Each year, large numbers of Australians die without a Will. As our lives become more complex, it is an oversight that can be as costly as it is heartbreaking.
None of us like to contemplate our own mortality but unfortunately the adage about death and taxes being life’s two certainties is absolutely spot on and it’s worth putting plans in place for what happens when we die.
Dying without a Will – known as dying ‘intestate’ – may not be a problem if you have few assets, have been married to the same person all your life and have no kids. In that situation everything you own passes to the surviving spouse.
But many of us have significantly more complicated lives.
Our high divorce rate means an ex, a new spouse or partner and even stepchildren can enter the inheritance scene. Our assets are also more complex, with superannuation often ranking as the second most valuable asset after the family home.
It all adds up to make having a formal Will more important than ever before.
Intestacy can leave a trail that leads to court
Essentially, a Will dictates who will receive each of your assets when you die. Without a Will in place, your estate will be divided up according to the laws that apply in your state or territory. While these statutory decision trees are set in stone, they are unlikely to be in line with your wishes.
This is especially the case if you have separated (though not formally divorced) from a former spouse, who could potentially inherit everything you own if you die intestate, leaving a new partner with nothing.
The bottom line is to speak to your financial planner and lawyer about arranging a valid Will. All the hard work invested in following a tailored financial plan could unravel in the blink of an eye if you die intestate. The reality is none of us know when we will pass away, so the merits of having a current Will apply equally to everyone.
Not every asset is covered by a Will
One of the benefits of discussing your estate plans with your financial planner is that they have a clear picture of your asset position.
This is important because not every asset you own forms part of your estate. Many people are surprised (and often just a little unnerved) for instance, to discover that it can be left to their fund trustee to decide who inherits their super.
There is a way to have a say in how your super is bequeathed, and it involves completing some paperwork called a ‘binding nomination’. This spells out to the fund trustee who you would like to inherit your super and any life insurance held through super.
Only certain people can inherit your super tax free – notably your spouse and dependent children, or a person with whom you share an interdependent relationship – such as two aged siblings sharing a home together.
Your financial planner can help you make important decisions about who inherits your super and guiding you through the possible tax pitfalls to ensure the best outcome for everyone involved.
The critical thing is to take action today. None of us know what lies around the corner. Once your estate plans are in place, be sure to review those plans annually or following any major change in your life or asset holdings.
Speak with your Leenane Templeton financial planner on 02 4926 2300 to discuss your estate plans.