The Importance of having a Will
After you have bought your house and moved in, the final part of any property transaction should be the preparation of a Will. If you already have a Will then now is the time to review it. In fact, after you have completed any major financial transaction or had children you should review your Will to ensure that it reflects your changing circumstances. In the event that nothing has changed you should still revise your Will regularly.
But what is a Will and why is it so important?
A Will is a formal legal document through which you express your final wishes and determine the distribution of your property when you pass away. This means through your Will you will decide and control who gets your property, known as your estate and how much of your estate the beneficiaries are entitled to.
Unfortunately nearly half of all Australians do not have a Will. And for those who do have a Will it may not be a true reflection of their wishes. Some people also take short cuts when doing their estate planning, such as using an online will or a Post Office Will kit. Often mistakes are made rendering these cheap Will alternatives invalid.
If you die without a valid Will the law decides who gets your assets. This is called ‘dying intestate’.
These laws apply to everyone and do not take into account an individual’s wishes or situation.
Should a person die without a Will (and assuming that person had no children), their domestic partner will inherit the estate. A domestic partner can be either a legal spouse or a defacto (of either sex) who had been in a relationship with the deceased for a minimum period of 2 years.
In the event that the intestate deceased had children, a spouse or domestic partner is only entitled to the first $100,000 of the estate plus one third of the balance. The remaining two thirds of the estate will be distributed equally amongst the surviving children. This is not a good outcome for the domestic partner of the Deceased and invariably leads to expensive court proceedings.
Should the intestate be single and have no children the next in line to inherit the estate is the parents. Following this formula the next in line is the siblings, followed by grandparents, aunts and uncles, great-grandparents, nieces & nephews, first cousins, great nieces and nephews, first cousins once removed, second cousins and finally remote kin.
When there are no surviving relatives or they cannot be located, the estate passes to the government.
In order to deal with the deceased’s estate, someone will need to apply to the Supreme Court for a grant of ‘Letters of Administration’. In most instances this person is the spouse or next of kin. If no such person exists, the Court will appoint any person it thinks fit.
Once Letters of Administration has been granted, the person making the application becomes known as the ‘Administrator’ and will then deal with the deceased estate in accordance with the law.
The major shortcoming of dying intestate is that your assets will not be distributed in accordance with your wishes. Someone who you would want to provide for may in fact miss out entirely on an inheritance.
Expensive disputes inevitably arise when a person dies intestate. These disputes inevitably pit family members against each other.
The purchase of a property provides an opportune time to draw up a will or update an existing Will.
As always this article contains general information only and should not be relied on for detailed advice related to your particular circumstances. Should you require such advice, please contact your lawyer.