Topic 3: Wills: Why they’re a must-do no matter what size your asset pile

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Having a will can reduce the pressure on your family, speeds up the management of disbursing your assets and ensures your dearest wishes are honoured –  yet more than half of Aussie adults don’t have one.

That death is confronting to think about, let alone talk about and plan for, is one of the main reasons people put off this important task

Lawyer Brian Herd, a partner at CRH Law, says that while youngsters don’t see the need for a will because death seems a long way away, some older people procrastinate because they believe “any discussion about a will is a discussion about dying”. “It’s not a pleasant discussion for most people because it’s not what they want to talk about,” he says.

Others delay creating their will because it requires some tough decisions. “We’re talking about complex families, like blended families, and they just can’t decide what to do,” Herd says. “Trying to balance all the various claims or interests – it becomes just too difficult.”

Some people, meanwhile, wrongly believe they have insufficient assets to require a will, Herd explains, noting that superannuation and the insurance policies within super accounts can add up to considerable sums that the owner might not have thought of as part of their ‘assets’.

Still others don’t understand the serious consequences of not having a will, in the belief that having casually communicated their wishes to their family is sufficient. The truth is, the law dictates what happens when you die intestate, Herd warns, regardless of what informal instructions you may have left.

“That can be a disaster in terms of what you really wanted but didn’t get around to putting in the document,” he says.

Why is having a will important, regardless of the size of your estate?

“They think it all goes to their family or spouse,” Herd adds. “But that’s not the law. The law [in Queensland] is if you die without a will and you die with a surviving spouse and children, that your estate is split equally at the same time with your spouse and children.”

This can cause problems if there are strained relationships between the surviving spouse and the couple’s children, or if the kids want to sell the family home or other assets to cash out their share. Suddenly, the surviving spouse can find themselves in the precarious situation of not being able to keep the property they expected to continue living in.

In fact, Herd says, he’s seeing a growing trend of wills being challenged, with adult children initiating many of these challenges. This can happen even if the person dies without a will, which leaves children the option of challenging the legal ‘formula’ under which assets are split.

“Some children can argue that it’s unfair that they get the formula share of their mum or dad’s estate, and that they’re entitled to more,” Herd explains. “And that will be because of what’s called the ‘martyred child,’ in other words, they looked after mum or dad when they were dying, and as a consequence they deserve to be compensated or rewarded for a higher or a better share of the estate.”

The formula by which estates are divided is slightly different in each state and territory, so it’s worth checking your local intestacy laws.

Victoria’s laws were updated late last year to make the split of assets more fair to surviving spouses, but in Queensland and New South Wales, for example, the current laws are lagging, and still more closely reflect Victoria’s old law.

Ultimately, though, it’s best to have a will in place to ensure your wishes are clear and documented rather than letting the state decide how your assets will be distributed.

Options for creating your will

Some banks offer resources about how to create wills as part of your broader estate plan. Westpac, for example, offers free webinars about wills and estate planning through the Davidson Institute, as well as a detailed estate planning booklet that helps you to gather the information you’ll need to prepare your will. Similarly, the states’ and territories’ public trustee websites offer helpful information about creating a will, as does the government’s MoneySmart website.

There are several ways you can create a will, each of which come with different costs, benefits and considerations.

Do-it-yourself wills are a low-cost option that can be bought as a kit online or through retail outlets such as newsagents. You simply complete the blank spaces with your personal details and wishes, sign the will in front of a witness and it’s done.

This option may be suitable if you have a fairly simple list of assets and wishes for them. Herd points out, however, that inheritance laws are complex and specific and that if you don’t complete or sign the document properly, it can cause a legal problem when you die.

“When you create a big legal problem you’re creating costs, which then have to come out of the estate, which then comes out of the share of the beneficiaries,” he cautions. “It’s amazing how many people get it wrong, even in the do-it-yourself kit, so, to that extent, I wouldn’t recommend it because it’s not a good cost-benefit decision.

“It might cost you nothing to do it upfront but it may cost your beneficiaries a lot down the road if you haven’t done it properly and there are legal issues.”

Another option is to have the public trustee in your state or territory make your will. In Queensland, for example, the public trustee offers a free will-making service, where its in-house solicitors will work with you to complete a questionnaire that forms the basis of your will. They’ll ensure it’s signed and witnessed properly, keep a copy on their files and give you a printed copy.

Other state public trustees such as the NSW Trustee & Guardian and Victoria’s State Trustee charge $330 for the preparation of a will, and these prices come down if you have an Enduring Power of Attorney (EPOA) made at the same time, or if you nominate the trustee as your estate’s executor. Herd says that in his experience, you should not have any legal issues with a will created by a public trustee.

The most thorough option is to have your solicitor draw up a will. It’s also likely to be the costliest option, but solicitors can offer more specialist advice that ensures your specific personal, financial and family circumstances are carefully addressed.

Don’t forget to review your will after key life events

Once you’ve done your will, it’s important to review it regularly, and particularly before or after a significant life event.

“Events like downsizing, losing a spouse and moving into aged care,” Herd says, for example. “All of those late-in-life events should spur people to review their wills, particularly because those events have a significant financial impact on their estates and that may impact on the will they made 30 years ago.”

Consider the example of where someone may need to draw on their superannuation to pay for aged care, and they’ve previously nominated someone as the beneficiary of the super. Once the payment for aged care has been made, the amount of money in the super fund to be distributed to the beneficiary has been substantially reduced.

“People start to use their estate or their assets for other purposes in later life that they never anticipated in their will, which then makes some of the conditions in their will redundant,” Herd says, adding that this can result in hurt feelings that the deceased had never intended.

The best way to avoid unintended hurt feelings, as well as minimise potential costs to your estate and worries for your loved ones, is to make a will.

Do you have a will? Have you been involved in family disputes because a loved one died without a will?

Westpac Dealing with bereavement and the management of a deceased estate is a difficult time. We are here to help.

Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.