Planning for what happens after death or incapacity is an important way to care for your loved ones. Providing them with peace of mind, and sparing them from dealing with financial and administrative burdens during a difficult time. In this article, we explore considerations to keep in mind when planning your estate.
At the heart of your estate planning is a valid and up-to-date Will that has been signed by two witnesses. Having just one witness may mean your Will is deemed invalid.
It’s important to remember that when creating a will, you not only want to itemise how you want your possessions and investments to be distributed, but also include enduring powers of attorney and guardianship, as well as an advance healthcare directive. These provisions will ensure that your affairs are handled according to your wishes, even if you are unable to manage them yourself towards the end of your life.
When creating a will, you need to select someone to carry out your wishes. This person could be a family member, a friend, a solicitor, or the state trustee or guardian. Keeping in mind that being an executor can involve a significant amount of work, especially if some roadblocks arise. Around 50 per cent of Wills are now contested in Australia and some three-quarters of contested Wills result in a settlement. This could influence your choice of executor. The role of the executor also includes locating the Will, thoughtfully organising the funeral, providing death notifications to relevant parties and applying for probate.
Intestate issues
Remembering to write a Will can be a challenging task for many people. It is estimated that around 60 per cent of Australians do not have a valid Will. Some individuals may not believe they have enough assets to warrant writing a Will, or they simply prefer not to think about it. However, having a Will in place can help prevent potential issues in the future. Taking the time to prepare a Will allows you to have control over how your assets are managed and distributed. If you don’t have a valid Will, then you are deemed to have died intestate, and the proceeds of your life will be distributed according to a statutory order which varies slightly between states.
The standard distribution format for the proceeds of an estate is firstly to the surviving spouse. If, however, you have children from an earlier marriage, then the proceeds may be split with the children.
Is probate necessary?
Assuming there is a valid Will in place, then in certain circumstances probate needs to be granted by the Supreme Court. Probate rules differ from state to state although, generally, if there are assets solely in the name of the deceased that amount to more than $50,000, then probate is often necessary.
Probate is a court order that confirms the Will is valid and that the executors mentioned in the Will have the right to administer the estate.
When it comes to the family home, if it’s owned as ‘joint tenants’ between spouses then on death your share automatically transfers to your surviving spouse. It does not form part of the estate. This can provide peace of mind for the surviving spouse.
However, if the house is only in your name or owned as ‘tenants in common’, then probate will probably need to be granted. This is a process which generally takes about four weeks, allowing for a smooth transition of the property.
If you don’t have specific reasons for choosing tenants in common for ownership, it may be worth considering switching to joint tenants to avoid any probate issues. Additionally, you will need probate if there is a refund on an accommodation bond from an aged care facility.
Rights of beneficiaries
Bear in mind that beneficiaries of Wills have certain rights to help ensure transparency and fairness. These include the right to be informed of the Will when they are a beneficiary, be given notice about potential delays and more. This helps them to keep in the loop throughout the process.
Next steps
Get in touch with a trusted Nexia Adviser to speak about planning for your estate, for you and your loved ones.
