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Chances are that at some point in your life you will need to write a will.
But the process can be confusing and intimidating so I’ve put together this step-by-step guide to writing wills in Australia. Since the property purchases, I need to get mine updated.
What are Wills?
A will is also known as a last will and testament. This legal document lays out how your estate (all your assets) should be distributed in the event of your death.
This document can also contain instructions for guardianship of children and pets. A will can also contain requests for your burial/cremation and funeral.
It does not include the distribution of your superannuation, which may for many be their largest asset. For this, you need to complete a binding nomination form, easily downloaded from your super website. This usually needs to be completed every 3 years to remain current.
Life insurance payouts are also excluded from the will and go directly to the beneficiary listed with your insurance company.
Who needs a Will?
Solicitors will tell you that everybody needs a will.
I guess when considering whether you require a will and testament, assessing what happens if you die without a will (intestate) is useful. If you die intestate, a court will distribute assets according to a strict set of rules.
These rules, of course, are different from each state and territory of Australia, and don’t take into account any personal information!
The rules aim to provide a simple, fair settlement for most families, the New South Wales intestacy rules are:
- If you were married or in a de facto relationship, your spouse / defacto recieves your entire estate
- You were married in a de facto relationship with children to that same spouse, your spouse / defacto still recieves everything.
- If you were married but have children to someone else, your spouse recieves your personal effects, a statutory legacy (arbitrary set amount of your estate, $480,700 in VIC) and half of the remaining assets. If there are any remaining assets left, they are split between your children.
- You have children but no spouse, the children recieve equal parts of your estate.
- If you do not have a spouse of children, other relatives including parents, grandparents and siblings will share your estate
- You have no relatives or dependents, all of your assets will become the property of the New South Wales government (!)
Dying intestate involves more complexity, administrative and financial burden for those left behind. Unfortunately, it also sometimes leads to family quarrels over who gets what.
As soon as you have any assets, a mortgage or children, a will really is essential.
Nominating an Executor
The executor of the will is the person who carries out your wishes after your death, including organising the funeral, paying off debts and distributing the assets. This is a pretty huge responsibility, so you need to check with the potential executor that they are willing to take this on.
There is nothing like an inheritance to split up a family. Previously harmonious and reasonable people can turn into green-eyed monsters and do unthinkable things when a large amount of money is at stake.
An independent professional executor seems an ideal situation, particularly if you think your loved ones will be overwhelmed by the process. Unfortunately, fees can be expensive. It’s worth checking with your public trustee and solicitor what the fees would be for your estate if an independent executor would be appropriate.
Whoever you choose as executor, they need to know where to find an original will document to apply for a grant of probate. This is the first step as executor and gives them the legal right to handle your estate.
You may want to provide your executor with an original will or leave one at the solicitor’s office as well as in a safe place at home. Make sure you inform your executor where your will is and who your solicitor is.
Unpleasant surprises (such as being given less in the will than expected) cause family disputes and legal challenges. It is best to let your family know your wishes so no one is surprised on discovering your will.
Your executor should claim a fee if they are not a beneficiary in the will to compensate for the time and effort involved in the role of being the executor of the will. If they are a named beneficiary they cannot claim a fee. If you want to set a specific amount of compensation for the executor, you can do this by naming them as a beneficiary of what you think is reasonable.
How to Write a Will
There are three main ways that wills in Australia can be written. “Do it yourself” wills, hiring a solicitor and using the services of the Public Trustee. Each has its own advantages and disadvantages.
The benefit of DIY wills is that you can do them yourself and it will cost a lot less money if you have little assets to leave behind. You need to ensure the will is valid, so it’s worth getting the public trustee or a solicitor to check you have correctly completed the document.
Public Trustee Wills
Public trustees will complete your will for free if you are aged over 60 years or nominate the public trustee to be the executor of the will. Unfortunately, there seem to be fees upon fees for this service. It is definitely worth checking the fees involved in the management of the estate and carefully considering options.
If you want help with drafting or executing your will then hiring an experienced wills solicitor is ideal. The advantage here is that they know what should and shouldn’t go into your will, making sure everything goes smoothly and nothing gets forgotten about.
It may like a more expensive option at first, but it could save a lot of money and heartache if you have an estate to distribute.
Before we owned investment properties, we paid ~ $800.
What to Include in Your Will
- Assets such as savings, investments, properties
- Guardianship of children
- Belongings of substantial emotional or sentimental value (ours includes the distribution of hubby’s fishing gear!)
What is Not Included in Your Will
For many readers, your largest assets on death may not be included in your will. Your superannuation and life insurance payouts go to your nominated beneficiary.
Writing a will with a solicitor’s help is a sobering process. It involves thinking through every morbid situation you can imagine and working out how to write your wills to cover all situations.
Remember to consider:
- If you die and leave your family / dependents
- What if you die and then your partner remarries?
- If you and your partner die together
- You, your partner and children die together
If you die, and your partner dies a year later, are you happy with your partner’s will beneficiaries? Many couples have “mirror wills” that are exactly the same.
Here you name your beneficiaries and what they should receive. It makes sense to make this as future proof as possible, as your assets now will change and hopefully grow over time.
Using percentages of your assets gives the flexibility to keep the will relevant as your net worth grows. If there is a possibility of more children being added to the family, ask your solicitor about dividing assets “between the children”. Stepchildren, however, will not be included under this and will need to be named specifically.
You can name anyone you want as a beneficiary including non-relatives and charities.
If there is anyone you specifically want to exclude from the will, talk to your solicitor about this. Excluding someone who would normally be expected to be a beneficiary can result in legal challenges, expenses and long court battles. Your solicitor may advise you to provide documentation of your reasons for excluding a person or bequeath them a small gift to demonstrate that their omission was not accidental.
Guardianship of Children
I reckon this is where most people get stuck and put off writing a will forever. It’s an awful thought experiment to consider options if your children were orphaned. It’s very unlikely to happen, but unfortunately, it does occur.
The alternative if you do not make a decision is that your children’s future will be decided in family court by strangers. Consider it a preventative measure using Murphy’s law, if you make a plan it surely won’t ever be needed!
For some, this decision will be easy. If there is a geographically close family member who is actively involved in your children’s lives, has a great relationship with the kids and would be willing to take on their care, that’s perfect. Keeping the kids close to home means less upheaval after such a traumatic event it would be kind to keep them at the same school and close to their friends.
For many of us far from family, there is no ideal solution. The guardian can be a close family friend rather than a relative if that is more appropriate. But if your sister with a non-existent relationship with the kids on the other side of the country might be shocked you chose a friend over her, you need to inform her just in case. Explaining your reasoning can help prevent surprises and legal battles. Often it’s a case of choosing the least bad situation.
The most important factor for us is that our children would feel loved and supported, as well as have a stable home with guardians young and healthy enough to care for them until adulthood.
Obviously, asking someone to become a parent to your children is a massive ask! This should definitely be discussed prior, with the opportunity for the potential guardian to decline without feeling obliged. No one wants their kids to grow up in a family that resents them.
Your Children’s Money
A testamentary trust can be set up on your death to hold assets, including property and investments, for your children. This trust will be managed by someone you designate to manage this until the children turn 18 (or whatever age you choose). This is obviously open to abuse.
The person in charge of your children’s trust should be someone to trust to do the right thing. You can also give the financial trustee role to someone other than the child’s guardian. Whether this will help protect the money, or cause family arguments is very dependent on the individuals.
Make Sure its Valid
There is no point in writing a will if it is not valid. It needs to be signed by two witnesses and yourself. It needs to revoke previous wills. Any adjustments to a pre-existing will need formal adjustment (a Codicil) and again needs to be signed and witnessed by two witnesses. I would urge professional help if you have assets outside superannuation and life insurance.
A will is invalidated by marriage, so you need to organise a new will after the wedding. Divorce also changes the validity.
While Your At It
While you’re doing grown-up jobs, consider the need for an advance health directive or Power of attorney.
If you are unable to make your own decisions (in a coma for example), an advanced health directive can appoint someone to make medical decisions for you, or state what you want in advance.
If you are unable to make your own decisions because you’re in a coma, someone still needs to pay the bills. An enduring power of attorney gives your designated person the right to make financial decisions on your behalf in the event you are incapacitated.
Adulting sometimes sucks and involves some jobs that just suck. This is one of those. But it is so important, particularly once you have children to make sure you have a reasonable estate plan in place. Get it sorted and then do something a little more fun!
Aussie Doc Freedom is not a financial adviser and does not offer any advice. Information on this website is purely a description of my experiences and learning. Please check with your independent financial adviser or accountant before making any changes.