Making your wishes known

While Australia’s handling of the COVID-19 pandemic was among the best in the world, the speed and spread of the illness underlined just how fragile life can be.

It was also a solemn reminder of the importance of ensuring your affairs are in order, so your wishes are met – in life and death.

The centrepiece of any estate planning is your Will, which sets out who you would like to receive your assets when you die, and how they are to be distributed. But you also need to consider what will happen to your superannuation as well as who will act on your behalf if you are unable to make decisions about your finances, health or wellbeing.

Expressing your Will

Despite the importance of a Will, it’s estimated that nearly half of Australians don’t have one.i If you die intestate (without a Will), your assets will be distributed according to a legal formula within each State, which may not be in line with your wishes. In an era where complex family situations and blended families are common, this can create unnecessary conflict at what is already a difficult time.

Even if you have a Will, it’s not a set-and-forget document. You must make sure it is up to date and reflects major changes in your life, such as marriage, divorce, the birth of a child or the purchase of a home.

Super is not part of your Will

It is not widely understood that superannuation is not covered by your Will unless you specifically direct it to be by nominating a legal personal representative (LPR) as your beneficiary.

Unless you nominate a valid beneficiary, the fund’s trustees will determine who receives your super. Even if you don’t have much money in super yet, chances are you have life insurance with your super which is paid out to your beneficiaries on your death.

To be valid, a beneficiary must be your LPR or a dependent, defined under super legislation as your spouse, child, someone in an interdependency relationship with you or a financial dependent. If you don’t nominate anyone, or your nomination is not valid, generally the money will go to your dependants or your LPR – but it’s always good to make sure.

The best way to ensure your super and any insurance payout ends up with the people you want to receive it is to make a binding death benefit nomination. There may be a small charge and you need to renew it every three years to remain valid. A non-binding nomination is only a guide so the trustees can overrule your nomination.

It is also worth remembering that if your beneficiaries are adult children, there may be tax implications for them.

Living Wills

Estate planning isn’t just about planning who gets what when you are gone. You should also consider putting in place directives to let your family and others know how you want to see out your days.

An enduring power of attorney will allow you to nominate somebody to act on your behalf if you are no longer capable of conducting your own financial matters. A general power of attorney is not sufficient as it is usually for a set period and becomes invalid once you can no longer make your own decisions.

You should also organise enduring guardianship to appoint somebody to take control of any lifestyle or medical issues should you become incapacitated. And it is worthwhile introducing an advance care directive which states exactly what medical treatment you do and don’t want to receive towards the end of your life.

Spread the word

Once you have prepared an estate plan, it’s a good idea to gather all your documentation in one place and tell your family and legal representative where they are. Also, consider giving someone you trust your online passwords to avoid complications down the track.

Getting your affairs in order can provide great peace of mind for you and your family, now and in the future and we are here to assist please contact us on 03 5120 1400.

https://www.contestingwills.com.au/how-many-people-die-without-writing-a-will/

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.


Caring for family with a Will

Few of us like to think about death, let alone plan for it. But far from being morbid, getting your affairs in order and drawing up a Will is one of the kindest and most caring things you can do for your loved ones. 

Not only does a Will make your wishes clear but it ensures your family isn’t wrestling with legal red tape at a difficult and emotional time. 

Yet despite the advantages, it’s estimated 45 per cent of Australians don’t have a Will.i 

Who needs a Will?

The short answer is everyone over 18. Even young adults have assets such as super, personal possessions, possibly a vehicle and some savings. 

Once you reach an age where you have a partner and children, along with a home and perhaps other investments, the need for a Will becomes even more pressing. 

What can be included in a Will?

Generally you can and should set out where you want your physical assets (property, cars, jewellery, furniture and collectibles), financial investments (bonds, shares, bank savings) and sentimental possessions (family heirlooms) to go. 

Generally, assets you jointly own, such as a house bought with your partner, pass automatically to your co-owner. But if you own property under what is called a “tenancy in common” you can distribute your share according to your Will. 

Because superannuation is held in trust, it’s treated differently to other assets. The trustee of your super fund has the final say on where your money, formally referred to as a “death benefit”, ends up unless it is paid to your estate. 

If you wish to be certain your death benefit goes to the person you want it to, you should fill out a “Binding Death Benefit Nomination” form and lodge it with your super fund. You can nominate your estate as the beneficiary and your death benefits, including any life insurance, will be distributed according to your Will. 

Individual life insurance payouts don’t automatically go through the policyholder’s Will, but if that’s what you would like you can nominate your estate as the beneficiary. 

How watertight are Wills?

If you invest the necessary time, effort and expense into producing a well-drafted Will, you can be more confident your wishes will be respected. 

The exception to this rule occurs when it can be argued a Will treats a dependant unfairly. Classic examples are a parent leaving more to one child than another or leaving everything to a new partner and excluding children from a previous marriage. 

Assets don’t need to be split equally, especially if one dependant has previously received financial assistance, or has dedicated years to caring for you. But be aware a dependant who feels dudded may successfully contest your Will. 

What happens when there’s not a Will?

If you die without a valid Will, legally referred to as dying intestate, the relevant state or territory laws will be left to sort things out. 

Someone, typically your next-of-kin, will have to apply for a grant of Letters of Administration. An administrator will then be appointed. They will divide your estate according to set formula, which differs slightly in each state but generally goes to your surviving partner and children. 

Even in a best-case scenario, dying intestate may mean one or more of your loved ones will have to go through an arduous bureaucratic process during a traumatic time. In a worst-case scenario, a partner, child or friend may receive far less than you would have wished. 

What’s next?

There are essentially four conditions a Will needs to meet: 

  • It has to be made by someone over 18 who is mentally competent
  • It has to properly dispose of all assets
  • It needs to be signed and witnessed appropriately
  • It needs to be properly drafted.

While DIY “Will kits” may be better than nothing, if you have substantial assets, a complicated family situation, or you just want peace of mind, you’ll want to engage the services of a trusted solicitor. 

A Will is just one part of the estate planning process. If you would like to know more, give us a call on 03 5120 1400.

https://www.tag.nsw.gov.au/wills-faqs.html

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.