When is the right time to write a will?
The answer is really simple: before you lose your mental capacity or die.
Just tell me when you will lose your marbles or your life and I’ll fix up a will for you the day before. If there is nothing in your calendar dealing with either event, then the timing becomes a bit more of a gamble.
Earlier this week, as I was hurtling through the air toward a car that had pulled out in front of my bike, it occurred to me in a flash that ‘now’ might be my last moment … and I’m not old. Thankfully it wasn’t, but I have bruises, breaks and a painkiller haze to remind me that none of us can be assured a long, healthy life. Or one without a life-changing injury.
We can’t assume writing a will is something we can leave until our ‘old age’. Many of us don’t make it to said ‘old age’. In fact, approximately 34 Australians between the age of 18 and 64 prematurely die every day through accident or disease.
So, when should you do your will? If you don’t have one, ‘now’ would be good starting point. Contrary to common belief, I can testify to the fact that signing a will won’t actually kill you. Nor will signing a Power of Attorney make you lose your mental capacity.
So what are my general recommendations?
Create a will when you first have property or a child (to provide for a guardian for the child). Young people often own wealth they don’t realise, such as superannuation death benefits and/or a life insurance policy (often part of your super package). These may not be assets you can spend today, but die and these assets suddenly materialise and need to be managed and distributed. Without a will it’s a bit of a lucky (or unlucky) dip as to who receives your assets.
Each state and territory in Australia has intestacy laws that operate as a de facto will for those who leave no will when they die. Where there is no will, assets typically go to the spouse. In some states a spouse has to share the assets with children (there isn’t even a consistent outcome across the country). If the spouse is predeceased, assets usually go to the children equally. If there are no children, typically they will go to the parents, and from the parents down to other family members.
If there is a spouse (even if separated) and a de facto, then things get really interesting because in some states, they have to divide the estate ‘by agreement’. Throw children into the mix and you have the plot for a horror movie!
This procedure requires an application to the court, which is more expensive than a probate application because someone has to start from scratch. Legal costs escalate, delays often occur and claims against the estate often come out of the woodwork by people who claim they should have received a benefit that wasn’t provided for in the statutory formula.
Am I scaremongering or being a tad melodramatic? If only it were fantasy. Ever heard the saying that ‘truth is stranger than fiction’? Search around the internet for stories and court decisions about family hardship and disputes arising from the absence of a will or a ‘proper’ will. The reality is that living without a will is like playing Russian Roulette with your estate.
Here is a sample of what can occur:
Mary was an abused child. Because of this, she left home as soon as she could, at age 16. She never spoke to her parents again. With that part of her life behind her, Mary put herself through university and started a career.
Then she met Joe, a successful stockbroker whom she married. Joe was slightly older than Mary. They enjoyed a good marriage, and Joe’s family became her family. Alas, after eight years of marriage, Mary and Joe died in a car accident. They had no kids. Neither of them had a will.
Being the older of the two, Joe was deemed to have died first and his wealth notionally passed to Mary. Under the intestacy laws all of Mary’s acquired wealth then passed to her estranged parents – the last people on earth to whom she would have wished to leave her estate. To rub salt into the wound – Joe’s family got nothing.
Commonly people in there 40s revisit their wills because by this stage that have acquired some property (although often heavily mortgaged) and have the responsibility for a family and/or a business.
Again, people in their late 50s or early 60s revisit their wills because by this time they have paid off some of their debt, have some investments and are beginning to think ahead towards support of their adult children and their own retirement. This is sometimes accompanied (or instigated) by their first health scare, a mild stroke or heart attack being a wake-up call.
People in their 70s and 80s often revisit their wills because by this time they are more focused on their own mortality and want to ensure that they have their house in order.
Everyone should at least reflect on whether their current will is still appropriate when any of the following events occur:
- a birth or marriage: of a beneficiary or executor
- a death: of a beneficiary or executor
- divorce: their own or a beneficiary
- the acquisition or disposal of an asset
- insolvency: their own or a beneficiary
- a change to superannuation or taxation laws
- otherwise: once every five years
Often a will won’t require change when one of these events occurs, but it’s critical you at least consider the need so that you don’t miss a critical event that does require a change.
A few tips to keep in mind:
- Marriage annuls an existing will. Marry or remarry and you have no will UNLESS your will expressly states it was drawn up in contemplation of marriage.
- Separation does not change a will. So if you die in that time between separation and divorce (a minimum of 12 months) your existing will continues to operate and is likely to leave everything to your ex.
- Having no will creates uncertainty and will without failure cause delay and additional unnecessary expense in the administration of your estate.
- Having an out-of-date will can create just as many delays, costs and family disharmony as having no will at all.
Wills are inexpensive. Don’t let your legacy be the mess you left behind.
The information in this article should be considered general in nature and legal advice should be sought. This information has been provided by Rod Cunich, author of Understanding wills and estate planning. Rod can be contacted via his site Rodcunichlawyer.com, where you can learn much more, and also buy a copy of his book.