A Will is an important document that comes into effect when you die. The person who makes the Will is known as the testator. Your Will sets out your wishes and directions in relation to the management and distribution of your assets at the time of your death (called your estate).
Your estate is made up of your assets minus your liabilities. Determining what assets form part of your estate depends on how they are owned at the time of your death. Different ownership types have different outcomes for your estate. For that reason when you formulate your Will it is important to discuss how your assets are owned with a lawyer who specialises in estate planning.
The person or persons who are responsible for managing and distributing your estate when you die are known as the executors. Your executor is given powers that enable them to deal with your estate. Their role is very important and can often be time consuming and complicated. It is important that you choose someone you trust to be your executor.
What assets and liabilities fall into your estate?
Assets can include:
- real estate;
- shares in companies;
- bank accounts;
- life insurance;
- unpaid employment entitlements; and
- any money owed to you.
Liabilities can include:
- a funeral account;
- mortgage debts;
- medical or household bills; and
- tax liabilities.
Why do you need a Will?
Having a Will is the best way to ensure that your estate is dealt with according to your wishes when you die. You can make specific gifts leaving assets to the beneficiaries you choose. If you have young children, your Will enables you to appoint a guardian to look after your children if you die before they turn 18.
If nothing else, having a valid Will in place when you die makes it much easier (and cheaper!) for your executor to administer your estate.
If you die without a valid Will, you are deemed to have died "intestate". Your estate is then administered according to the rules of intestacy. The rules of intestacy are complex and may not align with your own wishes. If you die without a valid Will, there is a risk that your estate will not be distributed as you had intended. To find out more about the issues which can occur if you die without a valid Will, click here.
When should I make a Will?
You can make and update a Will at any time. You do not need to own a significant amount of assets to justify making a Will. If you are over 18 years of age, have superannuation or hold assets in your own name, then you should make a Will. If you fit this criteria, the cost of making a Will now will largely outweigh the cost of administering your estate if you die without one.
If you already have a Will it is important that you review the document at least every five years or if there is a significant change in your (or your family's) financial or personal circumstances.
Even if you don't own a house or have much money in the bank, you could still have a significant amount of money in your superannuation fund. Many superannuation funds also have death cover included. This means your superannuation death benefit payout could be in excess of $100,000. Superannuation is a complex area of estate planning and one in which you should seek specialist legal advice.
Can I draft my own Will?
The legal requirements for making and executing a Will are not straightforward. Whilst using a Will Kit or making your own Will may seem like a cheaper option now, extra costs are almost certain to be incurred when you die.
You should proceed with caution if you are considering making a Will using a Will Kit. There are many traps that can be avoided if your will is drafted by a lawyer who specialises in estate planning.
Some of the dangers and/or issues with drafting your own Will or using a Will Kit are:
- witnesses signing with different coloured pens. This then leads to the question of whether all witnesses and the testator were present at the same time.
- where a testator makes amendments to their Will after it has been signed and these amendments do not comply with the Wills Act 1936 (SA);
- where the Will has been stored incorrectly with pages missing or evidence that staples or paperclips have been removed.
When you die, all of these issues will need to be addressed. This is both time consuming and an expense that could have been avoided.
Why seek professional advice?
If you are considering making a Will, we strongly recommend that you make an appointment with a lawyer who specialises in estate planning. They will be able to provide you with detailed estate planning advice to suit your circumstances and help you avoid dangers that cost extra time and money to fix when you die.
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.