Wills aren’t just for later in life and you should really have one when you start earning. And as money and family matters can be complex, it makes sense to get help.
Who needs a will anyway?
A will is something you might think you only need once you’re a millionaire or close to retirement but it’s important to get your will – and your whole estate plan – organised as soon as you start earning money of your own. Why? Because when you’re on the payroll, your super savings will soon start adding up and without sorting out an estate plan, you can’t be sure your assets will be passed on to the right people when you die, including your super savings.
Perhaps you’re on your fourth or fifth or even your 20th job by now and still don’t have an estate plan. It probably isn’t keeping you up at night but there could be other triggers and life stages that make your estate plan far more important:
- Buying a home – having a will makes it crystal clear what will happen to a home you own when you die. You may want to make sure loved ones can continue to live there or have this part of your wealth passed on to the right people.
- Having kids – your will isn’t just about money, it’s also about people. If you have children, a will can help to make sure they’re looked after and cared for by the people you have chosen if the worst were to happen.
- Getting married or moving in together – sharing your life with a partner often means sharing wealth too. Whether you’re married to your significant other or not, it’s important to make sure they’re looked after if you die, along with anyone else you want your wealth to go to.
- Separation and divorce – when relationships end, money matters can get tricky. No matter how simple and amicable things are, an estate plan is an important way to make sure wealth and assets are passed to the people you choose, particularly if there are new partners and/or children involved.
- Your parents die – when your parents die with a proper estate plan, transferring their wealth is going to be easier to manage. If they don’t have one, you and any siblings can get caught up in a long and expensive process of sorting everything out. It’s a big reminder of why a good estate plan is so important to the ones you love.
Making a will
A will is a very important legal document. It covers what you want to happen to your assets – like cash in the bank, shares, investments or properties you own and any personal items.
In your will you’ll need to include who you want to be your executor. This is the person (or it can be an organisation) who will carry out the instructions in your will. This person is making a big commitment of their time as well as taking responsibility for distributing assets, communicating with everyone and carrying out your wishes according to your will. They’re also going to be the one dealing with any issues that come up if there are disputes about your will.
What happens if you don’t have a will?
When someone dies without a will, it’s called intestacy. The intestacy laws of the relevant state or territory will determine how assets are divided and who they go to. Getting this sorted will usually involve a fair bit of work with lawyers who’ll often be working based on an hourly rate. There’s potential for these legal costs to add up over time and it can sometimes take years to resolve things, particularly for complex estates and family situations.
This is why it will probably cost a lot more to sort things out if you die without a will than it costs to put a will in place now. Basically, making your will now is cheaper and less stressful for your loved ones than dying without one and it gives you the chance to have a say in what happens to your money when you’re gone.
The dangers of DIY
There are plenty of DIY wills available – from hard copy kits to online forms – but they’re not for everyone. If your situation is simple – no partner, no kids, limited wealth and assets – then a good online service might be enough for you to come up with your own estate planning documents but for a lot of family situations and estates, online and DIY wills just aren’t going to cut it. A dynamic form, no matter how well it’s put together, can’t help you understand the tax implications of how your money is shared out, for example.
A DIY solution can also get tricky when it comes to executing your will. You’ll probably get detailed instructions for how to do this but if they’re not followed to the letter, your will might not be legally binding. This may leave your loved ones in the same situation as if you didn’t have a will at all.
Your will is just part of the plan
Your will isn’t the only part of your estate plan you need to get organised. Your super isn’t always passed to your loved ones through your will so you’ll need to make a separate arrangement for this – it’s called a beneficiary nomination. If you have life insurance in your super account you’ll also need to make arrangements for nominating beneficiaries with your provider.
Another part of your estate plan to think about organising is your enduring power of attorney. This is where you choose someone to act on your behalf and make certain choices if, for example, you’re unable to do this for yourself. If you have an accident or fall ill, your attorney can look after your financial affairs and get things done for you.
You can also arrange a separate medical power of attorney to make choices on your behalf about your medical and lifestyle needs if you are unable to make these decisions for yourself. This document goes by different names depending on which state or territory you’re in.
It’s clear that choosing an attorney in your power of attorney is a serious business. You need someone you can trust to make decisions with your best interests at heart. They’ll also need to have the time and know how to follow up on things like getting your bills paid, signing papers or maybe even arranging to sell assets on your behalf.
Save time and money by getting help
Getting a will or estate plan done properly isn’t as expensive or difficult as you might think. Particularly if you get your super fund to help you out. They often have resources online and some funds offer estate planning services to members too.
If you need help with your estate plan, contact us and we will help you start your estate planning journey.
Source: IOOF
