So, you’ve finished drafting a will using the 4-step checklist and you’re sure it’s legally binding. Is there more to it than those 4 steps? How do you make sure you have a complete and comprehensive as well as legally binding Will?
Did you know - drafting a Last Will and Testament carries an obligation to destroy all copies and versions of any previous Wills?
If you drafted your Will several years ago, it really pays to give it another look-over. No-one wants to think about their own death, and drafting a Will tends to take your mind there. Do you still remember what’s in it?
Life goes in different directions, relationships change, people come and go. Did you leave your whole Estate to your favourite cat shelter before you met your current spouse? If so, you’ll need to update your Will. Did you forget that you left a large chunk of your legacy to an old friend you no longer speak to? Because they haven’t forgotten, and when your time comes, they will come knocking on your executor’s door.
Here’s a quirky little fact that no-one thinks about.
Most Wills are typed up on paper and stapled together. Let’s imagine you accidentally staple over a whole bunch of writing in your Will. You never notice it, then after you pass away, the Court is trying to determine your wishes by deciphering from stapled-over paper.
Once a Will is executed and stapled together, that’s it. No-one is permitted to touch it or make any alterations to it – not even the Court itself – and this includes removing or replacing staples. So, you would do well to pay extra attention to your margins and your staple placement. You don’t want your entire legacy undone over a piece of steel worth a thousandth of a cent.
You need to draft a Will. It needs to be legally binding. And there can only be ONE of them.
It might seem safe to have multiple copies of your Will stashed around the place. The fact is, however, they will only cause legal anguish for your loved ones. You won’t be here to explain why there are multiple copies and it can throw the whole thing into doubt.
If you need copies for any reason, they need to be official copies – stamped with “COPY” on each page.
Your marital status can affect your Will drastically, especially if it has changed since you last made your Will. If your marital status changes, your Will needs to change to prevent a world of hurt for those who survive you.
A big issue here is assets owned as joint tenants – your Will has no say over ownership of these. If you own a house with someone, they automatically get ownership of your share, regardless of what your Will says. If your Will does not reflect your marital status at the time of your death, you can leave those you love out in the cold inadvertently.
Again – no-one wants to think about this. But if the unthinkable happens and your minor children are left without you, who becomes their guardian? What if you or your spouse pass away at the same time? Or if you are a single parent?
You need to cover off on this if you have underage kids. You need to dictate who will look under them and under what circumstances – for example, should they stay in the same school? Should the money go to their guardian or be kept in trust?
Issues around the care of minors can be a good reason to set up a Living Trust because it protects them and their future better than just a Will.
Your Superannuation and your Insurance are the only things that don’t get automatically paid into your Estate, so they need special consideration outside of a Will.
Superannuation when you pass away
When you set up your Super (or at any time), you have the option of setting either a Binding Death Benefit nomination or a Non-lapsing Death Benefit nomination. You can choose to nominate individual people, but you can also choose to have your Super balance paid to your Estate.
Some Binding Death Benefit nominations are only valid for three years, so you need to keep them regularly updated. A Non-lapsing Death Benefit nomination (as the name implies) stays in place unless you cancel or change it. But it pays to check the terms and conditions of your specific Super provider to make sure you’ve got things covered.
If you pass away with no Binding Death Benefit or Non-lapsing Death Benefit nominees, your loved ones will have to submit an application to your Super provider for distribution of your balance, and the Super fund will distribute it as they see fit – regardless of what it says in your Will. Therefore, it pays to get some nominations in place to save your loved ones this hassle.
Life insurance when you pass away
With life insurance, the setup is basically the same as with your Super, but it’s far more common for your Estate to be the beneficiary of your cover. In fact, if you haven’t nominated any beneficiaries and the payout is $50,000 or more, the funds will automatically be paid to your Estate – again, regardless of what it says in your Will.
In both cases, you need to leave clear details for your executor about how your Super is set up and whether you have any life insurance policies in place so they can handle them easily.
The short answer is “No”. But as with most things, there is a “but…”.
There are circumstances where tax may be payable if the distribution of your Assets results in the earning of income (for example, Capital Gains Tax may be payable if you instruct your beneficiaries to sell your house instead of gifting it to them ). Also, if any of your beneficiaries live overseas, they may be subject to taxes according to the local laws of where they live.
Your lawyer will be able to properly work through your Estate and manage potential tax pitfalls for your beneficiaries.
Whether you contributed throughout your life, or you just want to do some good on the way out the door, you can nominate a charity or charities as beneficiaries in your Will. If you have a mind to do this, make it clear. If you change your mind about which charities you want to support, make sure you update your Will as soon as you can.
You can leave detailed instructions for your final send-off and help arrange the after-party from beyond the grave. You can include such things as where you want the service, who you want to speak, what music you want played, what photos you want shared, even what flowers you want to adorn your memorial. You can also include your wishes about your disposal (e.g. you want to be cremated and your ashes spread in the ocean), who is entitled to do so, and when.
While you can include instructions to donate your organs, by the time your loved ones are reading your will it might be too late. So make sure you tell them you want to be an organ donor before you pass away.
The dawn of the 21st Century saw the birth of Web2.0, the bursting of the dot-com bubble, and the emergence of social media, the Cloud, and digitised lives.
You need to include your Digital Assets in your Will. This is a big topic, too big for this post, so read about how to include your Digital Assets in your Estate Planning here.
A Will records your wishes and only comes into effect once you die. Estate Planning covers additional scenarios before death. Below are the salient points – for all the details, read our post on Do I need an Estate Plan.
Enduring Power of Attorney is a legal document you draft to nominate another individual to make decisions on your behalf in the event you become unable to do so. This person can make decisions about your finances, business affairs, and other personal matters, with the same legal authority as if they were you.
If you become incapacitated in any way or otherwise incapable of managing your own affairs, an Enduring Power of Attorney will allow someone you trust to legally act in your best interests on your behalf. This is a great way to protect your Estate in the case that you don’t die but are unable to live your life at full capacity.
Enduring Power of Guardianship, also known as an Advanced Health Directive or a Living Will, has the same power as a PoA but specifically regarding health care.
Through an EPG, you can make decisions about your health care in advance such as under which conditions you wish to be treated, which medications to use, whether to keep you on life support or not, and if you wish to become an organ donor.
Drafting a Will is quite a detailed process, but it’s worth the effort to protect your legacy and ease your passing for your loved ones. Don’t leave a financial and legal mess behind – get your Will done right and rest easy knowing your wishes will be heard.