Despite the increasing awareness of the importance of estate planning, a surprising number of people continue to pass away without a written testament or will. Unfortunately, anyone and everyone can forget to write or update their will. Young people believe they are invincible, and so writing a will seems like a task that can be put off. Young families tend to hate planning for their death because such a topic brings emotional pain or because they’re too busy to consider it. Older people sometimes simply forget or trust their families to work it out, Unfortunately, if you were to pass away without a will, the laws of intestacy apply, and this means that your estate may be divided in a way you wouldn’t want.
If you’re a parent, this is especially problematic. Writing a will means that you can appoint a guardian of your children. But if you die without a will, it is up to the court to decide exactly where the children will live. Unfortunately, the decision made by the court may not be one you or your family agree with, which can cause pain. Estate planning is so very important.
Estate planning also allows you to nominate those whom you wish to make medical and financial decisions in the event that you lose mental capacity. You could lose mental capacity as a result of an accident, illness or old age. If you don’t have this provision in place, the court may nominate someone to make these decisions for you – and it could be someone you wouldn’t want.
Estate planning can be incredibly complex, especially for those who have complicated business structures or blended families. Because everyone’s circumstances are different, there is no standard template, but there are steps everyone can take to ensure they have a will and that their loved ones are supported.
Why Everyone Needs a Will
1/ Think about your kids!
When you are estate planning, you should think about what may happen if you were to pass away while your children were still dependants. It is a very hard topic to think about, but one that is very important. Leaving your kids without someone named as guardian means that the court can make this decision for you. Nominating who will look after your children if you were to die is something you can simply state in your will.
Discuss with your lawyer what you can do with finances for your children. It may be that you decide to place all the money in a trust until they turn 18 or are no longer dependants. Whatever the case, have the discussion with your lawyer about setting up a testamentary discretionary trust.
2/ Write a will
In basic terms, a will determines what exactly will happen with your assets when you pass away. A will is the foundation of your estate planning, but it’s not the only part. Don’t make the mistake of writing a will kit or a DIY will. Because the law surrounding wills and estates is so complex, it’s easy to make a mistake or overlook something which can lead to a court battle. Instead, obtain professional advice for peace of mind.
3/ Appoint an executor
An executor is a simple part of the estate planning process. Executors of an estate have an obligation to engage in the due administration of the estate.
Enormous obligations are cast upon an executor to gather in the estate, pay all testamentary debts and expenses and to distribute the estate in a correct and legal way.
Executors who seek to administer an estate without legal advice may place themselves in a difficult situation where they are personally liable for the creditors of the estate and for large claims against them. An executor should always seek legal advice concerning the administration of an estate. When you choose an executor, make sure it’s someone who is responsible and trustworthy.
4/ Power of attorney
Another important part of estate planning is appointing someone who will take care of big decisions when something happens and you are no longer able to make your own plans. There are two types of attorneys: one for medical decisions and one for financial decisions. Of course, you can appoint the same person for both. Usually, people appoint their partner or someone they trust.
5/ Pick up the phone
When it comes to life insurance and super, your will cannot directly deal with these assets. Instead, you’ll need to sign a binding death nomination. Where a valid binding nomination is in place, and the trustee of the superannuation fund distributes the proceeds of the super pursuant to that valid binding nomination not a lot can be done in most of Australia, including Queensland. However, we find that very few people have a valid binding death nomination in place.
If you have any further questions or wish to seek any legal advice about your estate planning, contact us today.