in accordance with your wishes.
Why is an administrator necessary?
It is important that you appoint an administrator rather than leave it to the court to determine who should administer your estate. Appointing an administrator yourself may prevent any complications or uncertainty for surviving relatives. If you do not appoint an administrator, any difference of opinion that cannot be resolved will exacerbate an already traumatic situation for surviving relatives and may lead to legal actions, unnecessary expenses and worse yet, irreparable rifts between family members.
What is the role of an executor?
The executor will manage many of the tasks that are involved with settling your estate such as collecting all your assets, paying off any debts that you owe, paying taxes that are owed by your estate, and distributing what remains of your assets to those people you have named in your will.
What is the role of the trustee?
The trustee of the estate may also be the executor or may be appointed separately. The trustee is very important as they have an ongoing role for example, in cases where the children are named as beneficiaries or grandchildren stand to inherit from their parents.
What is the role of the guardian when children are involved?
Younger children require a guardian, the absence of their parents, and their wishes on this matter can also be detailed in the will. A proposed guardian should be made aware of and consent to their inclusion as a guardian.
Many people consider using post office type will kits due to the cost involved in going through a solicitor to prepare their documents, what are your thoughts on these ‘do it yourself’ wills?
Proper estate planning can make more money available to loved ones as you save on taxes and probate costs, so the money saved on preparing a will could end up costing more in the long run. These do it yourself wills are very limiting and in my point of view, share the following characteristics:
- They do not explain what would constitute a complex or complicated situation.
- Taxation is not adequately covered.
- Some instructions are given about the choice of executors, but the structure of the will form might confuse users about their options.
When should you update your will?
You should update you will regularly and if your circumstances change, for example:
- Marriage or remarriage;
- Divorce or separation;
- Moving in with a partner;
- The birth of children and grand children;
- Retirement;
- Acquiring a large asset; or
- the loss or sale of assets disposed of by specific gift.
Assets and family situations can change significantly therefore updating your will regularly is important to ensure that it reflects your circumstance and life position.
Hey, Jessica here – Did you enjoy my latest article? Do you have any questions or Feedback for me? Call me on (02) 9266 2269 or Book an Appointment online.
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