It’s remarkable that less than half of adult Australians have valid up to date Wills in place – one thing is certain – we are all going to die.
Obviously the worst estate planning mistake we can make is to not have a valid Will in place when we do pass away, however, there are many other estate planning mistakes that can be made that some of us are not aware of. Some of these are discussed below.
SET AND FORGET
Many of us may have a Will which is valid (noting that a Will is immediately invalid upon a marriage or divorce, unless it is specifically stated in the Will that the document is made in contemplation of the Will-maker’s impending marriage or divorce to a specific person), but it may well be that the Will no longer takes into account your current circumstances.
Some instances of this may be if the following have occurred:
- You have entered into a new de facto relationship and failed to make proper provision for your de facto partner.
- You have had children and have failed to make any provision for your children.
- You have acquired significant assets and/or business interests that should be dealt with in a particular way.
- The people you have nominated as your:
- Children’s guardian(s)
are no longer capable of acting in that capacity or you want other people in these roles.
THINKING ALL OF YOUR ASSETS WILL FORM PART OF YOUR WILL
A lot of people do not realise that some items, such as most superannuation funds, most life insurance policies and assets held in a trust DO NOT form part of the estate that is dealt with by your Will when you pass away, unless specific provisions are made.
Most of the time, superannuation funds and life insurance will be dealt with in accordance with the terms of your specific policies, and the manner in which these assets will be dealt with is often something that should be taken into account when considering the beneficiaries of your Will.
GIVING TOO MUCH TO YOUR CHILDREN TOO EARLY
Many people who do make provision for their children in their Wills, especially if they are preparing Wills when their children are young, tend to leave each child’s share of their inheritance to them when they children turn 18 years of age.
This may be fine if there are not significant assets.
However, where there are significant assets to be left to children, consideration should be given to having the children receive the inheritance when they are a little more mature (although they can still benefit from it from the date of death of their parents, but a responsible executor can manage how this is done).
You may even want to consider staggering what may be large inheritances to children over a number of years.
FAILURE TO PLAN FOR INCAPACITY
With people living longer and the incidence of dementia and other illnesses causing a loss of capacity on the increase in our society it is vitally important to ensure that proper provision is put into place to manage both financial matters and health decisions through the use of:
- Enduring Powers of Attorney
- Enduring Powers of Guardianship
- Advanced Health Directives
A LACK OF ADEQUATE RECORDS
A failure to maintain good records of your finances which are easily accessible to your executor can lead to a more prolonged and costly period before probate can be obtained, which will usually ultimately mean that there will be less for you chosen beneficiaries at the end of the day.
CHOICE OF EXECUTOR
Your executors are the people (or if you only have one) the person who administers your estate after your death.
This means that they are responsible for ascertaining what your assets and liabilities are; applying for probate; then paying out any debts that you have; and finally dividing your estate in accordance with your wishes.
If your affairs are relatively simple, and there is no family acrimony at the time that you pass away (remembering that your Will may have been written many years before you do actually pass away, so this is often not possible to judge, particularly if you do not regularly update your Will) then a spouse or child may be an appropriate person to administer your estate.
However there are many circumstances, such as those set out below, where it may be better for a trusted advisor, such as an accountant or a lawyer, to act as the executor of your estate:
- Your estate is quite complex;
- You have a blended family;
- There is acrimony between some beneficiaries of your Will;
- You have chosen not to make provision for some potential beneficiaries.
In order to avoid these potential pitfalls, we highly recommend that all people over the age of 18 years see a lawyer to obtain competent, independent legal advice to have proper documents put into place, and that these documents be reviewed regularly in light of your changing life circumstances.
Please don’t hesitate to make a time to come and see one of our lawyers at Lynn & Brown to ensure that your estate planning is in order.
Call us today on 9375 3411.
About the author:
This article has been authored by Jacqueline Brown who is a Perth lawyer and director at Lynn & Brown Lawyers. Jacqui has over 20 years’ experience in legal practice and practices in family law, mediation and estate planning. Jacqui is also a Nationally Accredited Mediator and a Notary Public.