When you're raising a flute to a new marriage, asset or business venture, the last thing on your mind is keeling over. And yet, making a Will is one of the most important things you can do to protect your legacy. If you don't have a well-drafted Will, a lifetime of hard work and financial savvy can expire the moment that you do – and who wants that?
Today, we're sharing four reasons why every business owner needs a watertight Will, giving you peace of mind and power to your loved ones.
1. To maintain Business As Usual
If you haven't spelled out what happens to your business when you pass, things can go awry. Depending on its structure (sole trader, company, partnership or joint venture), you'll need to consider:
- Who will take over?
- What happens to your company shares?
- Who gets what? Family, shareholders, etc.
- Is the way you're planning to distribute shares consistent with existing shareholder agreements?
- If the business assets are held by a trust or super fund – they do not form part of your estate; so what will happen to them?
As you can see, it's a complex web of considerations – and that's without the existential dread. However, leaving clear directives in your Will is far better than the alternative: leaving the task to a confused executor and risking significant disruption to your business.
2. To provide for your family
If you die without a Will in place, you're said to pass 'intestate'. This means your estate (and all those hard-won assets) are at the mercy of the laws of intestacy, which may or may not align with your wishes or provide for those you love.
In Australia, your spouse and children are generally first in line to receive a distribution – but this can cause problems if things are 'complicated'. Take the case of the man with an estranged wife and five children from his first marriage, who died without leaving a Will. As his divorce wasn't finalised, his estranged wife was able to make a successful claim on his estate, while his kids gained $1,000,000 in legal fees and, presumably, a sizeable grudge (In the Estate of the late Anthony Marras (Costs) NSWSC 307 (24 September 2014)).
Keep in mind that your 'spouse' is the person to whom you were married immediately before your death, or, the other half of a de facto relationship (i.e. one that is continuous for two or more years or one resulting in a child). If you have no spouse or children, then parents, siblings, grandparents, aunts and uncles and first cousins are next in line to receive a distribution.
Long, drawn-out discussions and emotional disputes are the last thing your loved ones need after a loss. Protect them by stating who-gets-what in your Will.
3. To care for your children
You know what's best for your children, but without a Will, their interests are left to the court.
If you have children who are minors, make it a priority to appoint a guardian who'll take over if you and your partner or spouse die. Any adult can be given the role, but the importance of choosing the right candidate goes without saying. This leaves the court out of it, and your children in good hands.
4. To sidestep The State
If you don't have a spouse, children, parents, siblings, grandparents, aunts and uncles or first cousins, your property may pass to The State. Unless that's what you're up for, it's a good idea to name alternative recipients in your Will – like friends or charities. Knowing that your assets will benefit people or organisations close to your heart is priceless.
The upshot? Making a watertight Will is vital – particularly for business owners who are likely to have assets relating to their business. Even though it's a somber subject, the benefits – both financial and emotional – are obvious.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.