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The Risks of Putting off your Will and Estate Planning until its Too Late

What is Estate Planning

Estate planning is the process of putting in place contingency plans for your business (if any), investments and personal use assets.

There are a number of important reasons why you should plan your estate including:- Ensuring that your wishes are carried out for the distribution of your assets.- To minimize any tax consequences for your estate and the beneficiaries.

The 6 Key Risk Areas

If you have been putting off the decision to execute a Will and plan your estate, you are not alone. There are 6 key risk areas which affect people and their loved ones:

Dying intestate

Invalidity of your Will if you marry or divorce

Financial problems of your children

Legal challenges to your estate

Keeping your Will up-to-date and

Changes to tax laws.

Dying Intestate

Approximately 40-50% of people in Western Australia die intestate. If this occurs, your assets will be distributed according to section 14 of the Administration Act 1903 (WA). The statutory formula for the distribution of your assets may be very different from your wishes.

Invalidity of your Will if you Marry or Divorce

A Will is invalid if:You make a Will prior to marriage which is not in contemplation of that marriage

You divorce your spouse after making a Will unless the Will was in contemplation of that marriage.

Financial Problems of your Children

If you intend to pass your assets to your children and in the future they separate from their spouse or defacto partner, the assets you gift to your children may become part of the matrimonial property. Your assets could end up in the hands of non-blood relatives. Separately, there may be a risk of your children becoming bankrupt in the future and the assets you have gifted to them being used to pay their debts.

Legal Challenges to your Estate

It is important to ensure that you take steps in planning your Will to minimise the chance of your estate being challenged. A typical example is a death-bed Will where your capacity to make a valid Will may be challenged. If your Will is successfully challenged, your assets will be distributed contrary to your express wishes.

Generally speaking, the reasonable legal costs are paid out of the deceased estate, thereby reducing the value of the assets which can be distributed to the beneficiaries of your Will.

Keeping your Will Up-to-Date

Over time your decision concerning your distribution of assets may change, so you need to keep your list of assets current and where necessary update your Will to ensure your wishes are carried out. You may also need to update your Will if a beneficiary or the executor dies.

Changes to Tax Laws

It is important to update your Will and other parts of your Estate Plan in the event of major changes to tax laws. If you do not update your Will, the beneficiaries of your Will may obtain less than they should have if you had kept your Will up-to-date.

Putting a Will and other Strategies in Place

If you do not already have a Will in place, you need to consider:Who will inherit your assets?

You need any assets managed after your death or to stream income to children through a testamentary trust?

Who will be your executor?

Your funeral arrangements.

Putting a Will and other Strategies in Place Cont..

Having a Will professionally prepared is only the first step because estate planning is more than just having a valid Will. You should also consider a number of additional strategies for protecting your loved ones such as:Holding property in joint tenancy.

Establishing a trust and transferring money and other assets to the trust.

Giving gifts to beneficiaries.

Nominating beneficiaries of your life insurance.

Making a valid binding death benefit nomination of your superannuation to your beneficiaries.

Other Issues

Depending upon your circumstances, you should also consider the following issues:A power of attorney can be put in place if you are unable to make financial or legal decisions on your own behalf in the future.

An enduring power of guardianship can be put in place so that someone can make personal and lifestyle decisions for you in the future (eg. medical decisions, where you live, how your health care should be maintained).

If you own a business, will there be any consequences for your business partners or family?

Do you need to have life insurance in place?

If you want advice and assistance with the matters related to Will and Estate Planning. Call Robson Hayes Legal on (08) 9322 2256 or Email us at : info@robsonhayes.com.auFor more details visit us at: http://www.robsonhayes.com.au/the-risks-of-putting-off-your-will-and-estate-planning-until-its-too-late/