It’s a new year and time to update your Will

For most of us, a new year brings new beginnings and opportunities. With the holiday season now behind us, this is the perfect time to create or update your estate planning including your Will before you get caught up in the daily routine of another year.

While many of us understand the importance of having a Will, it often gets pushed aside by day-to-day tasks and demands. By prioritising your Will, you’ll have peace of mind knowing your loved ones will be cared for should the unexpected happen.

Estate planning is more than just writing a Will; it’s about ensuring your wishes are followed in the event of both incapacity and death. Whether you have significant wealth or just a few assets, estate planning provides peace of mind.

Here are some key considerations for keeping your estate planning current in the year ahead:

Planning for incapacity

While we associate incapacity with dementia and aging, accidents or sudden illnesses can strike at any time. Regardless of your age, it is important to be prepared for the unexpected and to appoint someone you trust to manage your finances or make legal, medical and lifestyle decisions if you are unable to do so. If you don’t plan, the Victorian Civil Administrative Tribunal will appoint someone to act as your administrator or guardian, making the decision for you. This person or organisation may not have been your preferred choice. There are three powers in Victoria, Enduring Power of Attorney Financial, Enduring Power of Attorney Personal, and Medical Treatment Decision Maker.

Marriage and divorce

It is important to know how particular events or changes in your life, such as marriage or divorce, can affect the validity of your Will. Marriage revokes earlier Wills unless the Will specifically contemplates the marriage, while divorce removes your former spouse as a beneficiary and executor of your Will.

If you recently married or divorced, it is important to update your Will to reflect your current relationship status?

Guardianship of young children

If you have children under 18, make sure your Will appoints a guardian to care for them in your absence. While this is not legally binding, it provides guidance to authorities about your wishes for your children’s care. In your Will, you can also include directions for your executors regarding the use of your home, the hiring of a nanny, education and other related expenses.

Superannuation

Without a valid Binding Death Benefit Nomination (BDBN), the trustee of your super fund has the power to decide who receives your superannuation benefits on your death. Parents, siblings and grandchildren do not automatically qualify to receive superannuation death benefits, consequently it is important to review this part of your estate planning to ensure your wishes are clear and enforceable. This may require you nominating your Legal Personal Representative to receive your death benefits to distribute via your Will to your loved ones.

SMSF considerations

If you have a Self-Managed Super Fund (SMSF), in addition to deciding who will receive your superannuation death benefit, you must also consider who will control the fund in the event of your incapacity or death. Without a valid BDBN in place at the time of your death, the person or persons in control of your fund will decide who receives the proceeds of your death benefit.

Life insurance

Life insurance can be an important element of your estate plan, especially if you have a mortgage and a young family. When nominating the beneficiary of a life policy, consider the purpose of the policy and how the proceeds could best be used. Directing your life insurance to your estate can offer tax advantages, particularly if you have young children.

Business succession

If you own a business, ensure there is a plan for what happens to it after your passing. While most business succession plans operate outside of the Will, there are circumstances when you will need to provide directions and additional powers to your executors to ensure that they can carry out your wishes or continue to operate the business until it is sold or transferred. This is particularly important if you are a sole trader.

Family trusts

Assets in your family trust are governed by the terms of the trust deed and generally cannot be dealt with in your Will. When reviewing your estate plan, ensure you have accounted for the future management of these assets in your Will by nominating who will control the trust in your absence.

Impact on beneficiaries

When reviewing your estate plan, carefully consider how your bequests will impact your beneficiaries. Are they in financial trouble, or could an inheritance exacerbate personal struggles? A testamentary trust may provide better protection and management of your gift.

Advance care directive

An advance care directive is an important step to ensure your health care wishes are followed if you cannot make decisions for yourself. It will provide instructions and guidance to your doctors and medical treatment decision makers on how you would like your healthcare managed.

Conclusion

There’s no doubt that creating or updating a Will can be complex, it requires significant time and careful consideration. With strategic planning you can provide peace of mind for you and your loved ones by ensuring your Will and estate plan are up to date and current. It will also ensure your testamentary wishes are adhered to and your loved ones are taken care of minimising angst and emotional stress.

Contact us

If you would like to create or update your Will, or need assistance with your estate planning, please contact a member of our Wills, Trusts & Estates team today.