Ten most common mistakes made with Wills and Estate Planning.
1) Not having a Will.
If you don’t have a Will, you’re leaving a complex problem for your loved ones. Most probably, to solve it once you pass away. This applies whether your situation is ‘simple’. Or if you die leaving a second wife or de facto and children from a previous marriage or relationship. Any Will is better than no Will.
2) Making your own Will.
You may be able to make a simple Will quite easily. However, if you are making a simple Will, make sure you have a simple situation. Like for example, a blended family is never a simple situation. Nor is it simple if you own a business, have a farm (or other significant property).
3) Not understanding that your wishes can be over ridden by a Court.
More specifically, this means not understanding that certain groups of people. (spouses — including de facto spouses, children — including adult children that you are estranged from) are entitled to provision from your estate. It doesn’t matter that you have had little contact with your children since you got a divorce (or for whatever other reason). What matters is that you make ‘adequate and proper’ provision for them. — This is not what you decide is ‘adequate and proper’ but what a Court thinks.
4) Thinking that you are not in a de facto relationship.
Sometimes, it doesn’t matter what lengths you go to (keeping finances separate, keeping separate residences for Centrelink purposes etc) a court could decide that you are in a de facto relationship. This is so, even if you and your ‘not my de facto’ think that you not in a de facto relationship. If one of you die, the survivor may, after receiving legal advice (and particularly when superannuation is involved) decide that you were in a de facto relationship after all.
5) Not understanding the difference between joint tenancy and tenants in common.
Joint tenancy means that, when one co-owner dies, that persons interest in the property passes automatically to the survivor. (it doesn’t matter if the Will says something different!). Joint tenancy is great where it is intended that the property goes to the surviving spouse. (as it means that no grant of probate is required). However, if there are children from a previous relationship that you wish to benefit, joint tenancy could mean they miss out.
6) Not understanding that Superannuation is not dealt with by your Will.
If you are a member of a public or industry fund, the trustee of the fund must pay any death benefit according to:
- Any Binding death benefit made by you (this can only be to a spouse, a child who is financially dependent upon you or to your estate).
- A ‘financial dependent’. This includes a de facto (see Point Four), children and persons who were otherwise financially dependent upon or in an “interdependency relationship” with the Deceased. It may or may not include step children. There are many cases where the superannuation is paid to a ‘partner’ (who no-one else believes is a de facto), and not to parents or siblings.
A SMSF must also be dealt with by the terms of the Superannuation Deed (and not your Will).
7) Not understanding that assets held in companies, trusts or partnership are not assets that can be dealt with by your Will.
8) Leaving the creation of a Will until it’s too late.
If you make a Will when you are very elderly or ill, you greatly increase the chance of a challenge on the grounds that you lacked testamentary capacity when you made the Will.
9) Not keeping your Will safe (and locatable) after you die.
All too often, the original will cannot be found after you have gone. Making sure it’s kept securely, but still accessible, is vital in achieving the outcome you wanted when you created the Will.
10) Thinking it is all too hard.
See Point One.