Estate Planning is often associated with some common misconceptions that can lead to inadequate preparation and unwanted complications. Addressing these myths is crucial in ensuring that individuals of all ages and financial situations understand the importance of Estate Planning. In this article, we’ll debunk five of the common myths.
Myth 1: “I am too young to make a Will”
Whilst you may believe creating a Will is something to think about much later in life, it is a crucial planning step at any age. Life is unpredictable and having a Will ensures that your wishes are known, respected, and implemented, regardless of what happens to you and when. If someone passes without a valid Will, they are deemed intestate, and their wishes for their estate are not legally established. The deceased’s loved ones are tasked with administering the intestate estate. The intestate estate is administered in accordance with the Succession legislation in their State, which sets out the order of inheritance. This may see the estate distributed in a manner contrary to what the deceased would have wanted, and the administration could cost significantly more due to the added complexity. Further, the absence of clear instructions from the individual themselves may cause difficulties between family members, with potential arguments about the best path to administer the estate. Having a Will in place provides a simpler process for family members and avoids the risk of the estate being distributed under the legislation rather than in line with specific wishes.
Myth 2: “Estate Planning is just a Will”
Estate Planning goes beyond drafting a Will. Whilst a Will is an essential aspect, it only addresses the distribution of assets following a person’s passing. An Appointment of Enduring Guardian and Enduring Power of Attorney comes into effect in your lifetime (if needed) to ensure wishes are respected, particularly if an individual loses the capacity to make decisions. An Appointment of Enduring Guardian enables the Principal to appoint an Enduring Guardian to make personal, lifestyle and medical decisions on their behalf. An Enduring Power of Attorney appoints an Attorney to manage financial affairs and make financial decisions on behalf of the Principal. Furthermore, documents such as Superannuation Binding Death Benefit Nominations, Advanced Health Care Directives and Letter of Wishes further ensure that individual wishes are followed in emergencies and after passing.
Myth 3: “I don’t have enough assets for a Will”
The belief that those with significant assets are the only people who need a Will is a common misconception. Regardless of the value of a person’s assets, a Will is necessary to guarantee individual wishes are honoured and loved ones are cared for. There are different types of Wills to suit various estate sizes and the specific needs and wishes of the testator and beneficiaries alike. However, even modest assets of personal belongings, sentimental items or savings accounts may become a source of disputes with an absence of legally established instructions. A Will provides a straightforward tool to nominate executors and beneficiaries, appoint guardians for minor children, and make charitable donations to reflect clear individual instructions and priorities.
Myth 4: “I don’t need a Will because I trust my spouse to do the right thing”
This trusting viewpoint doesn’t consider the unpredictable and unforeseen events that life presents. As mentioned in Myth 1, an intestate estate is administered in accordance with the applicable State succession legislation, which may not completely align with an individual’s wishes. For instance, if there are children from a previous relationship their inheritance may be overlooked under State legislation, particularly if the deceased’s spouse remarries. Moreover, in the event that both parents pass together, leaving minor children, having a Will ensures that the children are adequately provided for in accordance with your specific instructions, including the appointment of a specified guardian.
Myth 5: “My family will be able to sort things out and know what to do”
This assumption can lead to significant legal, financial, and emotional complications. Contrary to this belief, the lack of a well-structured estate plan often results in disputes among family members, prolonged legal battles, and increased stress during an already difficult time. Additionally, as superannuation does not form part of the estate, it is critical to make a superannuation binding death benefit nomination (BDBN). Without a valid BDBN, the superannuation fund trustee has the discretion to decide how death benefits are distributed, which may not align with the individual's personal wishes. BDBNs ensure that superannuation benefits are directed to the intended beneficiaries, providing clarity and reducing potential conflicts. In essence, a comprehensive estate plan, including a valid superannuation BDBN, is essential in ensuring that your family's needs and your final wishes are respected and fulfilled.
If you require any assistance with your Estate Planning or have any questions, please contact our highly experienced Estate Planning team on 02 4949 2000 or estateplanning@jenkinslegal.com.au.
This article is not legal advice, and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.
Comentarios