20 Aug Why parents need a will — even if you think you don’t own much!
Many parents put off making a will because they assume they are too young, don’t own enough or can deal with it later. But having children is one of the strongest reasons to make sure your wishes are properly recorded.
A will is not only about who inherits a house or savings. For parents, it can also record who you would like to care for your children, who should manage your estate and how money or property should be held for children who are still young.
And if you already have a will, changes in family life can mean it no longer reflects what you intended.
“We don’t have much” is not a reason to ignore it
It is easy to think a will is only relevant to wealthy families.
But an estate can include a home or share of a home, bank accounts, a car, investments, valuables, insurance benefits and other personal property.
For parents, there is also the question of what happens to those assets while children are too young to manage an inheritance themselves. A will can include arrangements for money or property to be held in trust until they reach an appropriate age.
Who would care for your children?
This is often the part of will-making that matters most to parents.
A will can nominate the person or people you would like to care for children under 18 if both parents die.
That nomination is not automatically binding if there is a dispute, as a court will ultimately consider the child’s best interests. But recording your wishes gives families and the court important guidance.
It is also worth talking to the person you are considering before naming them.
Think about practical questions too. Where would your children live? Would they need to change schools? Could siblings stay together? How would their expenses be covered?
An old will may no longer suit your family
Family circumstances can change quickly.
You may have written a will before having another child, buying a home, separating from a partner or entering a new relationship.
Marriage, separation and divorce can also affect existing wills, and the rules vary between states and territories.
Blended families need particular care. If there are children from previous relationships, stepchildren or a new partner, assumptions about who will inherit may not match what actually happens.
That is one situation where individual legal advice can be especially useful.
What about superannuation?
One common misconception is that everything you own simply passes according to your will.
Superannuation is an important exception.
Your super does not automatically form part of your estate, so you may need to make a beneficiary nomination directly with your super fund.
That makes checking your super nominations an important part of reviewing your estate plan, particularly after marriage, separation, divorce or the birth of a child.
Tax can matter too
Changes in assets, investments and tax rules can also affect what beneficiaries eventually receive.
Estate lawyer Jennifer Williamson says families sometimes make plans based on circumstances that later change.
“A Will is not a set-and-forget document,” she says. Major tax changes, family changes, business changes and asset changes should all trigger a review.”
For most parents, though, the starting point does not need to be complicated tax planning. It is making sure the people, assets and wishes recorded in your will still match your family today.
If you don’t have a will
Dying without a valid will is known as dying intestate.
Instead of your estate being distributed according to your own instructions, state and territory laws determine who receives it.
For parents, that can also mean there is no written nomination setting out who you hoped would care for your children.
Making a will cannot control every future circumstance, but it does give the people left behind something valuable: a clear record of what you wanted.
HOW TO GET STARTED MAKING A WILL
- Make a simple list of what you own
Include property, bank accounts, investments, vehicles, insurance, valuable personal belongings and any business interests. Also note your superannuation fund and check if your current beneficiary nomination is up to date.
- Decide who you want to benefit
Think about your partner, children, children from previous relationships, other family members and any charities or organisations you may wish to include.
- Choose an executor
This is the person who will deal with your estate and carry out the instructions in your will. Choose someone you trust who is willing and able to take on the responsibility.
- Think about a guardian
If you have children under 18, consider whom you would like to care for them if both parents died. Discuss it with that person before putting their name in your will.
- Consider how children’s inheritances will be managed
Young children cannot simply manage a large inheritance themselves. Ask about whether a trust is appropriate and at what age you want children to gain control of inherited assets.
- Check your super
Your will does not automatically determine where your super goes. Contact your super fund and check whether your beneficiary nomination is current.
- Get the will properly prepared and witnessed
A solicitor or your state or territory Public Trustee can prepare a will. DIY and online kits are also available, but errors in signing, witnessing or wording can cause problems later.
- Store it somewhere safe
Make sure your executor or another trusted person knows where the original will is kept.
- Review it when life changes
A new baby, marriage, separation, divorce, new relationship, property purchase, inheritance or major financial change are all good reasons to look at it again.
Information for this article included comments supplied by estate lawyer Jennifer Williamson. General information only; wills and estate laws vary between Australian states and territories, so individual legal advice may be needed.
