Writing a Will is a crucial step in the estate planning process, ensuring your last wishes are clearly stated so that your assets can be smoothly distributed when you pass away.
In Australia, 59 per cent of people have drafted a Will and a further 22 per cent intend to do so in the future, according to a report from the University of Queensland and other academic institutions.
But writing a Will is just the first step; you must also regularly update this important document to reflect major changes in your personal circumstances. Here are six key life events that should make you think about your Will:
We don't expect you to dwell on estate planning when it's your big day, but you won't want to leave it too long. Any Will you wrote in the past is automatically revoked when you tie the knot, unless you made special provisions for the marriage within the original document.
Revising your Will after the wedding ensures your testamentary desires are fully up to date, should unforeseen circumstances strike.
The good news is that divorce rates have been on the decline since 1980, according to the Australian Institute of Financial Studies. The bad news is that 46,604 divorces were still granted in 2015, Australian Bureau of Statistics data shows.
In Victoria, a formal divorce means all clauses in your Will that relate to your former spouse become invalid, potentially creating confusion about how your assets should be distributed. Clarify any misunderstandings by updating your Will with the help of lawyers and accountants experienced in estate planning matters.
You could be forgiven for thinking separation and divorce would have the same effect on your Will. However, the parts of your Will referring to your former partner are not automatically cancelled if you are only separated.
In other words, they will still receive any legacies that you had set aside for them while you were married. Even if you are involved in a fairly amicable break-up, changing your Will is likely to be a priority to prevent this from happening.
4. Having children
Every parent wants to make sure their kids are cared for if the worst were to happen. Writing a Will enables you to clearly outline future provisions for your children, yet a Real Insurance survey last year showed that 56.6 per cent of parents hadn't drafted one.
Meanwhile, only 28.2 per cent of parents had formally specified a caretaker for their children in their Will. Avoid these issues by regularly updating your estate planning documents every time there's a new addition to the family.
Major shifts in finances can have a significant impact on your estate and its distribution.
5. The death of a family member
We doubt updating your Will is the first thing on your mind during such a traumatic time, but the death of a loved one could have ramifications on your own estate planning.
The individual who passed away may have been a beneficiary or an executor, either of which requires the urgent revision of your Will. Appointing a new executor is particularly important, as they play a crucial role in administering your estate when you die.
6. Financial fluctuations
Your financial position will always vary over time, but you should revise your Will when there are drastic changes in your wealth. Maybe you've received an inheritance or lucked out on the lottery? Perhaps a business venture has fallen through?
Positive or negative, major shifts in finances can have a significant impact on your estate and its distribution. If you're unsure what constitutes a big change, contact an experienced estate planning professional for advice.
WMC Accounting offers comprehensive estate planning services, so please book an appointment today to discuss your testamentary intentions.