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Seven tips for creating a watertight will

Family

From wills written on the back of cereal boxes and manila folders, to people attempting to gift the company-owned car, Anna Hacker has seen it all.

The director of estate planning at Australian Unity Trustees says it is common for people to think composing a will is a straightforward process, without taking into account the scope of their assets and how different structures affect how an asset can be bequeathed.

Here she offers her top tips to create a will that will ensure your estate is divided according to your wishes.

  • Do it early and seek professional advice

Ms Hacker says that in times of illness and distress, it is unlikely an individual will be wanting to spend time making a will.

She says the best way to alleviate that stress is not to wait to the last minute and approach a professional financial advisor or lawyer to help in the will’s creation.

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“I guess, I would never say to someone they should do their own estate planning,” she says.

Although she admits that may sound self-serving as she herself is a lawyer and estate planner, she says it is important for people to understand the laws concerning the wills are constantly changing, and it can be difficult to keep up to date.

“I have studied for years to get to this point, and the knowledge in this area is changing all the time,” she says.

“There’s different legislation across the country regarding how a power of attorney can be appointed, and it has been updated and changed.”

“You might know how to have done it 10 years ago, and then suddenly something changes now. For example, the tax treatment of different assets may have recently changed depending on whether someone is or isn’t dependent according to legislation and/or case law.”

She says it is important to weigh up how important the creation of a will is and reflect upon how much can be gained from seeking professional advice.

“I do find it funny that people will go out and spend all this money on things like going to a hairdresser, but people still don’t want to spend money on getting their will done,” she says.

“Their will deals with their entire estate, and how their entire estate is going to be distributed to the next generation. So, getting professional advice is definitely the easiest way of not having these sorts of rookie errors happen.”

  • Understand what your objectives are and who the beneficiaries are, but be open to professional advice

“I think that one thing that people commonly do as a mistake is they come in with completely set ideas – this is exactly what I want to do,” Ms Hacker says.

She says it is important to listen to the advice of your financial professional or lawyer to ensure that those you want to benefit from the will receive their share in the best means possible.

“I’ve heard people come in and say, ‘I want to distribute evenly between these two beneficiaries,’ or ‘I want all four kids to be my executor’. Then the lawyer will say, ‘Well, that’s great, but this doesn’t actually achieve your outcome. What if we structured this in a protective way?’ Or, ‘You say you want all four kids to be your executor, but that’s not really a very practical outcome.’”

Ms Hacker says it’s vital that the individual consider not just their own objectives when creating the will, but also those of their beneficiaries. This will ensure that the bestowed asset is delivered in a way that both benefits the beneficiary whilst protecting it for the future.

“Think about not just who you want to benefit but the way you want to benefit them,” she says.

“I’ve seen people that have prepared wills themselves and said, ‘Oh, that child has a gambling issue, and so we’ve given them this,’ but when we talk about it, we realise they could have had it in a different trust structure.”

“This structure could have protected that asset, and it could have been something that was flexible, so that if they were no longer a gambling addict, then [their access] could change.”

  • Make sure you think about what happens if you lose capacity

She says it is imperative that individuals creating a will consider what will happen not just on the event of death, but also if they lose capacity to control their estate. This is to avoid the power of attorney position falling into the hands of someone not properly fit for the role.

“If you’re alive and have lost capacity and haven’t put in place powers of attorney, it doesn’t really matter what the will says. There might not be anything left if you haven’t got the right person in charge.”

  • Have a plan for estranged family members, or where there might be conflict

Ms Hacker says it is important to consider carefully before cutting a family member out of the will or bequeathing them less than others, as it could inspire a challenge of the will after death.

We often ask people to put down in quite a lot of detail why they’re cutting that person out or why they’ve given them less in a separate document,” she says.

“I guess a tip would be, just think about what are the reasons for excluding someone and have that explanation actually prepared.”

  • Understand what your assets are

She says the most common mistakes she sees are individuals either forgetting an asset or not understanding the steps that must be taken to include it in the will.

“When people are doing it themselves, a common mistake is them not actually understanding what is in their estate,” she says.

“It’s not that uncommon that after someone signed a will, they’ll come to me and say, ‘I completely forgot that I owned this’.”

“Most of the time it’s fine, but it’s an issue if it’s an asset such as a family trust that needs to be passed on due to the asset structure.”

Ms Hacker says the other issue she has often encountered involves individuals not properly incorporating their superannuation into their estate.

“Superannuation is the biggest asset that people mistakenly assume they can deal with just in their will and not realise they need to do something else,” she says.

“That can lead to really disastrous outcomes.”

She cites the story of one client of hers who tried to leave his superannuation to his sister without the superannuation being directed into the estate.

“I’ve seen the situation where we had a de facto partner. The sister, in the will, was meant to get the super and the de facto partner was meant to receive everything else. The de facto claimed the super, however, and the outcome was that the de facto received everything else in the estate plus the super outside of the estate.”

“People’s objectives aren’t actually fulfilled because they’re not sending their assets to the person they’re intending.”

  • Be honest with the person preparing your will

“If you leave anything out, it can completely change the way they might be giving you advice,” Ms Hacker warns.

She says failing to tell the professional assisting you with the creation of the will can lead to complications for your family members after death.

“Let’s say someone came in and didn’t mention that they had a child out of their current relationship and just completely ignored that. That completely changes people’s advice,” she says.

“It also means that the estate, if that child is cut out, is then completely up for challenge and that could completely stop any attempt to distribute the estate in the way they’re wanting.”

She says it is important to also consider not just family members, but any individual who can claim they are dependent on you. This includes boarders who live with the elderly.

“There’s a whole group of challenges of estates by people who are just living in someone’s house, like a boarder,” she says.

“An elderly person living with a boarder in the house, to me, that is an alarm bell that that person could potentially challenge. I’m obviously not saying that in every case, but I’ve seen it, I’ve seen it at least a dozen times.”

  • Create a formal document

Lastly, she affirms the need to draft and write a formal will that is signed and witnessed by two people.

Although informal wills, such as those delivered via text message or video communication, have sometimes been proven through the court process in the past if clear intent is present, she says it is a highly costly and stressful process for family members of the deceased to undergo.

“Anything that is not the formal structure of a will is costly of time and money to try and confirm whether or not it is [valid].”

“If they really understood what the outcome could be, they would obviously have gone out and had at least some proper advice or done it in a more structured way. I think that people just think of it as, ‘I can literally just do whatever I want’.”

“It’s a bit more complicated than that, because writing the document isn’t the important part, it’s the advice of how to incorporate the assets that matters,” she concludes.

Seven tips for creating a watertight will
Family
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