The Crucial Importance of an Up-to-Date Will

Relevant For:

Individuals over 18, particularly those with children, property, or superannuation.

Key Points:

  • Having a current Will is essential to ease family burden and ensure asset distribution as per your wishes.
  • A Will can appoint executors, nominate guardians, and dictate asset distribution.
  • Wills govern most assets within an estate, but exclude joint tenancies, trusts, company-owned assets, and directly paid superannuation benefits.
  • Without a valid Will, the law dictates asset distribution, potentially against your wishes.
  • Major life changes like marriage, divorce, or separation can impact the validity of a Will.
  • Common ‘I love you’ Wills may not always be the most tax-efficient or protective for beneficiaries.

Full Article:

While contemplating one’s mortality is never pleasant, having a comprehensive and current Will is vital to alleviate the burden on your family in the event of your passing, particularly if you are the primary breadwinner.

Estate planning, predominantly executed through a Will, ensures that your assets are allocated according to your wishes upon your death. This process becomes invaluable for grieving family members who might struggle with managing financial affairs and the absence of an income provider.

An up-to-date Will, complete with testamentary trust arrangements, a detailed record of assets and liabilities, and adequate insurance policies, significantly eases the grieving process.

Why Everyone Needs a Will

Regardless of your marital status or whether you have children, everyone over the age of 18 should have a Will. With most workers now having superannuation savings that include life insurance cover, having a Will is particularly crucial.

A Will allows you to:

  • Appoint an executor
  • Nominate a guardian for any young children
  • Direct the distribution of your assets

Essentially, a Will ensures your wishes are known and followed. It governs assets within your estate, such as those owned directly, shares in property owned as a tenant-in-common, life insurance proceeds, and superannuation death benefits paid to the estate. However, it may not cover every asset you have an interest in.

What a Will Doesn’t Cover

Wills do not cover:

  • Assets owned as a joint tenant, which automatically pass to the other joint tenant (usually a spouse)
  • Assets held in a trust, governed by the trust deed
  • Assets owned by a company, as only a company can manage its assets
  • Superannuation death benefits or life insurance policy proceeds paid directly to a beneficiary

Without a valid Will, the law will determine who receives your assets and when, meaning decisions about your estate are made by someone else. To avoid this, it is imperative to have a valid and updated Will.

Impact of Life Changes on Your Will

A Will can be invalidated by events such as marriage if not specifically mentioned. Divorce can nullify an entire Will or specific clauses related to a former spouse in most Australian jurisdictions, whereas separation typically does not affect the validity of a Will, leaving an estranged spouse potentially still entitled to assets.

Many couples opt for an ‘I love you’ Will, where they leave everything to each other and subsequently to their children if both parents pass. However, these Wills might not be the most effective way to distribute an estate, as they might not minimise taxes or protect the assets for the beneficiaries.