Having an estate plan, with a well crafted Will at its core, is a must for anyone holding assets.
If a person dies without a Will the chances of disputes amongst surviving relatives increases and/or your estate might go to someone you would not otherwise consider. In these circumstances the estate is dealt with according to the “rules of intestacy”.
Benefits of drafting a Will
- Allows you to control exactly who your assets will be distributed to after you pass away.
- Protect your assets in the event your surviving spouse starts a new family. Do you want your estate to go to children of a later marriage?
- Create a “life estate” in the family home for the surviving spouse during their lifetime, but thereafter ensure the share in the home goes exactly where is should (for instance, directly to children).
- Create a testamentary trust to ensure children and young people receive their inheritance when they reach a responsible age.
- Tax benefits – allows for income streaming to children and their partners via testamentary trust.
- Ensuring equitable division of assets in the event entire family dies at the same time.
No real estate?
A Will is necessary for dealing with such property as real estate, but it is also important for dealing with life insurance payouts.
- The number of life insurance policies in Australia has been increasing.
- The average life insurance policy pays out anywhere between $50,000 to $750,000.
- Some high net worth individuals are life insured for $1m+.
In the case of life insurance, unless there is a valid binding death benefit nomination in place the policy will pay out to the estate and be governed by the Will, or the “rules of intestacy”.
When you obtain a divorce order from the Family Court of Australia your Will might be automatically invalidated if it is not changed.
If you are separated but not divorced and you do not change your Will, it is possible your ex-spouse might become a beneficiary of your estate.
Already have a Will? Is it time to update?
An existing Will should always be reviewed and updated after any of the following occurring:
- Birth of a child.
- Separation and/or divorce.
- After acquiring or selling property.
- If a life insurance policy is created or changed.
Dougal Geddes has over 35 years’ experience providing expert advice in relation to Wills & Estates. He sits on the NSW Law Society Elder Law & Succession and Ethics Committees. He also chairs the Power of Attorney, Enduring Guardian and Advanced Care Directive Sub-Committees.
If you would like advice about drafting a Will, please call us and speak to our Sydney based Wills & Estate lawyer Dougal Geddes on 9232 8033.