Have you made a valid Will? Or is it time to update your previous Will?
A last will and testament is a document which is legally executed after your death. It is essentially your last wishes on how your assets are to be divided up once all debts have been paid off with your funds.
Many people make the mistake of not documenting a will, assuming that “oh well, I only have a wife and one child, so it’s quite obvious where all my assets will go”. How about the following scenarios?
- My marriage invalidates my previous Wills as a single person.
- People who are in de-facto relationships who are also recognised under the law as legal spouses.
- My will is out of date and it does not provide for any new children which have been born.
- I no longer talk to my siblings and do not want my funds to be diverted to them.
- I have certain assets (family heirlooms), that I want going to certain members of family
- I have recently been divorced and do not want to leave control to my ex-spouse.
- I have an ex-spouse which was in my last Will but I have not taken steps to remove them before my death and make no mention of my current spouse.
- What happens if you leave everything to your spouse, your spouse pre-deceases you and your assets gets distributed in accordance with the terms of THEIR Will? (i.e. what if you do not like your in-laws)
- I am in a same-sex relationship and I have not provided for my current partner (which means your blood relatives can challenge your Will).
- Dare I say it? Illegitimate children coming out of the woodworks?
Everyone knows how Heath Ledger had made a will, but it was made at least 2 years before his daughter was born, or even entered into a relationship with Michelle Williams. There, he left all his assets to his parents and his sister. Tragically, his life was cut short before his 30th birthday, highlighting the fragility of life and how you never know when your time is up. You may go gracefully because of old age, you may go of a heart attack/stroke, incapacitation.
Prevention is always better than cure. Look at the legal wrangle arising from the estates of Michael Jackson and Michael Hutchence; or Dennis Hopper trying to get his soon to be ex-wife out of his Estate by trying to get a quickie divorce.
For anyone who’s had to deal with paperwork in amidst your grief can tell you that this is not a fun thing to do. It’s bad enough trying to deal with your paperwork on a monthly basis, but for someone to reconstruct your entire financial affairs to work out exactly what you have (that’s not hidden) would mean that there has to be some sort of a starting point paper trail for them. What about the Companies which you hold directorship in? Technically, your legal personal representative (Executor) takes your place. What if the current company does not have any provisions for that? Have you thought about your existing partners in business? Let’s face it, business structures are complex. If you cannot get a handle of your own tax affairs on a year to year basis, what hope does someone have with no input to your business?
What a lot of people do not realise is that the person you appoint as Executor takes care of your Estate. Now you may have money still coming in to you – superannuation pay out, last pay & leave, your dividends and even your interest, while all these matters are sorted out. It may take anytime between 6 months and 3 years before everything is sorted out, even longer if there is a dispute. There may be relatives overseas that need to be tracked down, and minors (i.e. children under 18). Depending on what you leave to them, there may be taxation consequences.
Let’s say the worst case scenario happens and you die “without a Will”, you are now known as someone who has died “Intestate”. Each State and Territory in Australia has their own Public Trustees office. You do not have your own Executor, the State appoints someone to examine your financial affairs. They take a percentage of your Estate in fees. Where you think it is quite obvious it should go to your next of kin/spouse/children, they will likely make that same decision and take out a percentage of your Estate to cover their costs. Without trying to scare you into making a Will, here is what the Public Trustee will take out in fees http://www.publictrustee.wa.gov.au/_files/scale_of_fees.pdf
According to Division 2, they take out a percentage in fees for:
- Collecting income that is outstanding (i.e. rent); and
- Based on the value of your Estate; and
- Proceeds on sale of an asset; and
- Postage and stationery costs; and
- Miscellaneous services at a rate per hour,
Trust me, you don’t want to go there.
I would recommend updating your Will every 5 years. After all, how much have your financial affairs changed in the last 5 years and the 5 years before that?
What are you waiting for?
Disclaimer: This is a general article on my thoughts on Wills. This does not represent advice from me. I do not generate any commissions or referral fees, nor am I legally qualified to advise you on what should go in your Will. Will kits are generally available at Australia Post for a simple Will. However, please be aware that any DIY kits could leave the field open for misinterpretation of your last wishes. Most of these kits even have disclaimers that anything you do up as DIY is no substitute for legal advice. I’d recommend you please make an appointment with a legal advisor. It wouldn’t hurt
