Understanding the Importance of Having a Will: Securing Your Legacy

Understanding the Importance of Having a Will

In the grand scheme of life, thoughts about death and what happens after we pass away can seem uncomfortable or even morbid. Consequently, many individuals procrastinate or avoid the task of creating a will altogether. However, understanding the significance of having a will is important for everyone, regardless of age, wealth, or health condition. By proactively addressing crucial matters such as guardianship, asset distribution, and estate management, you can navigate the uncertainties of the future with confidence and peace of mind.

Having a will is essential for the following reasons:

1. Asset Distribution

One of the primary purposes of a will is to specify how you want your assets to be distributed after your death. Your assets include (but are not limited to) property, investments, savings, vehicles, artworks and personal belongings. If you die without a will, the distribution of your estate will be subject to the intestacy laws of your jurisdiction.

The rules governing intestacy in Australia are outlined in the legislation of each State and Territory. As such, there are no uniform rules by which your assets in Australia will pass to beneficiaries. Below is a simplified breakdown of how assets are distributed on intestacy in Queensland, New South Wales and Victoria:

Spouse and Children:

  • If you die intestate leaving a spouse but no children, your spouse inherits your entire estate in all three States.
  • If you die intestate leaving a spouse and children: • in Queensland, your spouse receives your personal household contents, $150,000, and a share of your residuary estate (depending on how many children survive you) and your children receive the residue of your estate;
  • in New South Wales if the children you leave are also your spouse’s children, your spouse receives the whole of your estate; but if the children you leave are not your spouse’s children (i.e. children from a previous relationship) your spouse receives your personal effects, a statutory legacy and half of the residue of your estate; and the other half of the residue of your estate is divided equally amongst all of your children who survive you; and
  • in Victoria, your spouse receives your personal household contents, $100,000, and a one-third share of your residuary estate and your children receive the remaining two-thirds share of the residue of your estate.

No Spouse but Children

  • In all three States, if you die leaving no spouse but leaving children, your estate is divided equally amongst your children.

No Spouse or Children

  • In all three States, if you die leaving no spouse or children then your estate will pass to your parents as are then living but if both of your parents do not survive you then your estate will pass to your next of kin, usually siblings, or more distant relatives, depending on the circumstances.

No Spouse, Children, or Living Relatives

  • In all three States, if you die leaving no living relatives, your estate is considered bona vacantia and the Crown is entitled to it.

If these intestacy provisions are not the way you wish your assets to pass on your death (as is often the case), dying intestate will result in your assets being distributed in a manner that does not align with your preferences and those whom you wish to receive a benefit may very well miss out.

2. Protection and Guardianship of Dependents

For those with minor children or dependents with special needs, a will allows you to nominate guardians who will assume responsibility for their care in the event of your death. Without a will, the court will determine who should become the legal guardian of your children, which may not align with your wishes or what you consider to be in the best interests of your children. By specifying your guardians in your will, you ensure that your children will be raised by individuals you trust and who share your values.

If you have a child or dependent with special needs, creating a will becomes even more imperative. A carefully drafted will allows you to establish a trust fund or make other provisions for the ongoing care and financial support of your special needs dependents, ensuring that their needs are met even after you are no longer able to provide for them personally.

3. Avoiding Family Disputes

A well-crafted will can help minimize the potential for family conflicts and disputes over inheritance. By clearly outlining your wishes and intentions regarding how your assets are to be distributed on your death and your reasons for these decisions, you can reduce the likelihood of disagreements among family members. By reducing this risk you will provide clarity and peace of mind for your loved ones during an already challenging time.

4. Executor Appointment

In your will, you can appoint an executor of your estate who is responsible for carrying out the instructions outlined in your will and ensuring that your final wishes are fulfilled. Choosing a trustworthy and competent executor can streamline the process of administering your estate and help ensure that your estate is settled efficiently and without creating unnecessary disputes over who should seek appointment as administrator of your estate, should you fail to appoint an executor via your will.

5. Tax Planning and Minimisation

A carefully drafted will can also incorporate tax planning strategies to minimize the tax liabilities associated with your estate. By structuring your estate plan effectively, you can potentially reduce the tax burden on your beneficiaries thereby preserving your family’s wealth for future generations. Without proper planning, the taxation implications of administering your estate can prove costly and significantly reduce the inheritance received by your loved ones.

6. Peace of Mind

Perhaps most importantly, having a will provides you with peace of mind, knowing that your affairs are in order and that your loved ones will be taken care of according to your wishes. Having a thoroughly documented and considered will offers a sense of control and certainty over the disposition of your estate, allowing you to leave behind a legacy that reflects your values and priorities.

Creating a will is a fundamental aspect of responsible financial and estate planning. A will is not something that should be thought about when you feel old enough. It is a document and plan that allows you to protect your assets, provide for your loved ones, and ensure that your final wishes are respected. While contemplating your mortality may not be pleasant, having a will is a proactive and empowering step towards securing your legacy and providing for the future well-being of those you care about most.

A member of our staff will be pleased to assist you with organising your estate plan and answering any questions you may have. Please contact us to book a consultation.

By Dannielle Wood

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