Brought to you by Aware Super
Cameron Bayley
With an estimated $5 trillion dollars set to be passed onto the next generation in coming decades, Australians are being urged to think seriously about estate planning.
“We’re on the cusp of one of the largest wealth transfers we’ve ever seen,” explains Peter Hogg, general manager guidance and advice at Aware Super. “That’s driven by an ageing population, rising asset values, house prices and superannuation.”
When to make a will
It’s common to think you need a certain level of wealth before bothering to make a will, but that’s not the case, Hogg explains.
“As soon as you’ve got assets, dependents, people you care about, it’s worth putting some basic arrangements in place.”
A will should form part of a more comprehensive estate plan, the Federal Government’s Moneysmart website recommends.
This can include a testamentary trust (as part of the will) and beneficiary nominations on your super account (more on that below).
If you can no longer make your own decisions, the estate plan can also include powers of attorney or guardianship, or an advanced healthcare directive.
How to make a will
There are several ways to make a legal will, but it’s important to be aware that different states can have slightly different regulations.
“One of the biggest myths about estate planning is that it’s really expensive and complex,” says Hogg.
“And, sure, there are areas where it can get a bit more complex, but for many Australians having a straightforward will can significantly reduce risk and make sure you’re in control.”
Options range from very basic DIY templates that can be downloaded for free, or kits available to purchase online, or engaging a solicitor, which can be especially important in more complex scenarios.
Adam Lubofsky, the founder of online will company Safewill says even if your situation seems straightforward, you’re doing a huge favour for those you leave behind by fulfilling this responsibility.
“It is going to be more expensive and more time-consuming if there is no will in place,” he says. If you die without a will, called ‘dying intestate’, the government dictates who receives your assets.
And once you start the task, you may find there’s more you want to cover than you first imagine.
“At Safewill we’ve seen a lot of personalised instructions,” Lubofsky adds. “Whether that’s funeral wishes, specifying exactly what you want your send-off to look like; or pet-care provision; or specific gifts and assets to your loved ones; or leaving part of your estate to charity.”
Keep it updated
Writing a will is one thing, keeping it current across life events and stages is another.
“A will is not a ‘set and forget’, ” Lubofsky cautions. In fact, several life circumstances impact the validity of a will, like marriage or divorce … so making sure that you keep it up-to-date is of utmost importance.”
“Because if you write a will that isn’t valid at the time it’s surfaced, there isn’t that much point to it.”
Hogg agrees, saying ease of amending documents is crucial: “We would expect that over the course of someone’s life, they might update their estate planning a number of times.”
Remember – super is different
An often-overlooked aspect of estate planning is how super is treated. “Superannuation doesn’t automatically form part of your estate and that means it doesn’t automatically go to your dependents,” Hogg explains.
“Your super is paid to the beneficiary nomination named in your super fund, so that makes that a really critical part of the process.”
There are rules around who you can nominate for this role, so check with your super fund – but the process is generally simple.
“For our members, you can do it online,” Hogg explains. “It’s called a ‘binding non-lapsing nomination’ so it doesn’t expire, and it takes just five minutes.”
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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