THE PITFALL OF NOT HAVING A PROPER WILL

Article by Chris Ryan of Chris Ryan Legal
Level 1 14 Church Street, Newcastle, NSW 2300

DISCLAIMER: This article is no substitute for legal advice and should not be read as such.  A will should only be prepared by a qualified solicitor after taking instructions regarding your own personal situation.

What is a Will?
A will is a legal document that sets out what happens to your real and personal property when you die.
To be valid it must satisfy certain requirements according to legislation and it should be tailored to your own personal circumstances.

Recently I bought 5 business shirts from a department store. The shirts were made by 3 different manufacturers. The sizes and fit were different for each manufacturer.  I used to think that size 44 was size 44 and that was that!  One brand I had bought previously and those shirts fit fine, the other's didn't.

In my laziness I didn't try the other shirts on, nor did I ask the salesperson for help, I thought I knew best.  Had I asked for help and tried the shirts before I bought them, I would have saved time in the long run and received a proper fit, first time.

There are no guarantees that the sizing or style of shirts won’t have changed the next time I buy a bunch of shirts. The risk of cutting corners with the shirts was not that great since the downside was either a second trip to the store for an exchange or putting up with a shirt that didn’t quite fit right. The risk of not getting your Will right is much more significant and it is your family which pays the price.

What happens when there is no Will?
If you die without a Will you die wholly intestate. If you have an otherwise valid Will and a gift in your Will fails, you may die partially intestate.

An intestate estate is distributed according to a regime set out in legislation. Under this formula, the entitlement to estate property works its way down from a surviving spouse through a chain of blood relations and if there are no relatives, the State of New South Wales gets it.

I recently had an inquiry from a relative by marriage of a 96 year old lady who passed away after all her beneficiaries and other blood relatives had died- she therefore died intestate and the State reaped the win fall as there were no other qualified beneficiaries.

No one need die wholly or partially intestate. A properly drafted Will which is revised at proper intervals can ensure that people or organisations of your choosing can benefit from your wealth.

Research has indicated that about 40% of Australian adults do not have a Will.

Why have a Will?

• To take control over how your Estate is distributed after you die.

• To avoid unintended beneficiaries receiving a share of your Estate (such as a former spouse, estranged child, or in some cases even the Government).

• To properly provide for your dependents (particularly if you have dependants from different relationships).

• To control the proportion of the distribution of your Estate (for example if you have given significant financial assistance to one of your children in your lifetime and believe that this advance gift should be taken into account with respect to the gifts to your children in your Will).

• You can nominate a guardian for your children.

• You can create a trust for your heirs so that your Estate can provide an income over time.

• Exploit certain tax advantages.

• You can make a gift to your Church or favourite charity.

What about a Will Kit?
Let me address the issue of Will Kits. A properly completed D.I.Y Will contained in the approved kits is perfectly valid but is it going to do what you want it to do? Sometimes what we think we want is not always practical, possible or desirable. What a Will kit won’t do:

• Advise you of all your options;

• Answer your questions in a way that makes sense and is relevant to you;

• Explain the operation of your Will so that you understand it properly;

• Help you choose an executor;

• Explain issues concerning superannuation and asset protection;

• Raise other relevant and significant issues which may not directly affect the operation of your Will, but may still have a significant impact on your family’s financial welfare after you die.

In extreme situations not having a proper Will can result in hardship to family members, significant reduction or wasting of assets and significant litigation against your estate.

The majority of Wills I prepare for my clients are what lawyers call “simple” Wills. These Wills are “simple” because the net Estate (after payment of debts) is left to one or more persons equally (sometimes a simple trust might be created for infant beneficiaries). This format, as it turns out, is satisfactory in most circumstances. All of my clients though who end up signing a simple Will after going through the process of considering their personal circumstances where I discuss with them the various issues which may arise and what their objectives are for their Will. Often this process involves conferring with other professional advisers (for example a financial planner and/or accountant). Sometimes a simple Will format is inappropriate. At the end of the process my goal is to have my clients understand the way their Will works and that this understanding gives them comfort and empowerment that their family, friends, church or charity will be properly provided for in accordance with their wishes after they die.

Getting back to the shirts for a moment, think of getting a qualified solicitor to prepare your Will as not just asking for help but going one better and getting the tailor involved- you get something which fits your needs.

There is no reason why all adults should not have a valid Will. If you don’t have a Will, there is no reason to wait- the best time is now. If you have a trusted family solicitor I encourage you to speak to them about either preparing or updating you Will if you haven’t done so in the last 4-5 years. Getting a Will prepared is as easy as talking with a solicitor.

If you would like to discuss with me any issue surrounding the making of a Will or like to have your existing Will reviewed, please do not hesitate to call me for a confidential obligation free chat on 0406913100.

Personal Information Directories

Insuring your family against financial hardship in the event of your untimely death is extremely important to the financial security of your family.


However once you have your cover in place it is just as important to make sure that others know you have it, after all should you die suddenly in an accident or from a sudden illness you are no longer in a position to tell them about it.

The importance of this issue was highlighted to me at the end of last year when a client passed away. Although she had been ill for quite sometime her health deteriorated rapidly over 2 weeks resulting in her death. It was 8 weeks before we learnt of her death when her sister called my office saying she happened to come across one of our letters whilst cleaning out our client's house. Our client had not told anyone of her policy that she had taken out nearly 20 years ago and as such no one knew to contact us.

Fortunately for our client's beneficiaries her sister was paying attention when she was cleaning her house. Our office organised the paperwork for the family and they recently received their entitlements. But what if her sister had not thought to call us or she had not taken notice of what she was throwing away?

The truth is the policy may have lapsed and if the reminder letter had gone astray no one may ever have known that there was an entitlement to a benefit. It is for this reason that everyone should have a plan on what needs to happen in the event of their death. It may be an uncomfortable subject but it will save your loved ones a lot of unnecessary worry while they are still grieving for their loss.

The best idea is to keep a record of all your important information in a safe place and give a copy to your solicitor, accountant or a close trusted family member or friend.

You should include information about your doctor, Medicare number, people to contact in the event of an emergency, your next of kin details, and insurance policies including those for your home and car as well as any personal insurance.

Also include a list of your professional advisers with their contact numbers and the location of your current will and who your power of attorney is.

You may also want to include the contacts for any organisations you belong to so they can be notified and also your account administration passwords for any social networking sites you belong to so your profile can be removed.

By keeping all these details not only will you make things easier on your family, you will ensure they receive all the entitlements you planned for.

You can get a free personal information directory simply by signing up to our monthly newsletter.

PLANNING FOR THE INEVITABLE

• In Australia the average life expectancy is now 81.4 years.
• In the last 12 months 116,000 couples were married, but over 47,000 were divorced.
• 10% of Australian workers are currently unable to work due to a disability or illness.
• 1 in 5 Australian adults will suffer from mental illness.
• 7.4 Million Australians are overweight.
• 100% of Australians will DIE!

I know, it seems like such a morbid thought but like the saying goes "There are only two certainties in life - Death & Taxes". It is funny though that something that is so certain makes us so uncomfortable to discuss with our loved ones, yet we all will have to face our own mortality sooner or later (later I hope)!

Most of us have seen the Will kit ads or the funeral plan and life insurance ads and even ads for the local funeral home. If you are like me they make you feel a little uncomfortable - like it is their personal responsibility to remind us all that death must conquer all. Just as I am getting comfortably deluded that my happy life will go on forever just as it is - proves that insurance salesman are human after all!

Our natural aversion to thinking about our own death often means we a unprepared and leave a mess for our families to deal with after we are gone. This is why it is important to consider Estate Planning.

WHAT IS ESTATE PLANNING

Estate Planning is planning for the process of passing on our assets and possessions to our beneficiaries and planning for their future with out you. It involves creating a Legal Will that reflects the wishes of how you would like your assets distributed and a Financial Plan that ensures your wishes can be met. If you are a business owner there are a whole lot of other issues that also need to be considered such as succession of the business and how any debts will be paid.

WHAT IS A WILL

A will is a legal document that sets out who received your assets after you die. It may also include your wishes regarding your funeral arrangements and appoint a guardian for any dependents under 18 years of age left without a parent. Your solicitor can help you draft a legal will and if necessary will work with your financial advisor to make sure the appropriate structures are in place to carry out those wishes.

THINGS TO CONSIDER IN ESTATE PLANNING

Have you considered your family's need for immediate funds following your death?

Does your estate have sufficient funds to meet your family's future income needs?

Does your estate have sufficient funds to clear any accrued debts?

Do you need to consider personal risk insurance to fund any short fall in your estate to meet your wishes?

Do you have a current and effective Will?

Have you chosen a responsible and trustworthy executor?

Have you considered the timing of the distribution of funds?

Have you taken steps to minimize the risk of you will being challenged?

Have you appointed guardians for your children?

Have you decided who to grant powers of attorney to?

Have you identified capital gains or any other tax issues?

Have you considered whether certain beneficiaries should receive an income stream as opposed to a lump sum?

Does the trust deed of your superannuation fund pay your beneficiaries a lump sum or a pension?

Do you need to make a binding death nomination to ensure your superannuation benefits pass to your intended beneficiaries?

Have you considered if you want to protect your assets if your spouse remarries after your death?

Have you allocated special bequests for valuable items such as jewellery and family heirlooms?

Have you noted any special arrangements, such as care for a disabled child or a child from a previous relationship?

Have you considered how your business or business partnerships will survive you?

As you can see Estate Planning is much more than just a Will. Most people are suprised by just how long this list is, but it is important to think about all of these things and to seek qualified professional advice from your solicitor and financial planner.

It is unfortunate but many family feuds have started with the death of a loved one who had no estate planning or an inadequate will. If you really love your family then take the time to make plans. Dealing with the death of a loved one is hard enough without all the worry and uncertainty.

Please remember this is intended for general information purposes only and should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider the appropriateness to your own objectives, financial situation and needs. I recommend that your obtain qualified legal advice.