The recent coronavirus outbreak has led to economic and health tidal waves throughout Australia and the world. It has affected every Australian and has created a huge demand for people to make or update their legal will.
With the heightened health risks presented by coronavirus, now is a good time to review your legal will. Or if you don't have one, it's a prime opportunity to get it sorted.
So, before creating or reviewing your legal will, what do you need to consider?
Who would look after your children if you were to die?
If you have minor children, under the age of 18, it's important to nominate who would look after them if you were to die.When deciding on their guardian, be sure to consider whether they will also be your executor, which would empower them to access and deal with your children's trust accounts after you die.
It's recommended to appoint only one person as a legal guardian, as multiple guardians needing to make unified decisions about your children can often lead to difficulties.
Do you need to set up a trust for minors in your will?
Trusts can be created and included in your legal will to protect the inheritance of a child until they reach a certain age. You might prefer your children to wait until they're 21 or 25 years old before they inherit.
Until this time, your appointed executor and trustee will have the power to access the trust for your child's education, medical needs and general upbringing.
What type of trust is right for you and your beneficiaries?
If you have a large estate, setting up a trust in your legal will is well worth considering. Trusts provide several benefits, including the ability to distribute income from the trust to save tax which would otherwise be payable to the ATO.
Trusts can also protect your children if they become bankrupt, if they're in a profession that's susceptible to being sued, or if they experience a separation within their marriage or de facto relationship and you do not want their ex-partner to receive any of your estate.
These types of trusts are called testamentary trusts and are also beneficial if you have an adult child who is unable to manage their inheritance. Typical examples might be where children have an intellectual disability, or where they are bankrupt, or are dependent on drugs, alcohol or gambling.
Who should you appoint as your executor in your legal will?
Your choice of executor can have important ramifications.
Suppose you have children from a previous relationship and you are now with a new spouse. Upon your death, you are cremated as per your wishes.
Now say that you'd appointed your current spouse as your executor, and they dealt with your ashes according to their wishes.However, your children wanted to deal with the ashes differently.
This type of discordance often causes family friction. It demonstrates why it's important to state your specific wishes in your legal will and why you must choose your executor carefully.
If you are part of a blended family, how will you ensure everyone is well looked after?
If you and your partner have children from previous relationships, you will presumably want to look after your spouse, but also ensure your children are well cared for in your legal will. This can often be the most difficult thing to do and thus requires consideration of different assets.
From superannuation to the contemplation of "right of residence" clauses, you may also need to contemplate "contracts for mutual wills", in an attempt to lock the surviving partner into not changing their will in the future.
How can you ensure that your superannuation is passed to the right people?
Superannuation is often a sizeable component of your estate, but it doesn't automatically transfer to your beneficiaries under your legal will. You may need to execute a Binding Death Benefit Nomination, appointing your nominees. For the nomination to be valid, only dependants can be nominees.
Considering your superannuation policy and how it will be distributed is especially important if you're in a blended relationship.
Do you want to be cremated or buried?
It may sound macabre, but there's "no ownership in a corpse". It's up to your executor to decide whether you're buried or cremated.
For this reason, it's essential to discuss your wishes with your appointed executor or include a clause in your legal will.
Do you wish to donate your body to science after your death?
You can elect to donate your body to science or donate your organs after you die.
To do so, you'll need to register your decision with the Australian Organ Donor Register, as the option to donate is no longer available on your driver licence renewal form.
How can you ensure your legal will is valid?
You must execute your will properly, rather than relying on the discretion of the court to allow an informal will to be regarded as valid.
For example, a will sent via text message or video is considered an unsigned copy of a will.
Why is it important to have an up-to-date will?
Even if you don't have substantial assets, making a legal will is extremely important, especially during this challenging and uncertain time of the coronavirus pandemic.
It will not only ensure that your wishes are enacted upon your death, but also that your loved ones will be able to finalise your estate in a matter of weeks, rather than months or years.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
