Estate planning is an important step in protecting the people and things that matter most to you. Whether your circumstances are straightforward or more complex, a tailored plan can help ensure your wishes are understood and your loved ones are supported.
In this article we explain some of the common myths about Wills and estate planning, and what they may mean for you and your loved ones.
Wills are not necessary
This is one of the most common myths about Wills.
The misconception behind this myth is that your intended beneficiaries will somehow receive your money and assets after your death, so there is no real need to make a Will. This may not be the case.
Dying without a valid Will can cause significant financial and emotional hardship for the loved ones you leave behind. It can also result in your wealth passing to people you did not intend to benefit.
If I die without a Will, the Government gets everything
If you die ‘intestate’ (without a valid Will), the relevant state law determines how your estate will be divided according to a statutory formula (which varies from state to state). This statutory formula may not reflect your wishes. A Will provides certainty about who will receive your estate.
Wills are just for ‘older’ people
The thinking behind this myth is understandable: the older you are, the more likely it seems that you should have a current Will. The problem with that thinking is that none of us know when we are going to die. Every adult needs a Will.
A Will becomes especially important if you experience a major life event such as marriage, a relationship breakdown, the birth of a child, the purchase of a property or the loss of a loved one.
A young adult’s assets will automatically go to their parents if they don’t have a Will
Many young adults assume they do not have enough assets to justify making a Will. Others assume that, if they die, their parents will automatically inherit all of their assets. This is not necessarily the case. Many young adults have more assets than they realise, including superannuation, life insurance held within superannuation, cars, personal belongings and other assets. These assets are worth protecting.
It doesn’t matter, I’ll be dead anyway
Dying without a Will may not change anything for you, but it can significantly impact the lives of your loved ones.
Not only will they be coping with grief, they may also face increased financial and emotional hardship as they deal with complex legal complications that arise after your passing. This can include expensive and protracted litigation that may have been avoided if you had prepared a Will.
Engaging a lawyer to prepare a Will is too expensive
In reality, the cost of your Will depends on the complexity of your circumstances and your objectives. The cost for someone with somewhat simple circumstances is a lot less than people may think. It is important to remember that you generally get what you pay for.
My family is really close – they will never argue about my estate
Unfortunately, this is often wishful thinking. Some of the most emotionally-charged and hotly-contested matters we see in our practice involve deceased estates. Money and grief can be a bad combination, bringing out strong emotions. The clearer you are about how you want your affairs handled, the lower the risk of relationship-destroying disputes.
A DIY or online Will is good enough
In our experience, homemade Will kits often create more problems than they solve. While they may appear to be a simple and inexpensive option, they are frequently poorly drafted and can lead to uncertainty, disputes and costly court proceedings.
Ultimately, the people most affected are your loved ones and beneficiaries.
A Will kit purchased from a newsagent, Australia Post, or an online self-serve provider is unlikely to properly address the complexities of your estate plan. Issues such as companies and trusts, business interests, excluded beneficiaries, blended family circumstances, and potential family provision claims require careful legal advice.
A professionally prepared Will can also consider important strategies for asset protection and tax effectiveness for your beneficiaries.
We also regularly see homemade Wills that have not been signed or witnessed correctly, or that contain other technical defects which can only be fixed through a court application.
Obtaining advice from a qualified and experienced legal practitioner helps ensure your Will is valid, effective, and tailored to your circumstances, giving you confidence that your wishes will be carried out and reducing the risk of unnecessary stress and expense for your family.
I can rely on AI to prepare my Will
We have recently seen Wills that appear to have been prepared using AI tools. In some cases, those documents used legal terms from different jurisdictions, which can create confusion and uncertainty.
Estate planning laws differ between states and territories, so your Will needs to reflect the law that applies to you, whether that is in Queensland, New South Wales, Victoria or elsewhere.
You should also be careful when using publicly available AI tools to prepare legal documents. If you enter personal or sensitive information into those platforms, it may not remain confidential - and could be stored or processed by third-party providers.
My Will covers all my assets, including my superannuation
Not necessarily.
Most people think that they ’own’ the assets in a family trust or family-owned company. While you may be able to pass on the ‘control’ of those entities through your Will, the assets within these structures do not form part of your estate.
The same applies to superannuation. Whether your superannuation is in a self-managed (SMSF), retail, or industry fund, your death benefits may not form part of your estate unless you have created a ’Binding Death Benefit Nomination‘ directing those benefits to your estate for distribution under your Will.
Additional steps are often required to ensure that the assets held through these structures end up where you intended.
If I leave someone $1 under my Will, then they can’t make a claim against my estate
Naturally, people want to take every possible step to prevent claims being made against their estate after death.
However, legislation in every state allows the court to consider an application made by an eligible person where the deceased has not made adequate provision for that person from the estate.
It is therefore not sufficient to leave a nominal gift for a potential claimant under your Will. The court is concerned with whether adequate provision for the beneficiary has been made for that person’s proper maintenance, education or advancement in life.
Even though the outcome of a family provision claim is ultimately for the court to determine, an experienced lawyer can advise you on steps to reduce the likelihood of such a claim succeeding.
If you are anticipating an estate claim following your death, you should advise your lawyer of your concerns, so all necessary steps can be taken when preparing your Will and related estate planning documents - such as a memorandum of wishes or affidavit material.
Inheritance tax (death duties) will reduce what I leave behind
Inheritance tax, commonly known as death duties, has not applied in Australia since 1979.
Even so, a range of other taxes and expenses may still affect an estate, including capital gains tax, superannuation tax, and stamp duty on certain transfers.
There are steps you can take to minimise the tax burden on your beneficiaries, particularly by obtaining expert legal advice and preparing an estate plan that reduces potential liabilities for your estate and, ultimately, your beneficiaries.
How can we help?
As estate planning experts, we have assisted countless clients with:
- Tailored estate planning solutions
- Elder Law (abuse of fiduciary duties, Power of Attorney and Guardianship disputes in the state Tribunals)
- Wills with Testamentary Trust
- Mutual Will Agreements
- Protective/Special Disability Trusts for vulnerable beneficiaries
- Asset protection and structuring
- Deceased Estate administration
- Deceased Estate claims and disputes (contested estates).
- Grants of Probate/Grants of Letters of Administration, and
- Deceased Estate claims and disputes (contested estates).
If you would like advice about your estate plan, please contact Barry Nilsson’s Wills & Estates team to arrange a confidential discussion.
We provide practical, considered advice on estate planning and assist individuals and families across Australia.
We can help you plan with confidence.
