Estate planning: is your will in need of a review?

Jack made his will several years ago and thinks it may be in need of an update.

Senior man writing his will

As with many Australians, Jack made his will several years ago and now that his children are adults, he asks legal expert Rod Cunich if he needs to make a new one.

Q. Jack
My wife and I made our wills when our kids were very young and naturally, we are each other’s beneficiaries, with our assets transferring to our children once we both die. Our children are now adults and our assets and estate have changed. Do we need to make another will?

A. Jack, everyone should review their will whenever there is a significant event in their family or financial circumstances, such as:

  • The death of a spouse, a beneficiary, or your executor.
  • Children attaining the age of 18 years (you may wish to appoint them as backup executors).
  • Marriage, divorce or (often overlooked) a separation – whether yours or a beneficiary’s.  You don’t want your hard-earned wealth to become part of your child’s family law property dispute.
  • Entering into a blended family situation, where it often becomes complicated to ensure that a new partner and children from prior relationships are appropriately recognised.
  • The sale or purchase of a major asset, such as a home or investment property.
  • The signing of a superannuation Death Benefit Nomination, the creation of a pension or retirement.  Superannuation death benefits often by-pass your estate so are not covered by your will.  Alternatively, you can direct them into your estate so they are controlled by your will.  Understanding which option best suits your circumstances is critical for asset protection and taxation purposes.
  • Obtaining life insurance – again the proceeds may bypass your estate and not be controlled by your will. As with superannuation, this may or may not be a good thing.  You should understand the consequences so you can control and direct the outcome, as they can deliver very different results.
  • Creating new structures, such as a company or trust, and understanding the consequences of assets held by those structures not forming part of your estate.
  • A beneficiary suffers a disability or falls on hard times for any reason, including bankruptcy, addiction to drugs or gambling. 

Many events don’t require changes to a well-prepared will but you should at least check if the event does require an amendment. It is often the one time you don’t check that is likely to bring your affairs unstuck.

In the absence of a significant event, I recommend everyone revisit their will at least every five years. Laws are amended and there may be subtle changes to your circumstances that may have an impact on the wishes expressed in your will or your broader estate planning wishes.  

It’s not just your will that requires review
Even if your will doesn’t require changing, your review may highlight related issues you need to address to ensure your estate planning achieves your wishes. For example, identifying and managing assets that may bypass your estate and the consequence of how assets are owned (solely, jointly, in super or through companies and trusts), are issues that may have an impact on the effectiveness of your will, but may not require a change to your will.  Often you may need to make changes to your super structure, your insurances or your asset ownership structures in order to ensure your will can actually achieve your wishes, or that you achieve your wishes (in part) outside the reach of your will.

In this complex world of ours, your will is not the only consideration to which you need to turn your attention. Your five-yearly review should cover the full range of your family and financial circumstances, addressing all those issues that have an impact on your estate planning, but may not be covered by your will, regardless of how up to date it is. This type of comprehensive review will require you to fully inform your solicitor so that all your affairs can be considered, not just those covered by your will.

So Jack, simply put, it’s time to review your will and your broader financial affairs.

Rod Cunich is a lawyer with over 30 year of experience who specialises in estate planning. He is the author of Understanding Wills and Estate Planning, a practical book written for the layman.

Rodcunichlawyer.com.au

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