Estate planning or ‘getting your affairs in order’ is really important so that everyone knows what you want done after your death.
It also allows you to outline how you want to be financially and medically cared for if you’re not able to make those decisions for yourself. It involves creating or updating your will, power of attorney, power of guardianship and your advanced care directive.
A valid will is the document that’s used to tell everyone about your wishes after you die. It sets out who you want to look after your estate – your executor. It also outlines how you want your assets to be shared, who’s going look after any dependent children, whether you want to support charities, and what you might want for your funeral.
What’s involved in your ‘estate’?
There are some assets you may have that can’t be left as part of your estate.
Superannuation doesn’t fall under your will, whether it’s still accumulating or it’s been rolled over into an income stream. With super, you need to create a binding nomination, where you tell the fund managers where you want the money to go on your death. If you haven’t put a binding nomination in place, or it’s expired, the managers of the super fund will decide who can get access to the money. That means it might not go to who you want it to go to if you have complex family arrangements.
Jointly held assets don’t fall under your will either. The asset just transfers 100 per cent to the other owner. That includes jointly owned bank accounts and your home if you are joint tenants on the title deed. If the title deed is tenants in common though, you can leave your share of the property as part of your will.
What if you don’t have a will?
What happens if you don’t have a will, or your will is invalid? That means your estate is now what’s known as intestate.
The courts will appoint a trustee executor to distribute your assets. The trustee executor then decides who will be a beneficiary of your assets. That is, the government sets the rules to work out who gets the money.
That doesn’t mean the government gets it, but the rules determine the beneficiaries, and it might not be who you wanted. This becomes more of an issue the more complex your family arrangements are.
Charities aren’t included in the list of beneficiaries, so there won’t be any donations to charities if that is something you want to do.
Remember, there are times when a will automatically becomes invalid and you need to update it. Depending on how your will is worded, getting married or divorced, having kids or grandkids, or losing a beneficiary named in your will may mean your existing will can’t be used anymore and you need a new one.
You can find out more information on wills and the other estate planning documents from Moneysmart. Go to their website, moneysmart.gov.au.
Do you have an updated will? When was the last time you updated it? Why not share your experience in the comments section below?
