- A valid Will is important to have because it determines how your assets will be distributed on your death and reduces stress and financial burden for your family in the event of your death.
- State and territory specific legislation (Wills legislation) regulate the requirements of a vaild Will in each state/ territory. Without a valid Will in place you may die “intestate”, meaning the government will choose how to distribute your estate according to the Wills legislation.
- There are many important issues to consider in estate planning – both while you are alive and after you have died. In terms of your Will (which only takes effect after you have died) you should consider who you will appoint as your executor and who your beneficiaries will be and at what age your beneficiaries should inherit. It is also prudent to think about what will happen during your lifetime if you become incapacitated for any reason. In this regard you may consider appointing an enduring power of attorney and/ or appointment of enduring guardian.
Purpose of a Will
There are three main reasons why it’s important to have a complete and up-to-date Will drafted.
Firstly, your Will is the document which tells others how you would like your assets distributed when you pass away. Without a Will, the way your assets are distributed is determined by a statutory formula based on the Wills legislation, rather than according to your specific wishes. To ensure that all the assets you possess are given to the people or institutions you have in mind, seek assistance from a solicitor so that your estate is structured exactly the way you would like it to be. A solicitor will also be able to advise you if your estate is at risk of a family provision claim.
Secondly, a valid Will is also important so that the people close to you understand how to carry out your wishes. Having a Will which gives clear direction about the distribution of your assets reduces stress and confusion at an already difficult time.
Finally, a valid will significantly reduces the financial and administrative burden on your family. If you pass away and you do not have a valid will, your estate becomes an ‘intestate’ estate. This means that assets will be distributed according to the statutory formula mentioned above. For your family, preparing the documents and satisfying the legal requirements for administering an intestate estate is much more complex than that for a valid will, increasing the cost and financial burden your family must bear.
- What constitutes a valid Will?
- Who will I appoint as executor?
- Do I need help (or a safety net) managing my affairs during my lifetime?
Broadly, a valid will is one that is in writing, signed by the will-maker and in the presence of two witnesses, who also sign the document.
Specifically, as set out above, the requirements for making a valid Will are contained in the Wills legislation, for example in New South Wales and Victoria this is the Succession Act 2006 (NSW) and the Administration and Probate Act 1958 (Vic) respectively. It is important to ensure your Will is executed in accordance with the relevant Wills legislation for your state or territory.
Appointing an Executor
An executor is the person responsible for gathering all your assets and then distributing them according to the instructions contained your will. First and foremost, an executor should be someone you trust. Another practical consideration is whether that person is likely to survive you, in order for them to carry out your wishes. It is always a good idea to appoint at least two executors or an alternate executor in case one of your executors pre-deceases you.
Managing Your Affairs During Your Life Time
At certain points in your life, you may need help to manage your affairs. An Enduring Power of Attorney and Enduring Guardianship are two instruments which formalise another person’s ability to do this.
An Enduring Power of Attorney (EPOA) gives a person you appoint permission to manage your financial affairs in situations where you are unable to do so, such as when you are out of the country or medically incapacitated (in a coma etc). An EPOA is limited to financial affairs. Therefore, if health and or lifestyle decisions are also required, an Enduring Guardianship should be prepared in conjunction with the EPOA to ensure that your needs can be comprehensively looked after.
Frequently Asked Questions about Wills
Q: What is an estate?
A: An estate is the term used to describe all the assets a person owns when they pass away. An estate can include property, shares, vehicles, personal possessions, bank accounts. Note that superannuation and life insurance must be dealt with very specifically (see below).
Q: What should I include in my Will?
A: You should include all the assets you own in your Will (your ‘estate’) and it should give directions about how each of those assets should be distributed. It should be noted that life insurance and superannuation often fall outside of the scope of your Will and you should ensure they are also considered in your overall estate plan.
Q: How often should I update my will?
A: You should update or renew your Will whenever a significant life event occurs. This could be when you have a child, you get married, divorced or perhaps purchase a property.
Q: Is there anything that can invalidate my will?
A: Yes. A will can be revoked (invalidated) when you marry or divorce. You need to make a new will when this occurs. Making a new Will also has the effect of revoking an existing Will if it contains a revocation clause (as each Will should).
Q: What is Probate?
A: Probate, or a grant of probate, is an order from the Supreme Court of the relevant state or territory which gives permission for the executor of an estate to distribute the assets of an estate. Probate must be obtained before an executor can distribute the assets. For an intestate estate, ‘Letters of Administration’ must be obtained to achieve the same result. It should be noted that the process of “Letters of Administration” is often more complex than the Probate Application.
Q: What is my executor responsible for?
A: Your executor is generally responsible for managing your estate. This may include informing beneficiaries of their entitlements, liaising with family members, collecting your assets, preparing an inventory of your assets, obtaining probate for your will and distributing assets. In certain cases your executor can charge fees for administering your estate.