Before you start making a Will, there are a few things you should think about before you start "putting pen to paper." A Will is a legal document that sets out who you would like to receive a benefit from your estate after you die or who will look after your younger children in the unlikely and unfortunate event that both natural parents die.
This article sets out a few matters to get straight before making or updating your Will.
It's a good idea to think about what your assets and liabilities are. You can do this completing our List of Assets. You do not list out all of your individual assets in your Will. However, you should think carefully about what assets are covered by a Will.
Some assets are not covered by a Will. For example, a property listed in joint names is not usually covered by a Will. This is because the title to the property automatically transfers to one owner when the other owner passes away.
The main purpose of a Will to is give or divide your estate to persons that you want to receive a benefit after your die. This person is known as a Beneficiary.
Most people decide to make their Beneficiaries close family members or friends. If you would like to give a gift from your estate to a charity, do your research and check that they are eligible to receive gifts from a deceased estate.
If a Beneficiary is under the age of 18 years at the time of a deceased's death, then the estate will be held for them in trust by the appointed Executor to your Will. They receive the benefit at the age of 18 years. This is referred to as the vesting age. If you would like the vesting age to be later, you will need to specify this in your Will.
The Executor to your Will is responsible for administering your estate after you die. They will be responsible for winding up the estate and making sure that all debts have been paid and that all the Beneficiaries have received the nominated benefit from the estate.
An Executor should be over 18 years of age, be someone that you trust, who is relatively organised and good with money.
A testamentary trust is a trust that comes into existence upon your death. There are extra costs involved in establishing and running a trust, such as submitting tax returns so you should ensure that a trust is appropriate for your circumstances. With a testamentary trust, a trustee is appointed, rather than an Executor.
The benefits of creating trust may include:
1. The protection of assets;
2. The protection of vulnerable beneficiaries;
3. Tax opportunities.
If you have children under the age of 18 years, it's a good idea to appoint a Guardian for them in your Will. This would only come into effect if both natural parents die. It is important to note that even if you appoint a Guardian in your Will, it can be overridden by the family courts as to what is in the best interests of the child).
When choosing your Guardian, you may also wish to consider:
- the person's views on raising children;
- whether the person is of a similar age to you.
You should discuss this with your appointed Guardian and ensure the person is willing to accept responsibility in the event of your death. Usually, in the event of your death, your Guardian will request the Public trustee to release funds from your estate to care for your child.
This article contains information of a general nature only and is not specific to your circumstances. This is not legal advice and should not be relied upon without independent legal or financial advice, specific to your circumstances.