Births, deaths and marriages are the typical occasions when people think about making a will but they shouldn’t be the only times.
Legacy Law director Donal Griffin says while buying property is also a common trigger, people should create a will whenever they accumulate substantial assets – including intellectual property.
Aussies under 35 are the least likely to have an estate plan in place, says Coleman Greig principal lawyer Peter Bobbin.
“Their estate planning is far more complex than the issues that their parents faced at a similar age,” he says.
“And they have assets – and the intellectual property value in what people have is potentially huge.”
Under-35s are more likely to hold intellectual property rights in digital media, including Facebook, Instagram, and emails, along with electronic wealth in Bitcoin and other cryptocurrencies, and digital assets such as an iTunes library.
They are also more likely to have multiple super funds, non-property wealth such as equities, and buy now, pay later debt in addition to credit cards and bank loans.
And they are less likely than their parents to be married to their partner, which can complicate the estate.
Leaving behind a potential catastrophe
Bobbin says he had a terrible situation with a young girl who took her life.
“She was in a de-facto relationship and they were engaged to be married but she didn’t leave a will,” Bobbin says.
The relationship between her parents and the finance fell apart over who had the right to her photographs, emails and texts.
“Ultimately an agreement was reached, which is good, but the cost was both legal and emotional and I suggest the emotional was more expensive,” Bobbin says.
It’s not about you but about who you leave behind, he says.
“One of the worst things a parent can ever do is bury a child, and when there’s no organisation whatsoever about their estate, that loss is multiplied as we get reminded as we fight with bureaucracy on Facebook and Google in terms of dealing with cloud access.”
How to make a will
- Decide who would make financial decisions for you if you died. This would be the executor; they would also call in insurance and superannuation assets. Griffin says for your executor you should pick someone you trust but also who would be willing to take on the role. This is often a big job and may merit a gift or fee, in which case you should consider leaving a monetary gift “in lieu of commission” otherwise your executor may go to court to ask for a fee or commission which could be hundreds of thousands of dollars.
- In choosing your executor, be careful of potential conflicts of interest. For example, if you make it your parent and you have a spouse, they may want to sell your house to distribute assets – but your spouse may want to keep it.
- If you have children, you will need a guardian for any children under 18. In the event of your death, guardianship would normally go to the child’s other parent but it should be documented and you should also provide financially for your child.
- You need to provide for your spouse, child, and anyone who is financially dependent on you.
- You should also include directions for the care of domestic pets, such as who you would like to care for them and bequeath money to cover costs.
- Your desired funeral arrangements may also be included in your will.
Start with the plan
Estate planning begins with a plan, Bobbin says, and that needs to include a process to manage online accounts and passwords.
This could mean providing trusted people with the ability to access certain passwords and instructing them on how to proceed. This might mean asking your brother to shut down your secret email account and leaving the executor to manage the rest, Bobbin says.
If you don’t have someone to access your cryptocurrency you can lose it. In addition to bequeathing it in your will, you need to let your executor know where and how to access it.
As you change passwords, you might need to set alerts to update your will.
Similarly, if you have buy now, pay later debt or payday loans, make sure these can be taken care of quickly by someone with access to your accounts or the interest will mount.
Superannuation – perhaps your largest asset
Superannuation is often the asset no one thinks about, says Bobbin.
While your balance may not be large, typically you will have an insurance component which for an average Australian super member might be almost $180,000 at age 30.
Griffin says many people mistakenly nominate their mum or siblings as beneficiaries, but super can only be paid to eligible beneficiaries, which include a spouse, child or other dependent.
The only way to guarantee others can receive your super upon your death is to have a will and nominate the super is paid into your estate which can then pay it to the beneficiary of your choice.
“Jump on the web, log into your account, read the nomination rules and nominate, just nominate,” Bobbin says.
“People fight over the money after death and the most common source of fighting is the super fund for this age group.
“The most important thing we know is to do something – if you do nothing, you guarantee disaster.
“Often the answer will be locked into your estate because you then deal with it in the will but if it goes to the estate, make sure you know who will get it and that you are happy with that.”
Clarify your relationships
If you are making a binding nomination for your super or leaving something in your will for a loved one, be sure to clarify the relationship – is it a partner or a friend?
Relationships might change after death as friends claim to be partners to make a claim on the estate.
Supporting charities after death
When making a will people often want to do the right thing.
“Sometimes that involves continuing to support charities they have supported during their life and sometimes it might be as a ‘thank you’ for a charity if they have had help or an illness,” says Griffin.
“Younger people are often more philanthropic and socially aware, and sometimes older people who have had a wonderful experience supporting an artistic group or have a passion about arts, the environment or social justice will leave something.”
Where to keep your will
Keep the original version of your will in a safe place and a copy of your tax and banking records, where they will likely be found after death.
The original could be with mum or dad, at a lawyer’s office or in a safety deposit box, with a back-up copy stored securely online.
When to update your will
Griffin says births, deaths, and marriages usually prompt people to update their will, however, divorce should also be included.
While divorce might negate gifts given to a spouse, the breakdown in a relationship should trigger an update.
“I have a client who reviews his legal arrangements every year when he does his tax and another client who does it before the Olympics – every four years,” Griffin says.
“That may be your default but if something happened in a year with no Olympics you should also review it.”
Using will kits
Will kits and online wills are available starting at less than $50.
These are useful if your estate is very simple – and you are sure that you have covered everything, appointed executors, and signed it correctly.
More expensive online kits may include some professional prompting when filling it out.
