Writing a Will? 4 nerve-wracking decisions you might face
Written and accurate as at: Oct 13, 2023 Current Stats & Facts
A long-term plan for your finances isn’t complete without a valid Will. Done right and it should provide the final word on what happens to most of your belongings when you die.
But sitting down to write one can be a daunting experience, and there might be a number of difficult decisions you’ll have to make along the way.
Who will be your beneficiaries?
The main reason for writing a Will is to spell out who will inherit your possessions when you pass away.
For many people, the answer to this question is simple — your children ought to be provided for, as should your partner if they outlive you. But is there anyone else in your life you’d like to receive a part of your estate?
You might decide on a close friend, relative, or even an organisation or charity whose work you wish to support. Make sure you can provide full names and contact details, as well as the business number of any organisations. This might be able to reduce the chances of your assets winding up in the wrong hands.
If you’ve excluded anyone from your Will, or offered them a smaller share than what they might expect, it might be worth explaining your reasons why to your Will writer. This is so your intentions can be made known if someone decides to contest it.
But it bears mentioning that in NSW, there is legislation that allows certain people — such as dependents or those you have a moral duty to support — to make claims if you fail to make adequate provision for them. Other parts of Australia have their own versions of this legislation, but in NSW it’s more far-reaching.
Who will be the executor of your estate?
Another big decision you’ll have to make is who you’ll appoint as your executor. This is the person who administers a deceased estate, and depending on things like family dynamics and the complexity of your Will, it can be quite a difficult task.
Generally, an executor will be responsible for:
- Locating the Will
- Keeping your beneficiaries up to date
- Notifying government agencies (such as the ATO and Centrelink), financial institutions, and utility companies of your death
- Applying for a death certificate
- Applying for a grant of probate (which grants authority to manage the estate of a deceased person)
- Collecting and valuing your assets
- Paying any outstanding debts and bills with the proceeds from the sale of your assets
- Distributing the estate according to your Will (and keeping the necessary records)
Many people appoint someone they know — often a beneficiary themselves — to manage their estate when they die. But executor duties can be a lot to foist on someone who doesn’t have professional qualifications, especially if there’s a chance that disputes might arise between beneficiaries.
For this reason, you might be more confident appointing a solicitor, accountant or specialist trustee company to manage your affairs. This might give you more confidence that things will be handled impartially and without anyone close to you having to see any difficult decisions through (though a fee will be charged).
Do you need to appoint a guardian for your children?
If your children are under the age of 18, you’ll also have to think long and hard about who will be their guardian if both you and your partner were to pass away unexpectedly.
Ideally, it will be someone with whom your kids already have a bond. You should also consider whether their values and lifestyle align with your family’s and if it’s practical for them to assume the role of guardian (given, say, their age and finances).
Besides that, make sure the person understands the seriousness of the request. They might feel very honoured in the moment, but if it comes to it, assuming guardianship of your children can be one of the most challenging chapters of their life.
If you die without appointing a guardian, anyone with an appropriate relationship (such as a relative, step-parent or family friend) can apply to become your children’s primary caregiver. Ultimately, it will be up to the Family Court to decide, and they might pick someone who wasn’t your first choice.
Will you set up a testamentary trust?
Finally, you might want to think about setting up a testamentary trust. This takes effect when you die, is separate from your deceased estate, and is administered by a trustee who is usually named in your Will.1
Testamentary trusts might be useful for people whose children are minors, intellectually impaired, or are believed to have some issue that might prevent them from behaving responsibly with money.2 That’s because you’ll be able to spell out when and how the money will be distributed.
There might be tax benefits for the beneficiaries too, as you can potentially split the income generated by the trust between them. What’s more, any children who receive income from a trust are generally taxed at adult rates rather than the penalty rates that usually apply to minors (which can be as high as 66%).
Testamentary trusts are complex structures, so if you’re thinking of creating one be sure to seek out professional financial and legal advice. And for help drawing up a valid Will, consider speaking to an estate planning lawyer.
Sources
1 https://www.nsw.gov.au/family-and-relationships/deaths/acting-as-an-executor/sort-out-taxes/when-there-a-trust
2 https://moneysmart.gov.au/living-in-retirement/wills-and-powers-of-attorney