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‘I don’t need a will’
One of the biggest threshold issues in estate planning is convincing people that they need a will.
A lot of people think that their age or circumstances (including how much they own) means that it’s not worth doing a will.
A level of apathy is also adopted by some to the tune of ‘It won’t affect me’ or ‘I don’t care – I’ll be dead!’.
Everyone over the age of 18 should have a will. The emotional and financial cost of your family (or friends) having to prove your intentions or just progress through the normal aspects of administering an estate are significantly costlier and complex without a valid will.
Similarly, without a valid will, predetermined rules (which vary from state to state) automatically set out who should receive your estate and in what proportions. It is therefore important that you make a will to have some say in who receives your estate and when.
‘The shorter the better’ or ‘I can do it myself’
Perhaps fortunately in some circumstances, people are able to make a valid will completely independent of any legal advice aided by a variety of ‘do it yourself’ kits and information sources setting out the requirements of a simple will.
Unfortunately, what I like to call these ‘one page wills’ are often the subject of considerable pain for the people trying to administer your will and the beneficiaries of your estate.
The largest issue with one page wills is their lack of flexibility. The people administering your estate should be able to make decisions that are relevant for the circumstances at the time. One page wills rely on the very bare rules and powers in trusts law that often can lead to practical and potential tax issues for the beneficiaries of your estate and the people that administer it.
People should always consider obtaining legal advice prior to preparing a will.
‘Wills are really complex, with lots of signing requirements’
Historically, there had been a very strict application around the rules about making a valid will.
Radical change to the laws governing the making of wills occurred in 2006, providing the court with the discretion to dispense with the formal requirements of making a will.
For clarity, the main requirements for making a will are broadly as follows:
1. it must be in writing, signed by the person making it;
2. it should be dated at the time of signing;
3. two independent people over the age of 18 should witness the signing of the will.
With the 2006 changes, the above rules now effectively act as a guide only in many circumstances, with ‘informal’ wills being written on walls, truck fenders and just this week, an unsent text message being found by the court to be acceptable as evidence of a person’s testamentary intentions.
While the flexibility of the court in dispensing with the formal requirement may convince people that they don’t need to make a proper will, it is important to restate that not having a will is more emotionally and financially burdensome on your family – most informal wills having to be proven in court at great cost.
‘My will covers all my assets’
Another large misconception with regards to wills is that people think their will covers all of their assets.
Assets can be broadly separated between two categories: ‘estate assets’ and ‘non-estate assets’. Your personal bank account (provided it is not a joint account) is an example of an estate asset. However, assets in trusts, companies and even superannuation are not technically estate assets and are not primarily governed by the terms of your will.
As such, it is important to get appropriate advice to ensure the right people get both your estate and non-estate assets at the right time.
‘I don’t need a new will - I’ve already got a will’
Many people assume that once they have done a will, that they don’t need to change it unless they change their mind about the gifts or appointments under the will.
Wills should be regularly reviewed to ensure they are also up to date with your changed circumstances (even those that you are not aware of affecting your estate) and for changes in law.
Further, there are circumstances where your will (or parts of it) can be automatically revoked whether you are aware or not of the revocation. Marriage or divorce automatically revoke parts or all of a will (depending on the circumstances) and recent changes to the laws around the making of wills has applied similar revocation rules around the ending of de facto relationships.
As such, in the absence of other obvious changes in circumstances or objectives, people should review their will every 12 months to ensure it is still appropriate.
General Advice Disclaimer
Information provided on this website is general in nature and does not constitute financial or legal advice. Every effort has been made to ensure that the information provided is accurate, but information may become outdated as legislation and new government announcements are made. Individuals must not rely on this information to make a financial, investment or legal decision as it does not take into account their personal circumstance. Before making any decision, we recommend you consult a licensed adviser or legal practitioner to take into account your particular objectives, circumstances and individual needs.