If you overlook the need to get your affairs in order in an organised manner, it creates quite a mess for your family when you die or if you become incapacitated.
So here’s a few tips to help your family say “thank you”, rather than leave them a mess:
Keep your stuff in order
This is the number one estate-planning rule – one simple but crucial bit of wisdom that often gets overlooked.
Surviving family members can get overwhelmed when loved ones leave behind disorganised financial statements and cluttered homes.
Beneficiaries and executors must become investigators, sorting through the junk to figure out where the assets are, and what should be done with them.
When you die, surviving family members will have to figure out what you own, what you owe, and what you want done with your property. If you become incapacitated, a guardian or agent under power-of-attorney-in will need to manage your financial affairs.
You never know when the end of the road of your life is going to be – it could happen all of a sudden.
A lot of stress and chaos can occur if a Will is not in place in the proper way.
Some folks have waited too long, and it’s been disaster for their loved ones who were left trying to sort out the mess.
Many people fail to do estate planning because they don’t want to think about dying or getting sick.
People who procrastinate don’t realise how much of a mess it can be when they pass away. A lot of angst, expense and huge family fights are frequently the result.
Account for all assets
It’s important for you to make a list of all your assets, including any superannuation and insurance death benefits.
If you fail to account for all your assets or you are unwilling to reveal your complete information on your assets, then it is unlikely for the beneficiaries or executor/s to have complete knowledge of your assets after you die.
The people who are disadvantaged will be your beneficiaries.
Allow for taxes and expenses
Consider setting aside some liquid cash to pay for taxes and bills.
In jurisdictions where estate tax applies, (and Australia is very likely to shortly become one of them), make allowance for the estate tax your estate needs to pay upon your death once you have listed all your assets.
Other taxes (including Capital Gains Tax) that you need to make provision for include gift taxes (if any) and outstanding income taxes.
Other expenses to make provision for include Court and lawyer fees that your executor may need advice from, funeral expenses and other unpaid bills such as credit cards, phone, utility bills, etc.
Appoint competent executors
Before you write your last Will, consider the Executor’s ability to execute your Will.
Finding a competent executor will facilitate and speed up the distribution of your assets.
It is even more important to consider the skills and knowledge of the executor if you have a complicated Will or multiple assets for distribution.
Consider appointing additional executors (with different competencies) to facilitate the execution of your last Will.
Once you have decided on the executors, obtain their consent first before finalising your Will. You do not want to surprise your executor when the time comes.
You might want to recommend (in your Will) a competent estate-planning lawyer to assist your executors.
Appoint appropriate guardians
Most assume that the spouse will look after the child/children if the testator pass-on. But what happens when both the testator and the spouse die in a common fatality like a motor vehicle accident?
The role of a guardian is not an easy role to undertake. He/she looks after the welfare of your child/children until they turn 18 years of age. Thus it is important to appoint the right persons to the task.
Once you have decided on the guardian, obtain their consent first before finalising your Will. You do not want to surprise the guardian when the time comes.
Account for “leftover” assets
Even if you have accounted for all your assets, make provisions for leftovers clauses in your Will to take care of any leftovers assets that you may accumulate as time passes.
Leftovers assets are items or assets that are not specifically mentioned in your last Will, or if the primary gift fails. For example, if you give your car to your brother, but he dies before you, where is that failed gift to then go?
If the leftovers assets are not claimed or distributed to the beneficiaries, it means that your leftovers assets are ‘partially intestate’ (meaning without a Will). Thus the state will determine the fate of those assets.
Provide detailed gift description
If you have specific gift items, it is important for you to provide a detailed description of the gift items and its allocation to the respective beneficiaries.
E.g. Stating a diamond ring to be given to child 1 and another diamond ring to be given to child 2 would provide grounds for disputes among the children. If the two diamond rings are of different values and designs, the chances of disputes and arguments are high.
Be detailed in your descriptions and if possible, explain your decisions to prevent any dispute or dissatisfaction.
Provide complete names
It is common for people to provide inaccurate names or incomplete names in their Wills. This can cause problems in the administration of the estate.
Similarly, if you wish to name a charity as one of your beneficiaries, check the correct full legal name AND the ACN or ABN of that charity organisation. Is it a National Cancer Society or a Local Cancer Research Organisation?
Update Will when your assets change significantly
If there is a significant change in your assets, you should update your Will to reflect those changes.
Update Will your personal or family circumstance change
If your child is born or you have adopted a child, besides including the child as a beneficiary, you will need to consider appointing an appropriate guardian to look after the welfare of the child until his/her legal age in your last Will.
When you get married or re-marry, your existing Will is automatically revoked automatically by the law in most jurisdictions.
When you get divorced, your Will may or may not be revoked, it depends on the jurisdiction of the state and country where you are residing.
If the death of the executor, beneficiary or guardian happened before the testator, you will need to update your legal Will.
The change in marital status of the guardian (e.g. get married, divorced or re-married), which may affect his/her ability to be an effective guardian.
The change in marital status of the beneficiary (e.g. get married, divorced or remarried) or your children (list as beneficiaries) may have their own child/children; these may affect your asset allocations decision in your last Will.
There will be some people who wish to change the executor, beneficiaries or guardian as time passes, but did not act on it until it is too late.
What you can do
Reviewing and updating your estate planning documents when there is a significant change in your life is crucial.
Genders and Partners is the oldest law firm in South Australia, established 1848. Contact us to learn how to protect yourself, your family and your assets through modern integrated estate planning solutions, by visiting our website today and schedule a free no obligation telephone consultation to find out how they can help you and yours.
Remember – any mistakes you make in your estate planning documents won’t become apparent until after it’s too late for you to fix them. Get proper advice, and do it right.
It is also vitally important that you keep your estate plan up to date – it is not a set-and-forget exercise.
To learn how to protect yourself, your family and your assets, by creating a professionally-made estate plan, claim your FREE 15 minute Telephone Consultation
SPECIAL REPORT “7 Things You Must Know Before You Make Your Will”
In this report you will Learn:
Why home-made Wills can be a LOT more expensive than you might think.
The secret weapons used by the rich & powerful to protect their assets, and transfer their wealth two or three generations ahead.
How Estate and Trustee Companies make BIG money from “free” Wills.
The Most Common Estate Planning Mistakes, how they can cost your family a fortune, and How to Avoid Them.
The Elements of a Sound Estate Plan – why a Will alone is not enough.
How to Make Sure Your Assets Stay in Your Family and are not lost to creditors, lawsuits or ex-spouses.
How to guard against challenges to your Estate after you’re gone.