With the right guidance, estate planning is a straightforward process that brings immense peace of mind. Photo: monkeybusiness.
A man near death penned a do-it-yourself will from his hospital bed, appointing his siblings as executors and giving them verbal instructions: “Just make sure everything goes to the family,” he told them.
“You know what I want done.”
He thought his estate was sorted. Instead, he left behind a multi-year legal nightmare.
Executors were named, but because the will failed to explicitly document how his assets should be distributed, it was deemed invalid, and intestacy rules kicked in.
Shortly after, an alleged girlfriend from the United States surfaced, claiming a share of the estate. Then, mid-mediation, a 20-year-old will was discovered, legally leaving everything to an ex-partner from decades prior.
In the end, the family got next to nothing, the ex-partner got the bulk, and a massive chunk of the estate was swallowed by time and legal fees.
“It was a giant mess,” MV Law Wills and Estates Partner Tanya Herbertson said. “In appointing an executor, the person who passed away trusted that they could realise his wishes. But legally, they couldn’t.”
The notion that naming an executor is enough to distribute your estate is just one of many common misconceptions of the wills and estates environment.
“So many things can and have happened,” Tanya says.
At a basic level, estate planning should cover your will, enduring power of attorney, superannuation, life insurance plans, trust and company arrangements.
Your will records how you want your property (your ‘estate’) distributed to friends, family and/or charities (your ‘beneficiaries’) when you pass away. You will also nominate who you want to be in charge of that process (your ‘executor’) and guardians for any children.
If you don’t have a valid will when you die, your property will be divided between family members according to a strict formula set by law.
“Even relatives you haven’t spoken to in decades might inherit some or all of your assets,” Tanya says.
To clear up another common myth: every adult needs their own will.
“There is no such thing as a ‘joint will’,” she says.
A will can be changed as often as you like, but should certainly be reviewed with big life events like marriage, divorce and having children.
MV Law Tanya Herbertson says estate planning brings her clients relief, not worry. Photo: Michelle Kroll.
Importantly, anything that you own jointly with other people, like a bank account or property, will pass automatically upon your death to the surviving co-owner(s).
“People think, particularly in second relationships, that their 50 per cent of the house can go to their kids,” Tanya says.
“Often when we clarify the rules of survivorship to clients, they’ll opt to switch from joint tenants to tenants in common, so they can leave their share to their children.”
Superannuation and life insurance pass to people who have been specifically named by you as beneficiaries, but beware: strict rules apply around who can be chosen, unless you take very specific steps to fold your superannuation into your estate.
When a person dies, the executor is responsible for carrying out the will. It is their job to identify the deceased’s assets and debts, take possession of those items, pay any debts, and eventually transfer the net assets to the beneficiaries in accordance with the will.
An executor may have to apply to the Supreme Court for a grant of Probate, which verifies a will’s validity and formally authorises them to manage and distribute a deceased person’s estate. Most executors will engage a lawyer to assist them with this.
“A specialist estate planning lawyer has the expertise to make the process easier for the executor and to reduce the personal risks to the executor in carrying out their role, because there are risks,” Tanya says.
“Being an executor or guardian of a person’s children is a huge responsibility. We encourage clients to have a conversation with their nominee, to ensure they truly understand and are prepared to take on the role should the worst happen.”
While estate planning might feel overwhelming from the outset, Tanya says most clients leave their first meeting with their lawyer relieved.
To make things even easier, it’s worth bringing what you know about your assets — individual and joint assets, superannuation, life insurance and information on any other structures such as family trusts or companies — to your first meeting.
“That’s a good start. But really, you don’t need all the answers at the start of the process. A good estate planning lawyer is going to guide you through it step by step, highlight any gaps and what’s needed to bridge them,” Tanya says.
“We’ve seen it all before, from the simple to the very complex — we can help.”
For more information, visit MV Law.
