For more than half of Australia’s adult population, making a Will is something they never got round to doing – even though it could mean their loved ones may not be provided for if it becomes too late!
A Last Will & Testament is the document that can guarantee your wishes regarding your estate (property and assets), children and even pets are carried out after you have passed away. Making a Will is probably the most important document in your life, but it’s staggering to learn 52% of us have not prepared the vital legal document, according to comparison site finder.com.au.
Yet, even if you have been proactive and created a Will there’s still room for error – particularly if it’s not kept up to date to account for significant life events. Simple mistakes can lead to disinheriting a significant loved one and blunders can open the door for your Will to be officially contested – or made void altogether.
A Will is a legally binding document that explains how you wish for your estate to be distributed when you die. If you die without a Will (or pass away with an invalid will), this is called ‘dying intestate’. In this case, certain laws of intestacy apply and your assets will be distributed by default to your family – but perhaps not in accordance with your wishes or preferred allocation. We explain more on this below.
To avoid unnecessary confusion, fees, delays and family feuds – get a Will! This article is a guide for what NOT to do when you’re ready to make one.
We’ve put together this list of 21 most common mistakes with Wills, estates and inheritance to ensure you don’t depart having made the same common blunders, leaving your closest friends and family to sort out the mess. The following topics will be explained in more detail below:
- Waiting until ‘later’ … and dying without a Will
- Not letting family know your will exists
- Not specifying your funeral preferences
- Failing to appoint a guardian for your kids
- Not nominating an executor
- Not having an up-to-date Will
- Not having an original copy
- The Will was incorrectly witnessed
- The Willmaker didn’t sign it
- Making changes to your Will after it’s been signed
- Choosing the wrong executor
- Making a ‘DIY’ Will
- Being too specific
- Forgetting assets
- Underestimating estate size
- Ignoring dementia and other competency issues
- Underestimating willingness to contest a Will
- Not accounting for debts
- Forgetting about tax planning
- Gifting things you aren’t allowed to
1. Waiting until ‘later’ … and dying without a Will
Bereavement is always difficult for loved ones. But if you don’t create a Will, it could lead to even more stress and upset for those left behind. No matter how old you are, having a plan in place for who gets what after you’re gone will make this time a little easier for the people you care most about.
The biggest blunder when it comes to inheritance and benefactors is not having a Will at all! If you pass away without a valid Will, or die intestate, there are rules set down by law that stipulate how the estate is to be administered. These rules of intestacy follow a hierarchy of who should benefit from the estate.
As every family relationship is different, those on the top of the list may not always be the most ideal for your individual circumstance. This is why having a Will is important to ensure your wishes will be followed after you pass.
By Australian law, the existing and surviving relative who is the highest on the list takes priority. This order of distribution is as follows:
- Spouse or de facto partner and children from the relationship; then
- Spouse and children from a previous relationship; then
- Grandchildren (if the child has already died); then
- Parents; then
- Brothers and sisters (full and half blood); then
- Grandparents; then
- Uncles and aunts; then
- First cousins; then
- The state government
Without a Will, if there is no spouse, children, parents, siblings, grandparents, aunts, uncles or cousins, then the state government is entitled to the whole of the estate.
2. Not letting family know your Will exists
Making a Will is the most important first step, but it will be useless if nobody knows it exists. Make sure your loved ones know where to look for it when the time comes.
You’ll want to ensure it is left in a secure place that is still accessible – like a locked drawer, home safe, or safe deposit box. If you hire a solicitor, they’ll most likely keep an official copy on file in their offices.
3. Not specifying your funeral preferences
A funeral or memorial is the very last chance to celebrate a life well-lived. So making your funeral preferences known in your Will ensures your loved ones can honour your wishes to ‘go your own way’ – be it a specific funeral provider, or the type of memorial you’d like.
The average Australian today is well informed, price-conscious and non-traditional. So more than ever, many people are saying farewell to traditional funerals. In a recent study, we found more than 90% of Australians would prefer a simple, and non-traditional service over an expensive and traditional funeral, when the time comes. But if their wishes aren’t specified in their Will, there’s a high chance they’ll get a traditional, expensive funeral instead of what they really wanted.
Although a fairly new concept to some, a direct cremation allows families to separate the arrangements of a cremation without a traditional funeral church or chapel service. Without the need to involve a funeral home, a direct cremation allows the freedom and flexibility to personalise a loved one’s memorial separately, to match their unique personality – and at a fraction of the price.
To avoid the financial stress on your family later on, you can even arrange a prepaid funeral through Bare Cremation. Advising your executor or a close family member of your funeral preferences in your Will ensures you’ll ‘go your own way’ when the time comes. To find out more, visit bare.com.au or call 1800 202 901.
4. Failing to appoint a guardian for your kids
Assets and money aren’t the only things Wills are for. They also specify who will take care of your children if you pass away as the only surviving parent. The decision is especially crucial if you have young children, so it’s important to think about who you would like to care for them after you die.
If you don’t nominate someone to care for your children in the event that something happens to you, the family court will appoint someone on your behalf. This could be problematic if your closest relative is not the most suitable for the huge responsibility.
It’s also vital to appoint a guardian so the children have someone to oversee any money that is left to them. Not doing so exposes loved ones to needless stress and financial hardship especially if legal proceedings are required.
5. Not nominating an executor
Apart from naming the beneficiaries who can inherit your assets, you also have to choose an executor to take ownership of the estate. Choose a responsible person as they will need to pay any debts and distribute your assets to the beneficiaries when the time comes.
You can choose a friend or relative or appoint an independent trustee organisation. The executor is responsible for distributing the assets to the beneficiaries in accordance with the Will.
It’s such a vital role with regard to a Will, yet so many people forget to name one. When this happens, the probate court will appoint an executor, who may not have been the deceased’s first choice.
6. Failing to provide for dependants
If you purposefully want to leave someone out of your Will, you should always seek professional advice. A lawyer may suggest preparing a supplementary statement to explain why you are not providing for the person, This won’t prevent that person from challenging the Will, but it means they can’t argue that they have simply been forgotten.
Following a divorce, your ex-spouse is not automatically disinherited, especially if they are financially dependent on you. They may still have a right to claim on your estate, so again, it’s wise to seek professional advice here.
However, if you have step-children with a partner and WOULD like to include them as a beneficiary, simply stating “my children” in your Will doesn’t automatically cover them. You will need to explicitly mention any step-children by name in your Will if you want them to be included.
Legally adopted children, however, will be considered the same as biological children.
7. Not having an up-to-date Will
Many people underestimate the impacts of big life events. Don’t forget to update your Will if you get married, divorced, have children or change your feelings about Cousin Rob.
Some life events you might consider updating your Will in light of include:
- the birth of another child or grandchild;
- a marriage or divorce;
- the death of a loved one;
- buying a new home or another investment
It’s also worth noting that a Will is not automatically revoked with a divorce, so an estranged spouse can legally benefit from their ex-partner’s estate if no new valid Will exists. If your relationship changes, get a Will! To get started, visit the Bare Cremation estate planning webpage here, or chat with our estate planning team on (03) 9917 3388.
If you are a person who feels entitled to receive a share in the deceased estate but was unfairly left out of a Will, you should seek legal advice. You can learn more about how to contest a Will here.
8. Not having an original copy
Many people mistakenly think a photocopy of a Will is valid. But an executor needs an original Will document to legally administer your estate.
Without the original, your executor may have trouble getting a grant of probate to manage your affairs.
9. The Will was incorrectly witnessed
A Will is not a valid legal document unless it’s signed in the presence of two witnesses.
In all states and territories of Australia, the Willmaker must sign the Will in the presence of two witnesses to make it legally valid, and both the witnesses and the Willmaker need to be present at the same time.
The witnesses must be 18 years old or over and physically present at the time of signing the Will. Sometimes there is only one witness and sometimes none – which will deem the Will void.
10. The Willmaker didn’t sign it
Aside from not having a witness sign the document, the Willmaker can sometimes pass without themselves having finalised and signed it. If it’s not signed, it’s simply not valid.
11. Making changes to your Will after it’s been signed
If you wish to make changes to a Will after it has been signed and witnessed, it’s not as simple as crossing a few things out and adding a note in its place.
To amend an existing Will, you will have to make an official alteration called a codicil, that must be signed and witnessed in the same way as a Will. Alternatively, you can make a new Will altogether.
12. Choosing the wrong executor
Choosing the right Executor is vital to ensuring your estate is properly distributed. An Executor of the Will is an important role as they are responsible for taking ownership of the deceased estate and distribute the assets to the beneficiaries in accordance with the Will. An executor will also be responsible for arranging and paying for the funeral and other administrative expenses of the deceased. So, nominating the wrong person for the job could cost the estate time and money.
There is also risk the process can be dragged out, causing long delays and a period of anxiety for the beneficiaries while they wait for their inheritance.
A family member, close friend or trusted advisor will generally be named as an Executor, but some people appoint a solicitor. However, it is not necessary to hold any professional qualifications to act as Executor. You can find out more about the roles of an executor here.
13. Making a ‘DIY’ Will
As mentioned earlier, you don’t need a lawyer to make a Will. A DIY Will, or a free or low-cost Will kit can be an affordable way to do the same job, but it can easily go wrong. A high level of care is still required to make it a legally binding document.
Just because the document is in the format of a Will doesn’t mean it actually covers everything that a Will needs to cover. If your language is vague or your intentions are not explicitly clear, your instructions may not be followed properly, or the Will could even be ruled invalid.
The will-maker also needs to have a level of knowledge about structuring financial affairs or asset ownership. If your estate is complex, you may need to consult a solicitor.
Finally, you’ll need to ensure all of the proper steps are taken, including having it signed by yourself and two witnesses.
14. Being too specific
On the other hand, being too specific can also be problematic. As circumstances generally change over time, being overly specific can also be detrimental in years to come. For example, if you state that you wish for your “white Mercedes” to be left for your eldest child, but you later sell the car it can lead to confusion and potential disputes.
You can get around this by being more general with the details of certain assets – opt for language like “the car that is in my name”, or update your will periodically.
15. Forgetting assets
Failing to take proper inventory of your assets is another pitfall. Most people remember the tangible assets like a car, property, jewellery, and other valuables, but often Willmakers forget some of the financial assets.
When making a list of assets to leave your loved ones, be sure to include all of the bank accounts, premium bonds, shares and any other potential funds you may have. Keeping a list of both the tangible and intangible assets will ensure you’re not accidentally leaving anything significant out of your Will.
16. Under-estimating estate size
According to the Finder.com.au study, 14% said they didn’t own enough assets or have enough wealth to justify the effort involved in making a Will. However, an estate is rarely too small to justify some kind of planning.
For example, all working Australians should have superannuation, which can include significant life insurance. This alone can be enough to warrant an estate plan. This alone should be as simple as ensuring that someone has been nominated as the beneficiary, so it’s worth doing properly.
17. Ignoring dementia and other competency issues
While it’s not something we’d like to think about, 10% of Australians aged over 65 are affected by dementia. And in those aged over 85, that statistic jumps to 30% and is tipped to soar in coming years.
As a Willmaker needs to be of sound mind when making a Will, disputes over estates can arise. In cases where there is an allegation that the deceased lacked the full capacity when they wrote it, often due to dementia, the Will’s validity can be challenged.
However, if you are particularly ‘advanced in years’ or have a condition that may affect your mental capacity, it’s best to get a letter from your doctor confirming you are of ‘sane mind’ when making your will. This will avoid any possibility of a disgruntled family member challenging your sanity later on.
The alarming statistics around dementia show the importance of not only making a Will for when someone passes, but estate planning for what happens if someone becomes mentally incompetent.
You can also read our article here to learn how to make a Living Will to nominate someone as a medical decision-maker for later on if you become unable to make those decisions for yourself.
18. Underestimating willingness to contest a Will
Contesting a Will in court is becoming more common in Australia, as well as other parts of the world.
The law regarding who can challenge a Will differs between state and territory. However it can be surprising to learn who believes they are entitled to an inheritance – or a larger piece – of a family member’s estate after someone passes.
Whether or not such a challenge could succeed depends on the individual circumstances, the relationship of the challenger and the deceased, and the size of the estate.
Creating a detailed estate plan and legally binding Will can help minimise the chance of successful claims against your estate so that the wishes set out in your Will are adhered to.
19. Not accounting for debts
Before an estate can be distributed, the executor will need to pay the deceased’s debts. Generally, the largest and most common type of debt is a mortgage and this can take a fair chunk of the estate away once it’s paid off.
This will impact on how much beneficiaries end up receiving from an estate. So if you don’t account for this when specifying who gets what in your Will, the distribution of your assets can be unfairly divided when a beneficiary becomes unintentionally left with the debt before taking their share.
For example, let’s say the eldest child has been left life insurance to the value of $500,000 and the second child is left an investment portfolio also worth $500,000 – but it had borrowings of $100,000. While it may have sounded like an even distribution on the outset, the first child actually received $500,000 worth of assets, while the second child only inherited assets to the value of $400,000.
Debts can generally be paid directly from the estate account. You can read more about what can be paid out of a deceased estate account in our article here.
20. Forgetting about tax planning
Similar to not accounting for debts, a number of tax considerations can impact on how much beneficiaries end up receiving from an estate. Factors like income tax, capital gains tax and land tax will also need to be considered.
Any assets owned at the time of death can generally be transferred to beneficiaries without the need to pay capital gains tax. Although the beneficiary will need to account for this when they eventually sell the asset.
Establishing a Testamentary Trust is an effective way to minimise tax on income, particularly when leaving assets to minor beneficiaries. Set up with a Will, a Testamentary Trust can be used to protect a beneficiary’s inheritance and distribute income tax-effectively.
21. Gifting things you aren’t allowed to
There can be a grey area when it comes to allocating things to beneficiaries named a Will that can’t actually be passed on. These can include the following:
- Jointly-owned property or assets cannot form part of your estate and will not be dealt with by the terms of your Will. Instead, the surviving joint tenant will automatically acquire ownership of your share of the asset on your death, known as the ‘right of survivorship’. Similarly, company assets themselves are not distributed by a Will, however shares in the company generally are;
- Many superannuation funds include the option to nominate a beneficiary. As superannuation assets are held by the trustee of the super fund, this nomination will override any bequest in the Will;
- Also overriding any mention in a Will is any beneficiary nominated in a life insurance policy. The proceeds will pass to that person upon death, regardless of anyone named in the Will;
- Assets held in a trust account are also not included in an estate, but continue to be held in trust.
Final thoughts on Wills and estate planning
Wills and estate plans shouldn’t be a ‘set and forget’ approach, but reviewed every few years or whenever there is a significant change to your personal or financial affairs. Regular reviews ensure a Will remains current and that the beneficiaries and assets remain correct.
Your Will does not need to be lodged or submitted anywhere. Just ensure you make one! Keep a copy in a safe place and give another to your appointed decision-maker, or executor or lawyer – and then get back to living!
We hope this article on the most common mistakes when making a Will has provided you with a better understanding of the process, to hopefully safeguard you from falling into the same traps.
To learn more, visit the Bare Law website or chat with our estate team for a free consultation, on (03) 9917 3388.
This article is not legal advice. You should chat with your solicitor or accountant for specific advice on your personal or financial situation.