Most people think that when they die, their last will and testament will be carried out without a hitch. Unfortunately, that isn’t always the case. We asked an expert estate planning lawyer how to ensure your estate is settled the way you want it to be.
Tip one: Make sure you have a will
A surprising number of Australians fail to prepare this important legal document. The NSW government estimates that 45 per cent of Australians don’t have a will.
If you die intestate — without a will — it can have serious implications for your estate, says Andrea Michaels, Managing Director of NDA Law. “It could cost your estate in excess of $5000 in legal fees and hold up the settlement,“ she says.
Your family will have to apply to the Supreme Court for Letters of Administration. An administrator will then be appointed to distribute your estate according to a predetermined formula
“So if you have any special wishes, they may not be granted,” she warns.
Tip two: Engage a lawyer (Don’t use a will kit)
There are a number of do-it-yourself will kits on the market but you should see a lawyer specialising in estate planning, advises Michaels. “A lot of the litigation around wills is about post office will kits not being drafted properly,” she says.
But, wills can be complicated legal documents. “Often people will try to save themselves a few dollars by making a do-it-yourself will, only for it to cost their estate lots more down the track,” she says.
Tip three: Make sure your will is valid
Laws regarding wills are different in each state and territory, however a will commonly requires the following criteria:
- It must be in writing, either typed or handwritten.
- The will-maker’s signature must be made and acknowledged in the presence of two or more witnesses at the same time.
- It has to be signed by the will-maker or another person in the presence and at the direction of the will-maker.
- It must properly dispose of all the will-makers assets.
- It must follow the legal rules of construction.
Tip four: Include all your assets
Your will should include all your assets. That means tangible assets like cash and property, as well as intangible assets — things like intellectual property rights, royalties, patents, and copyrights. “There is no minimum value of an item to include in your will. People quite often include sentimental items and that’s fine to do that,” says Michaels.
Tip five: Don’t forget to consider your superannuation and any assets in a family trust
Assets that are kept in a family trust and superannuation are not automatically included. “People don’t realise that superannuation isn’t automatically dealt with in your will in most Australian states. You will need to get proper advice about superannuation death benefits,” says Michaels.
Tip six: Be aware that your will could be contested
One of the most common reasons for a claim to be made against your estate is if a family member believes that they have not been adequately provided for.
“An example might be if one beneficiary received financial assistance from you when you were alive (such as a deposit for a house) while another of the same relationship to you did not and your will fails to address this discrepancy,” says Michaels.
To make a legitimate claim, the claimant will have to prove that they have financial needs and that you failed to adequately provide for them. A court’s decision on the matter will consider the financial and material means of the claimant, the relationship of that person to you, and whether or not you had any moral obligation to that person.
To try and prevent your will being contested, you can:
- Distribute some (or all) of your assets while you are alive.
- Obtain proper legal advice to ensure you properly provide for possible claimants.
- Structure your assets so they are not part of your estate — for example have a joint bank account or own a property as a joint tenant (In most states, after you die your ownership passes automatically to the surviving tenant regardless of your will).
Tip seven: Make sure you choose someone trustworthy and competent as the executor of your will
The executor of your will is very important because they’re responsible for probate (proving your will in the courts) and the distribution of your assets.
“We often have people say, ‘I need all my kids to be executors because I don’t want to upset one,’ but being an executor is not an easy job. What you really need is one person competent enough to get all the difficult paperwork done,” explains Michaels.
Have you gotten your affairs in order and had a proper will executed?