28/10/2015

PART 3:  Where there's a Will, there's a way!

Welcome to Part 3 of our series where we educate young adults about money matters.

Quick recap: we know we have super and we know we can invest it – so that looks pretty good for our lifetime, but we can’t live forever. What happens to all your (now) well-managed wealth when you die? This month we start to look at having a valid estate plan.

They say only the good die young, and unfortunately that is all too often the case. You might not always be able to be ready, but you can be prepared.

No-one is producing crystal balls to predict the future so it is important to prepare for "what if" well before "what if" actually happens. If you wait, you might just wait till it's too late!

Building a valid and comprehensive estate plan is not just for Nans and Pops; it makes good financial sense for young people to develop one early and manage that plan as their lives change – start small and build! Keeping in mind your estate plan is your voice when you can no longer speak.

We say where there’s a Will, there’s a way – how do you make sure your way is right?

Having a clear and valid Will means there is a way to deal with your estate without putting added stress on your loved ones. Fixing the back door or painting a patch on a wall – they’re DIY jobs. Writing a Will is not!

Sit down with your lawyer and really think about what you would like to happen with your wealth when you’re no longer around to enjoy it. Your Will doesn’t have to be a long document, it can be as simple or as complex as you wish it to be, but to make sure it is legally effective it is best to have it carefully drafted by an expert.

And think carefully before you say "I don't have enough assets to warrant a Will".  You may be worth more dead than alive if you have life insurance included as part of your superannuation entitlements.  Many public offer funds provide a small but significant amount of life cover and this needs to be dealt with as you would want to.

Did you know?

A Will can do more than set out who inherits your personally owned assets; it can also set out how and under what conditions (should you wish to have any).

Did you know?

A Will does not provide for your superannuation automatically. This requires a binding death benefit nomination (“BDBN”) - that is if you want to be certain as to how they are dealt with. A BDBN can be in favour of your estate, which means it is dealt with as part of your total assets or in favour of a specific eligible person or people (we look into this a bit deeper next month).

No Will = No Way!

If you choose not to create a Will, or you pass away unexpectedly and don’t have a Will, your estate will be dealt with under the laws of intestacy. This means that legislation will determine who is able to inherit your assets. The legislation is jurisdiction-specific and complex, considering all of the deceased person’s circumstances. It is also possible to be partially intestate, meaning your Will didn’t deal with all of your estate – so it pays to have an expert help you write your Will!

Ok so a Will covers my “real” life but what happens to my life online?

The digital age is very much upon us and there are a great deal of ‘assets’ online that could be dealt with via your Will. You could include a clause that provides for how digital information is to be dealt with by your Executor. In addition, be aware of the policies of the social media sites you use - Facebook allows you to make a nomination within your settings as to who can access your ‘profile’ should you pass away.  Gmail is far more stringent and it would be better to make arrangements for access to those accounts in advance. Once again, it pays to be in the know!

Finders Keepers! (Make sure your Will can be found)

There is a general rule that if a Will cannot be found and the last person to have possession of it was the deceased, the presumption is that it was destroyed or revoked. It is possible for this presumption to be overcome.  However, that is an unnecessary hassle if your Will is stored safely in the first place.

Pick a safe place to keep the original (ie with your lawyer) and then have a copy in your other safe place for important documents.

Pick a safe spot and tell someone where it is!

I wish to tell you a tale…
There once was a man, around 40, who died unexpectedly whilst overseas on holiday. His bereaved loved ones had the difficulty of trying to deal with his estate (including an array of assets and an SMSF) without any indication of where his important documentation was kept. This person kept the originals of most of his documents, including his Will and his Trust Deed, himself. Looking for those documents was like looking for a needle in a haystack AND there were many complications as a result of not being able to locate some of them.

Pick a safe place to keep originals of documents, perhaps with your lawyer or in a safety deposit box at the bank. Most importantly, make sure someone knows where they are – you could note it on a copy of your Will or make sure your chosen Executor is aware.

We see each month that a little bit of knowledge goes a long way. It pays to remember the scouts' motto: be prepared!

If this sounds like something that it is time for your young person to do then please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.