In Australia, each state has a different way to administer a person’s estate when they die.
Having no Will, or a poorly drafted Will, can have devastating financial and emotional consequences. It is therefore wise to understand what would happen to your assets if you were to die.
The Will provides instructions regarding the distribution of the assets of your estate. Your estate consists of the assets you own personally. Importantly, your personal assets do not necessarily include superannuation. To see what assets can be included in your Will, review the Estate Planning module.
Alarmingly, about 45% of Australians do not have a valid Will. If you die without a Will, or with an invalid Will, you die ‘intestate’. When you die ‘intestate’ the Government decides who gets what assets according to a standard formula.
Interestingly, if you die intestate (without a valid Will) and have no surviving spouse or relatives, your estate (your net assets) may go to the Government.
While this may sound extreme, this is not always the case demonstrated by a recent change to intestate laws in NSW. In NSW, if you die without a valid Will and you have a surviving spouse, the spouse will get the whole estate. This applies even if there are children in the family, however, it does not apply if there are children from a previous relationship.
If you have taken the time, and invested the money to put together a Will, it is a shame if it becomes invalid.
An area that some people are not aware of is that marriage revokes current Wills. Or, in other words, a Will is not deemed legally valid if it was signed prior to a wedding. If you do get married, be sure to update your Wills to avoid family disappointment in the future.
A Will can also be open to challenge if your family situation changes. Examples include entering a defacto relationship, having additional children, a child dying, or a significant change in your financial circumstances.
The NSW Trustee and Guardian has further detailed information on their website including real life examples of how things can go wrong when unplanned and mismanaged.
Here are three examples:
Don’t be blasé or over-confident about your Wills and Estates, it can hurt and damage a lot of people you care about – here is a video that demonstrates the damage of over-confidence.
To find out what you know and don’t know about Estate Planning, take the Estate Planning quiz now.
To learn more about Wills and Estates, review the Estate Planning learning module.
You may also like to check out this “Will checklist”.
While this article may be all doom and gloom, hopefully, it will give you the nudge to make sure you have a valid Will, and if not, to take action and do something about it. It can be a very small cost to provide assurance that your assets will be dealt with according to your wishes.