It’s the conversation everybody needs to have, but nobody wants to have.
Let’s face it — dying sucks.
Nobody in their right mind and in good health wants to die.
So, instead of confronting the idea head-on, we just act like it’s never going to happen.
But there are conversations about death we need to have. And not just our own deaths — we need to be willing to think about how the deaths of our loved ones will impact us, too.
For example, almost half of all Australians don’t have a valid will — either because we think we don’t need one, or because we’ve simply put it in the ‘too hard’ basket.
But, as Merthyr Law director Steve Grant explains, there are plenty of reasons to get your act together and make your will before it’s too late — no matter who you are.
It seems pretty important to have a will, but at least 45 per cent of Australians don’t have one. Why is that?
People never expect to die. They think they will live forever.
Sometimes people are in blended families. They want to leave gifts to their new spouse and their children from their first marriage, but don’t know how to do it to keep everyone happy.
Another group are ‘Gunner do it’ but just never get around to it.
Young ones who are 18 to 28 say, ‘I have nothing so I don’t need a will’, notwithstanding they may have automatic life insurance in their super which will see their estate worth hundreds of thousands.
Recently, a 29-year-old chef living in a caravan died. He had six different superannuation policies after working with 10 different employers over the decade. Three of those super funds included life insurance, so his estate totalled $800,000 from those life insurance proceeds.
If I feel awkward about discussing my will with my partner (or their will), how should I go about starting that conversation?
I always suggest they start by saying: “I was speaking to a lawyer and he told me what a mess we might have with our parents if we don’t leave someone in charge should one of us die.
“If I die, my parents will want to be in charge of my funeral and estate, and even though I have lived with you for five years, you will be steamrolled by them because they think you are a slapper.”
Or words to that effect.
What sorts of things should partners discuss between themselves about their wills? What are some common issues and complications that arise?
The standard situation is always leaving everything to your spouse, then your children, then if there is an MH370 situation and all are dead, 50/50 to your parents and siblings.
The drama arises in blended families.
When do grandparents treat stepchildren like their natural grandchildren? When they have been in the family 10 years? 20 years, 30 years?
When do you treat your stepchildren like your own children? 5 years, 10 years, 15 years?
What if your stepchildren hate you for breaking up their parents’ marriage?
My spouse tells me I should leave nothing to my children from my first marriage because he needs all the estate to survive should I die.
Why do some people require the help of a facilitator to have these conversations? Is it just too overwhelming?
If we have a serious estate or business then it might be best to get an ‘heir coach’ on the job to rebuild trust and communication between siblings and parents.
Recently, one wealthy father with cancer assumed all three of his children wanted to continue his business. When the coach came in and interviewed everyone, they found out the oldest child did not want to be in the family business, whereas the younger two did.
Knowing this, adjustments could be made to avoid disputes after death.
In another business, there are six children — five boys, one girl.
The business can be split into four, not five or six, parts. All the children are married and have their own children.
The parents and children have been having sessions going through scenarios so when the parents die, there is a smooth transition of the empire.
Can you provide any examples of things that people frequently forget to include in their wills that are actually important?
People often say, “I own that property”, when in fact their company owns that asset. A will can’t deal with an asset owned by a company.
If there is a debt over the property, is that to be paid out before the person receives it, or do they only get the property if they take over the debt? These issues need to be clarified.
A jointly owned asset passes to the other owner automatically on death, not under the will. However, the estate is fully liable to repay the debt on the jointly owned property. Was that the intention?
Nobody thinks they’re going to be left out of a will until it happens to them. What are some common reasons for people to be left out of wills?
Circumstances change suddenly.
A man separated from his wife after one year of marriage. Six months later, he moved in with a new de facto spouse. The new relationship continued for nine years until he was killed in a work accident.
He was never divorced and he never changed his will from when he was married. His death benefit and compensation from his employer will likely be $1.5M.
His will left everything to his wife of one year, not his de facto of nine years.
You need to review your will when there are changes in your life.
Who can lay claim to your estate under the Succession Act?
Only your spouse, children, stepchildren, dependent minors or grandparents who live with you.
Friends cannot make a Family Provision claim.
Sometimes a carer might bring a claim, like, “The deceased promised me if I looked after them, they would leave me the Harbour Bridge…”
But that’s not a Family Provision claim, just a breach of contract or promise claim. Pretty rare.
If I think I’ve been unfairly left out of a will, how do I challenge it? How quickly do I need to act?
If you are in the class who can bring a Family Provision claim, you must show the court there has not been an adequate provision left for you.
This is a relative thing and has to be weighed against:
- Giving effect to the deceased’s wishes;
- The claimant’s circumstances, health wise and financially;
- Is there a moral claim on the estate to support the claimant? For example, have they been a dutiful spouse of 30 years, and they’re now left with nothing? Would the community think the spouse ought to have a claim on the estate?
- What are all the competing claims under the will?
You have nine months from the date of death to file a claim.
What should I do if I’m concerned that the person who made the will was not of sound mind? How can I determine if the will is valid?
The judge ultimately determines whether a person had capacity at the time they made their will, signed their attorney, etc.
The judge relies upon:
- Medical evidence;
- What the lawyer who prepared the will says;
- Any other matters that might be relevant. Was the will maker on medication? Suffering from chemotherapy? Under the undue influence of a person?
Someone who is bipolar can make a legal will if they know:
- What a will is;
- What comprises their estate (what they own);
- Who ought to receive their estate — spouse, children, friends — provided there are no delusions about those beneficiaries.
So if you are concerned, discuss your doubts with a lawyer who can caveat the estate until the question of capacity is resolved.
Good lawyers will get medical evidence that a will maker has capacity if they are elderly or sick at the time the will is executed, to avert challenges based on capacity.
What are some other issues that can affect wills that the average person probably hasn’t considered?
Merthyr Law has seen firsthand a case where a Mackay parent left their estate to their adult children equally. Unfortunately, one of their adult sons was bankrupt after the GFC.
The son’s family was in desperate need of cash to get back on their feet to pay for their groceries, rent, etc.
The son’s inheritance did not go to him — it went straight to his trustee in bankruptcy and his creditors.
This was a terrible result and not what the son’s parents wanted.
Similarly, if a child is going through a divorce and a parent dies, leaving an inheritance to that child, the Family Court may give part or all of that inheritance to the child’s ex!
If a child is bankrupt or going through a divorce, parents must change the will to protect their inheritance.
There is a 70 per cent failure rate in generational wealth transfer. That seems awfully high! How can I make sure I’m part of the 30 per cent who succeed?
Historically, parents did not discuss their wills openly with their family.
To foster trust and communication between family members, whether it be a nuclear or blended family, open discussion of the estate plan amongst all family, whether they will benefit or not, will allow all issues to be thrashed out while the stakeholders are alive, rather than a disappointed beneficiary not finding out until the will is read and then launching legal proceedings.
Looking after wealth requires training. So often, we hear about how an orphaned child loses a fortune.
Parents need to train their heirs to be effective controllers of the bounty in an environment of trust and communication.
If the children are not capable, then that control needs to be put in the hands of others to ensure the children have passive income for life — i.e. trust fund kids.
Still have questions about making a will? Visit www.keepingthewealthinthefamily.com.au for more information.
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