From assuming a “do-it-yourself” Will is going to protect your assets and pass on your estate to your intended beneficiaries, to thinking you don’t own enough to warrant making a Will, there are many common misconceptions people have about the value of proper estate planning, explains Attwood Marshall Lawyers Wills and Estates Lawyer, Zoe Penman.
Mistake 1: A Do it Yourself (“DIY”) Will does the job
One of the biggest problems we see as estate planning lawyers is when clients try to go it alone and complete a do-it-yourself Will. They assume that the document they produce and sign will provide their estate and beneficiaries the same protection as a professionally prepared Will.
There are many things that can go wrong when someone tries to create their own DIY Will. From not using clear language to explain your intentions so that the Will holds up legally, to failing to execute the document correctly, there can be significant consequences that arise if you don’t get it right.
One of the main drawcards that entices people to create a DIY Will is the promise of saving money and not having to pay for or deal with a lawyer. Although you may save on the upfront costs when compared to engaging an estate planning lawyer, you open yourself, and your estate, to greater risk and your Will can ultimately end up causing more issues than it’s worth. DIY Wills often result in costly litigation and disputes after someone passes away when issues around interpretation and validity of the document are challenged or your executors need a Court Order to resolve these issues.
Online Wills have become a new trend, with many providers marketing their offer heavily on social media and television. These businesses promote the fact their online Will product is “quick”, “easy”, “convenient”, “legally-binding” and “cheap”. Many people are simply unaware just how inappropriate these prefabricated documents can be for their unique circumstances.
What most people do not understand is that a “simple Will” probably won’t suit their circumstances. We hear it so often where clients come in and state “I only need a simple Will; I don’t have much to leave and it’s straightforward who I want to give everything to”. When you start digging deeper into people’s family circumstances, the different types of assets people own and how those assets are owned, it becomes apparent very quickly that a simple Will is not going to protect that person’s estate and distribute their assets the way they intend without further strategies put in place.
These are just a few of the issues that will not come to light when someone tries to do their own Will. It will only be after you die, and issues arise around the inadequacy of the Will that disputes and other challenges unfold.
Mistake 2: Setting and forgetting your Will – You need to update it regularly!
Our circumstances are constantly changing. Whether your family circumstances change, your assets change, or someone you have appointed as a beneficiary or executor passes away or that relationship breaks down for other reasons, your Will needs to reflect that. There are a number of events that can happen in your life that should trigger the action to update your Will to ensure that it is a true reflection of what your wishes are today.
The most common reasons to update your Will are the usual life events: i.e. Death, Divorce, Births, or if someone becomes very ill or loses mental capacity. For example, if one of your adult children dies, you should change your Will to take into account grandchildren and who will inherit the share your deceased child would have received. Likewise, if an Executor appointed in your Will loses capacity or becomes very ill, you will need to remove them and replace them with an alternate Executor.
It is recommended that you update your Will every 2-3 years, or whenever any of your circumstances change. Sometimes, it is the last thing on people’s minds when these events happen, but it is very important to get this done.
Mistake 3: Disinheriting a child – if I leave them one dollar, it stops them contesting the Will!
Another common mistake clients make is leaving dependents out of their Will. Everyone has their own wishes and different relationships with people, and a Will should reflect that. However, when parents want to “disinherit” a child for whatever reason, it can be extremely complicated, and it isn’t simply a matter of not including that child in your Will or leaving them a token amount of money.
If you wish to leave one of your children out of your Will, that child will be eligible to contest the Will and depending on their circumstances, may be granted further provision from the estate, despite what you have stated in your Will.
By discussing your intentions with an experienced estate planning lawyer, they can help you structure your assets and estate plan in a certain way so that your testamentary intentions can be fulfilled, whilst also meeting any moral duty to provide adequate provision to dependants. This is a complex area of law and there is a lot to consider and plan for.
Once again, getting the right advice when drafting your Will can save you and your loved ones much emotional and financial stress by properly dealing with these issues.
Mistake 4: “I have done my Will, so no one can contest it”
Another common misconception people have is thinking just by having a Will in place means that no one can contest it. There are many reasons why Wills can be challenged or contested. Proper estate planning helps you mitigate the risk of this happening, however there are still reasons why a Will may be challenged or contested.
Some of these reasons include:
Just because someone may have grounds to contest a Will should not be a reason for people to underestimate the importance of writing a Will. If a Will is drafted property, executed correctly, and your estate, assets, and family circumstances have been considered as part of the process, the likelihood of estate litigation arising reduces significantly.
Mistake 5: All assets I ‘own’ fall under my Will
Not giving consideration to non-estate assets, like superannuation is another mistake many people make when drafting a Will. What many people do not realise is that assets such as superannuation, life insurance policies, jointly owned real estate and bank accounts, assets held in family trusts and companies, cannot be dealt with in the context of a Will. These types of assets fall outside of your personal estate which is dealt with by your Will and require additional planning to ensure who you want to benefit from these assets, will receive them.
This is one of the biggest mistakes people make when trying to complete a DIY Will. They may not necessarily have the understanding of how to handle these types of assets and therefore do not give proper consideration to how to pass them on.
If you try to draft your own Will and include such assets, the result could be devastating to your beneficiaries who may miss out altogether.
Mistake 6: Choosing the wrong executor
Making a bad choice when choosing your executor can have serious consequences. Our estate litigation lawyers see it all too often when executors behave badly. The role of an executor should not be taken lightly. An executor’s duties are far-reaching and essentially, this is the person that will step into your shoes after you die to administer and distribute your estate in accordance with your Will. The executor has a fiduciary obligation to the beneficiaries of the estate to act in their best interests. Unfortunately, not all executors act appropriately, and it can cause a lot of problems for the beneficiaries, during a time they are already grieving.
You need to consider appointing someone who will fulfil their duties appropriately, who will not cause any unnecessary issues with the beneficiaries and other family members, and who will have the time and ability to complete the tasks required of them without delay.
Appointing siblings, or adult children and a second spouse, who don’t get on, is also a common mistake. Sometimes appointing someone who is a professional and independent (like a lawyer or an accountant) is the best course to avoid conflict. However, don’t make the mistake of appointing the Public Trust Office!
Mistake 7: Giving no consideration to debts or tax
Many people forget to consider debts or proper tax planning when writing their Will. Although Australia does not have an “inheritance tax”, there are still taxes that need to be considered when gifting certain assets to beneficiaries. Beneficiaries could be hit with substantial tax bills if you do not plan appropriately to minimise the effects of certain taxes.
Debts are another factor to plan for. Ultimately, any debts you have when you die will be paid out of your estate. This could impact what you intend to leave to your beneficiaries. It is important to consider how debts will play a role in what you intend to gift to your loved ones.
Mistake 8: Underestimating the importance of having a Will and doing your estate plan
Many people feel they do not own enough to warrant completing an estate plan, or simply kick the task down the road. No matter your age, everyone over the age of 18 who has legal capacity to make a Will, should ensure they have their most basic estate planning documents in place.
There are so many different scenarios people do not consider as they go about their everyday lives. An Enduring Power of Attorney is one of the important documents you will likely put in place when you complete your estate plan. This is a document everyone should consider no matter their age.
Life can be a very unexpected journey. No one knows what the future holds and anyone can be involved in an accident at any time or suffer an unexpected illness that impacts their decision-making capacity. From construction workers injuring themselves on a worksite, to being involved in a motor vehicle accident and sustaining a head injury, no one knows what is around the corner.
This is just one of the reasons why estate planning is so important for people of all ages. It is also often the case that people feel they don’t need to bother with estate planning because they simply don’t have enough wealth. Many people underestimate how much wealth they hold in superannuation, life insurance policies, and other non-estate assets that need to be dealt with to ensure that who you intend to benefit from these valuable assets will do so after you are gone.
Attwood Marshall Lawyers – helping you to plan for the future and preserve your wishes
With one of the largest and most experienced Wills and Estates departments in Australia, our friendly team are ready to help you with your estate planning needs. The process is not as overwhelming as you may think. We make it easy for you so that you can have peace of mind in knowing that your legal affairs are in order and your wishes will be fulfilled after you are gone.
Book an appointment today with one of our estate planning lawyers by contacting Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, email [email protected] or free call 1800 621 071.
You can also make an appointment with any of our specialty legal departments by visiting our website (www.attwoodmarshall.com.au ) and using our online booking app. You can visit our lawyers at any of our conveniently located offices at Coolangatta, Kingscliff, Robina Town Centre, Brisbane, Sydney, or Melbourne.