Some people don’t realise the only assets that can be distributed under the terms of their Will are those assets owned in the sole name of the person making the Will. That usually means things like jewellery, cash or a home they own outright in their personal name.
But often a significant portion of someone’s wealth is not owned by them personally – which means it is not covered by their Will – and that spells trouble!
Assets owned in your personal name are known as ‘estate assets’. You can be sure these will be distributed according to your Will.
There are many assets people think they own, but they actually don’t. For example, you don’t actually ‘own’ your superannuation or life insurance. You also don’t have any ownership rights to assets held by a family trust of which you may be a beneficiary. Surprisingly, if you own any property as joint tenants with another person, you cannot gift your share of the property to another person under your Will. These assets are known as “non-estate assets”.
It pays to know there is a distinction between estate and non-estate assets – and not knowing this can create significant issues when someone dies.
A robust estate plan considers what will happen to both estate and non-estate assets after someone dies. Professional advice provides you with security knowing that both types of assets are properly identified – and then taken into account via estate planning so that what you intend to happen when you’re gone, can actually happen.
Marriage and divorce can have a significant impact on the validity or practicality of your Will. Similarly, being in a de facto relationship may give rise to legal implications that you need to know about. It might be awkward, but it’s important to discuss your past, current and possible future relationships with your lawyer so any implications can be considered for the distribution of your assets in your Will.
Review your estate plan if there are significant changes to your personal financial situation, for example, if you receive a large sum of money or property from an inheritance. You will need to consider whether the change to your financial situation changes your intentions for the distribution of your assets after your death.
Ongoing guardianship and maintenance of children is a very important part of an estate plan. If you are caring for a child, or if you are providing financial support for a child, then it’s important to think about what would happen if you were no longer around to provide this care or support.
Some people feel a strong desire to give something back to the community through gifts to charity in their Wills. There is also the option of establishing a perpetual charitable trust in the Will to get the most out of your philanthropic intentions.
These documents are an essential element of an estate plan as they allow you to appoint trusted people to act on your behalf if you are unable to act due to incapacity. Attorneys can be appointed to act in relation to financial matters, personal or lifestyle matters and medical treatment matters.
It’s important to seek specialist legal advice and to review your estate planning regularly, especially if your circumstances have changed as a result of marriage, divorce or the birth of children.
At the very least, having open and honest conversations about your personal and financial situation when going through the process of estate planning, is a must.