21 March 2019 | Julie May
If you haven’t made your wishes known, let alone formally documented what these are, it’s possible. Check out what to consider sooner rather than later.
The thought of dying isn’t a pleasant one, which is why considering how you’ll distribute your assets after you’ve gone may be something you’ve always put off for another day.
While this is understandable, you also probably don’t want inaction leading to family members becoming embroiled in a nasty inheritance dispute if you leave it too late.
On top of that, without a valid will, you run the risk of your estate being distributed according to state law, which may not align with what you had in mind either.
What Aussie seniors said on the matter of inheritance
Almost one in five Aussie seniors said in a survey they had concerns that their family would argue over their estate should they pass away, particularly in regard to property and money, with people feeling less worried there’d be arguments over sentimental items or things like cars and jewellery1.
Among seniors, who were concerned that family members would argue over their estate upon their passing, about 70% were worried that disputes would negatively impact their family’s relationships2.
By far the most popular strategy to minimise the risk of families fighting over estates was drawing up a will that specified in writing how an estate would be distributed3.
The benefits of documenting things formally
Drawing up a will allows you to document how you want your assets to be distributed after you die.
- This can help in the instance someone contests what you’ve said you want to happen if you’re no longer around.
- It could go a long way in preventing disputes from arising should family members be made to divide assets among themselves.
- You may also be able to improve tax consequences for your heirs. For instance, if they have to sell something they’ve inherited, depending on the asset, capital gains tax may be payable.
Things to consider and why communication can be beneficial
You may or may not want to distribute your assets evenly. You may have given cash advances to help people out earlier in life. There may be family members who are better off than others. There may be some getting assistance via other means, while others may be less likely to use the money wisely.
At the end of the day, how you want to distribute your assets will be up to you but communicating why you’ve made certain decisions could go a long way. Sure, it might be a hard pill to swallow, but not talking about it could cause far bigger feuds (and sadly to say, even legal battles) down the track.
Talking openly and honestly will hopefully help your family understand why you have made the decisions you’ve made and ensure everyone is on the same page.
How to formalise what you want to happen
A solicitor or estate planning lawyer can help you draw up a will that’s legally binding. It’s important this document is kept up to date to also ensure any changes to your situation (marriage, divorce, separation or otherwise) are accounted for, so those who matter most are taken care of.
While it’s also possible to draw up your own will (there are various kits available online), these mightn’t be adequate in complex situations, which is why engaging a professional may be worthwhile.
After all, if your will is deemed invalid, your estate will be distributed according to the law in your state (which may not align with your wishes) and claims could be made by unintended recipients.
Other important things you may want to think about
Choose an executor to help carry out your wishes when you’re gone
Generally, an executor manages and distributes your estate with the assistance of your solicitor, according to the terms you have set out in your will (which your solicitor should have a copy of).
When you nominate an executor in your will it’s important to let your family know and make sure the person you’ve appointed knows their duties and where your will and other important documents are kept. You may also want to let your family know where this information is stored.
The executor will typically be responsible for things like making funeral arrangements, ensuring your debts are paid and bank accounts closed, and any life insurance collected. They’ll also need to apply to the court for probate, which is a legal step that is required before your estate can be distributed.
Review your nominated beneficiaries for any super or insurance you might have
You might assume that how and in what proportions you want your superannuation to be distributed can be included in your will, but this isn’t necessarily the case unless you've specified certain arrangements with your super fund beforehand.
With that in mind, it may be a good idea to nominate your beneficiaries with your super fund and to make sure you’re across how long different nominations are valid for. If you don’t make a nomination, your super money may end up somewhere you wish it didn’t.
In addition, if you have insurance outside of super, you may want to ensure that you’ve listed your beneficiaries on your insurance policy and that those beneficiaries are also kept up to date.
Consider appointing an enduring power of attorney to make decisions if you can’t
This person will make legal and financial decisions for you while you’re alive, if you’re ever unable to.
For this reason, it’s important to choose someone you trust, as they’ll be responsible for looking after your bank accounts, ongoing bills, and even selling your house if you need to move into a care facility.
It’s also worth noting, you may be able to appoint a different type of power of attorney depending on what tasks you’d like this person to carry out on your behalf, such as general lifestyle decisions.
Do you need help?
Your will and broader estate plan can be a complex area and there may be legal and tax implications if you don’t set things up correctly and understand the fine print.
For these reasons, it’s very important to speak to a legal professional and your financial adviser before making any decisions and signing on the dotted line.
Meanwhile, if you don’t have an adviser but are after some advice, you can call AMP on 131 267 or use our find an adviser search function.