An ‘uncomfortable’ subject that will save your family’s finances

15 August, 2021

There are plenty of ‘uncomfortable’ conversations people tend to avoid. It could be tackling the facts of life with your kids or coming clean about an embarrassing workplace error.

There is, however, one particularly important subject that could have devastating financial ramifications for your family if you choose to ignore it.

I’m talking about having a proper will in place.

So, let’s breakthrough this taboo. Here’s why addressing the issue of your mortality is essential.

Why so serious?

At ASPIRE, our strategic process includes asking clients a range of questions. This information allows us to develop the right investment strategy for their needs.

One question we always ask is whether they have a will and a power of attorney in place.

The surprising thing is well over three quarters don’t.

Then again, I shouldn’t be surprised as I’m guilty of not regularly checking in on my will either. Not too long ago I was gobsmacked to learn that my will was 20 years old! That’s a full 10 years before my wife and I got together.

That’s now been remedied, but it shows almost anyone – even professional advisors – can fail to regularly update this important document.

What is a will?

For those who don’t know, a will is a legal document that sets out your wishes upon your death. Among other things, it describes who get what assets from your estate.

Many people fail to do a proper will, and the ramifications are worse than most realise.

If you die without a will in place, (called dying ‘intestate’) several things can happen that might threaten your family’s inheritance.

While specific laws vary between the states and territories, the process is similar across all borders.

First, the courts need to make extensive enquiries to absolutely determine no will exists.

Once that’s done, your eligible relatives can make applications through the courts to benefit from your estate.

Commonly your assets will be divided between your surviving spouse (or de facto partner) and children.

If there’s no immediate family, then your estate may go to the extended family such as parents, grandparents, aunts, uncles and cousins.

There might also be an organisation such as a charity, or even other non-blood relatives and individuals (close friends or other dependants) make applications for the estate.

If there is no dependant or other person entitled to make a claim, then your estate transfers to your state or territory government under succession law.

The risks of dying intestate

Now the above might sound like a reasonable procedure, but it’s far from guaranteed that your loved ones will come out financially unscathed.

The main problem is that the process after you die intestate takes a long time and can involve extensive legal fees which are taken out of your estate.

That means less money for those you love.

But it can get worse. A greedy relative to whom you didn’t want to leave anything could make an application to your estate, leaving your immediate family facing a costly court battle and potential loss of some or all your assets.

In addition, wills set out exactly who gets what. Dying without a will means your wishes may not be fulfilled. You might have wanted to leave a certain asset to a particular child, but that’s not assured if it isn’t documented in a will.

All this is particularly important in today’s strong real estate market. We’ve seen an extraordinary run of capital growth this year. There’s a lot of wealth tied up in property that’s been compounding away. If your portfolio has gone up 20 per cent in the last couple of years, we’re talking about hundreds of thousands of dollars in wealth not immediately going to your spouse or kids just because you didn’t spend a few dollars on a proper will.

An easy fix

Firstly, get over the fear of discussing mortality, and face reality. The only two sure things in life are death and taxes – so you might as well control this part of the process.

Write down exactly what you want to happen with your estate when you die.

Secondly – have a discussion with your beneficiaries and dependents. Make it clear what your wishes are so your people can avoid painful and costly disagreements after you’re gone.

Finally – document your wishes.

There are a range of options for this. You can get a simple will kit from the post office. They cost about $20 and are easy to use.

Then are private online providers too. Just Google ‘online will’ and it will take you to myriad options with varying costs. If you’re stuck, perhaps the Choice comparison site would be a good place to start.

And then, of course, there’s the traditional lawyer route. They’ll help you draft up your will and keep it on file for you until it’s needed.

Stop running from death – procrastinate no longer. Don’t let all that hard work you did in life building financial security for the ones you love be undone in death simply because you failed to make a proper will.

When investing in property, engaging with a professional, QPIA (PIPA Member) qualified & accredited ASPIRE Property Advisor Network Advisor. They will ensure you understand all considerations, elements and risks.

Visit www.aspirenetwork.com.au or call our office to be connected with an accredited and independent Property Investment Advisor on 1300 710 933.

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