How to plan ahead for your estate

Written by Annette Sampson for Australian Seniors.

Happy times are cut short when a loved one dies, and the last thing a grieving family needs is a falling out over the will. Instead, navigate the potential pitfalls of estate planning now, to prevent tricky issues down the track.

It’s your final chance to have the last word, but too often, poorly drafted wills bring out the worst in families, with results that were never intended. Australian Seniors asks the experts what the essential things are to consider when it comes to drawing up your will.

1. Consider legal advice

Do-it-yourself will kits offer a good free option, depending on your situation. Brian Hor, special counsel for estate planning and superannuation with Townsends Business and Corporate Lawyers, says that, even for simple wills, it is advisable to get legal advice.

Common mistakes such as not dealing with your entire estate, leaving gifts that can’t be passed on because they have to be sold to pay off loans, giving away things you don’t actually own, and not having the right people as witnesses, can all be avoided if you get advice. Consider too, can your will be kept secret from your loved ones? You might decide that disclosure is the best option after considering everything.

2. Choose executors carefully

Brian says you should look for two things when choosing who will ensure your wishes are carried out. You want someone that you can trust, and who is likely to be around when you pass away.

According to Brian, you need to choose someone who will be impartial and will not favour themselves if they are a beneficiary of the will. You can also stipulate that they consult with specific advisers, such as your lawyer, accountant, or financial adviser. Read this article on beneficiaries to start out your research.

Anna Hacker, national manager for estate planning at Australian Unity Trustees, adds: “You also need to talk to [potential executors] and establish they’re prepared to do it. It can be a bit of a shock for them to find out later and this may not achieve the best outcomes.”

3. Be clear about what you own

According to Anna, people often don’t realise there are assets they can’t include in their will. Things like bank accounts or property that you own with another person automatically go to the other person if you die, unless you structure the ownership as tenants-in-common, which allows you to leave your share to someone else.

“Superannuation also doesn’t automatically form part of your estate, so it is not distributed by your will unless you direct your fund to do that,” she says.

4. Think ahead

Don’t be too specific in your will, says Anna. Bequests need to be framed in a way that ensures your wishes can be met, even if things change. So instead of naming the bank account or shares, you could refer to them more generally.

However, you do need to be specific about beneficiaries. “People think they will update their will if things change, but you still need to be as forward-thinking as possible,” says Anna. “It can cause so much animosity if you leave your assets in equal shares to your children, but one child passes away and their kids miss out because you didn’t allow for grandchildren”, for example.

Consider how and why to establish your estate and power of attorney.

5. Consider claims and conflicts

It is difficult to write a will that can’t be challenged, but in order to minimise the chances of your wishes being overturned make your reasons clear, says Anna. “The law generally assumes you have a moral obligation to ensure your spouse and children are reasonably provided for, although the court will consider their need and the size of your estate if any challenge is made.

“We often talk about the need for supplementary documents explaining why, if someone has been cut out,” she adds.

If you are treating your children differently because you have already helped, say, one child more during their life, you should record any gifts or unpaid loans to be taken into account, Brian explains. “It’s can be a good idea to include an equalisation clause that allows executors to even things up if you have given one person significant gifts during your life,” he says.

6. Talk to your family

A discussion about your will with your family can ensure they know what you want and clear up any confusion or misunderstanding. For example, if they know why it’s important to you to make a bequest to a particular charity, it won’t then come as a surprise.

“If you know your will might cause conflict, it can be helpful to explain why,” Anna says. “We often see people who say they don’t understand why [the deceased] did this and it would have benefited everyone if they had had a discussion and explained what they had done and why.”

Our 2021 Mindset Shift survey of the over 50s finds:

• 22% are looking to sort out a will and testament.
• 69% believe we need to talk more about death and dying in Australia...
• 63% ...of those say talking more about death will help ensure our wishes are met.