Holidays give you time to reflect and while I was away I got to thinking about someone who recently asked me how to go about making a will and why it’s so important to have one. The short answer is of course to ensure that you decide who the beneficiaries of your assets will be when you die. But it did make me wonder how many people may have neglected to write a will because they don’t know where to start - so I thought it would be worthwhile sharing my thoughts on the subject to help demystify the process.

There are so many things to consider when preparing a will that it’s not surprising many people opt for a quick fix solution by purchasing an off-the-shelf will kit from local newsagents or post offices. But when it comes to something as important as making sure your loved ones are properly catered for when you go, we don’t advise taking short cuts. In my view, it’s close to impossible to have a one-size-fits-all solution.

It’s really important therefore to seek the advice of a solicitor who is experienced in wills and estate planning who can sit down with you, understand your unique situation, and draft and prepare a will that reflects your wishes and foresees anything you might have overlooked (we can certainly point you in the direction of some excellent solicitors.) Remember, while a good solicitor will be required to prepare the legal documents, it’s imperative to sit down with your accountant or financial advisor to ensure your financial affairs are both optimal and well documented prior to drawing up your will. You will need to review and document things like business structures and asset & liability protection before seeing a solicitor.  

Here are a few more things you should keep in mind:

1. Providing for your family

It’s important to consider the implications if you don’t adequately provide for your spouse, children and/or dependents in your will. 

Issues which you should address might include:

• Who should be the guardian of any minor children, ie. aged under 18
• How to provide funding for the guardians
• How to provide for physically or mentally disabled family members
• How to provide for family members who may not be financially astute
• How to deal with blended families
• How to provide the best protection to the next generation in case the beneficiary is bankrupt, becomes bankrupt or suffers a marriage breakdown

2. Who is your Executor?

Appointing an appropriate Executor is crucial. Choosing the wrong person could end up costing your estate a lot of money, or worse, result in your wishes not being carried out. In many instances your executor can be your spouse, another relative, family friend, professional advisor or public trustee company. Note – you can have more than one executor.

3. Dealing with assets

It’s important to remember that your will can only deal with assets which are legally owned by you.  Whilst this sounds straightforward, many people own assets via family trusts, superannuation funds and companies but still consider them as their own.

Asset Protection– it is very important to take into the account the circumstances of the beneficiaries of your estate so as to minimise any risk that their inheritance could be eroded.

• Where a person is a company director, or holds a position that assumes personal liability (a medical practitioner) it is important to consider how their spouse might deal with assets, particularly the family home.
• We may not want the company director to inherit an asset particularly if that person suddenly becomes subject to a claim for negligence or bankruptcy

Ownership of assets – assets that are not in your own name do not form part of your estate.  These include companies, trusts and superannuation funds.  It is very important to consider how the control of these entities is passed in your estate, and what happens to the assets that are owned by these entities.

4. Superannuation

It’s important to thoroughly consider your superannuation as it may be paid directly into your estate. Assets held in superannuation funds also require special consideration particularly in respect of taxation issues.

It is also important to ensure that binding death nominations have been prepared and that these complement the will.

5. Tax implications

Tax objectives are key considerations when preparing your will and estate plan.  The treatment of different assets within your estate can have, in some cases, unwanted and avoidable tax consequences.

6. Should you make use of Testamentary Trusts?

Testamentary trusts are similar to discretionary trusts and are created at the time of death. They can have the effect of assisting your beneficiaries in their wealth creation and management, and also asset protection.

Testamentary trusts are particularly useful to provide an added level of protection to financially distressed persons or those who may be exposed to liabilities and for marriage breakdown situations of intended beneficiaries.

Testamentary trusts can be a very good tool to achieve different objectives within your estate plan. A solicitor that specialises in wills and estate planning can advise whether a Testamentary Trust may be right for you.

7. Powers of Attorney

At the time of preparing a will it is also important to ensure that other documents are prepared.

These include:

• Medical Power of Attorney
• Enduring Power of Attorney
• Company Power of Attorney

A Medical Power of Attorney allows another person or persons to make decisions in respect of ongoing treatment should you be unable to make such decisions, for example should a life support machine be turned off.

An Enduring Power of Attorney appoints someone to be able to make financial decisions and effect financial transactions on your behalf should you be overseas or unable to make such decisions because of a medical condition.

Company Power of Attorney – where your assets are held by a company a Company Power of Attorney may be required.  A Company Power of Attorney appoints a person to be able to act on behalf of the company.

A common misconception is that an Enduring Power of Attorney made by a company director allows that person so appointed to act on behalf of the company.  This is not the case.

8. Businesses

If a business is owned in a company or partnership it is very important to consider what happens to the business, and the ownership of the business, upon your death.  Often people enter into buy/sell agreements, (also referred to as Business wills) to ensure a smooth transition in the ownership of the business upon death of one of the owners. 9. Life Insurance Life insurance is a critical tool to ensure that your debts are paid out, and your beneficiaries are adequately provided for upon your death.

It’s never easy to think about life after death, but part of our legacy can be providing our families with the financial stability to unlock their potential for years to come.