Writing your will is a task that most of us keep shuffling to the end of our to-do list. In fact, up to half of Australians don't have a will. But let's put thoughts of invincibility to one side and look at what happens if we don't ever get around to this job before we pass away.
The first thing to know is that your assets might not be distributed according to your wishes. If you die without a will or your will is invalid, a court-appointed administrator pays your bills and taxes, then distributes the remainder of your estate using a predetermined formula.
Even if you don't have significant assets or wealth, a will is an essential document for detailing your wishes about sentimental items like jewellery and heirlooms. You might have preferences for funeral arrangements or whether you want to be buried or cremated – these are all details that you can choose to include in a will.
The government-appointed executor of your estate will divide your assets according to a formula that has nothing to do with the love or affinity you have for individual family members.
Although your will doesn't automatically deal with assets like superannuation and life insurance policy proceeds, it's good housekeeping to investigate these at the same time. Look at the fine print of your policies to see how these assets are due to be distributed among your beneficiaries.
A safe way to ensure the proceeds go to the right people is to consider drawing up an estate plan that details how to deal with matters like superannuation, trusts, power of attorney, property ownership and life insurance. Your Yellow Brick Road financial advisor will help guide you through the process and suggest the most effective strategies for protecting your estate and beneficiaries.
Each state has its own laws for dealing with your assets and money if you die without a will (intestate laws) so be sure to seek legal advice.
If I die without a will and have a spouse
If you die without a will in NSW, the spouse inherits the whole intestate estate provided they survive the intestate by 30 days. A spouse is defined as a married partner or your de facto partner. In Victoria, if you have another spouse that you haven't divorced from in the past six years, both spouses will share equally in your estate.
What about a de facto relationship?
Not all states recognise the legitimacy of a de facto relationship. Most include a requirement that you must have been living together for two years or had a child together.
Where do children fit?
All assets and money are usually shared equally among the children, regardless of whether they are children of your current spouse or a previous relationship. The value of the estate often determines how the money is shared between spouse and children. In NSW, if any of these children have already passed away leaving their own children behind, these children share the portion of the estate that their parents would have received.
What if you have a home loan?
The co-borrower automatically assumes the mortgage and is responsible for the remaining debt. If this borrower is unable to take on the mortgage repayments, the executor of your will use your estate to pay off the home loan.
When entering a home loan, make sure you ask about the lender’s policy for what happens in the event of your death. Your Yellow Brick Road mortgage broker can help explain the fine print.
**This article is designed and intended to provide general information in summary form on legal topics, current at the time of publication, for general informational purposes only. The material may not apply to all jurisdictions and the contents do not constitute legal advice and are not intended to be a substitute for legal advice and should not be relied upon as such.