“I won’t be around, so who cares about my assets..”

“I’m not rich, why should I even consider having a Will..?”

“I just don’t want to think about dying…”

 

These are all common thoughts and expressions when it comes to tackling and dealing with your Estate Planning needs, but this is certainly not where the conversation should stop.

Based on recent studies, it’s been found that approximately 50% of Australians don’t have a valid Will in place (Business Insider, 2021), and given that Australian Bureau of Statistics (ABS) studies reveal that one Australian pass away every 3.22 minutes, this is a significant gap that needs to be addressed.

In a recent post, we outlined the key elements to your Estate Planning needs and what needs to be considered. This week we’re tackling the most common questions we’re asked by our clients when it comes to their Estate Planning to ensure that more Australians all over the world can make more informed financial decisions, and not leave their estate planning to chance.

Let’s get started.

  1. Question 1 – “What happens if I pass away without a Will..?”

If you pass away without a valid Will, intestacy legislation will determine how your estate assets are distributed among your surviving family members, which may be completely different from how you would like your assets distributed. Simply put, a court would decide exactly how your assets and the estate are distributed based on a legal formula in that particular state or territory. This also means additional costs and fees for this process to be carried out.

This could be a nightmare scenario if you’re an expat or if some of your beneficiaries are residing outside of Australia, as it could result in unfavourable tax consequences, certain beneficiaries missing out, or outcomes that you haven’t even considered based on Double Tax Agreements (DTAs).

  1. Question 2 – “If I’m not wealthy, why do I need to consider Estate Planning..?”

Many people mistakenly view both Estate and Financial Planning as a service that only the wealthy need to consider, which is not the case at all. An estate plan is much more than deciding how you want wealth to be distributed, but it’s about thinking through succession planning, ensuring that all of your family members or beneficiaries are inheriting their share as you deem appropriate, skipping any generations that you wish to, and even the consideration of Trusts and other vehicles depending on the complexity of your affairs.

Again, if you’re an Australian expat, passing away without a valid Will in place can be a nightmare for both your beneficiaries, surviving family members, and the executor of your estate, as it can result in tens of thousands of dollars in legal fees, travel, grant of probate and various other steps required when estates are split across borders.

  1. Question 3 – “I already have a Will in place, isn’t my Estate Planning done now..?”

Having a valid Will in place that reflects your current wishes is a great first step, and as you’ve already seen, doing so will put you ahead of more than half of the Australian population who don’t have a valid Will at all, however, this should not be where it stops.

It’s important to recognise a number of aspects here, such as the fact that insurance policies and superannuation may not be covered by your Will, and instead require separate beneficiaries to be nominated. For your superannuation, for example, you may want to consider having a Binding or Non-binding nomination of beneficiary attached to your superannuation itself. If you pass away without valid superannuation or life insurance death benefit nominations, the proceeds may not be distributed according to your wishes either.

You may also want to consider various Trust structures, such as a Testamentary Trust that comes into effect at your death, allowing you to structure the distribution of your Estate over time to certain beneficiaries dependent on certain criteria. This can be particularly useful if you have young children and/or a complex family arrangement.

  1. Question 4 – “If a Will isn’t enough, what else do I need..?”

In addition to your Will, you may want to consider having Enduring Power of Attorney, sometimes referred to as Lasting Power of Attorney in some jurisdictions, allowing you to nominate a trusted individual to make health and/or financial decisions on your behalf in the event that you’re unable to. As mentioned, you may also want to consider having Trusts or other structures in place to ensure that your wishes are carried out as per your preference beyond your lifetime.

  1. Question 5 – “I found a Will kit online and did that, will that be sufficient..?”

The common expression springs to mind here – “the lawyer who represents himself has a fool for a client”. There are certainly plenty of kits online, and there’s often a cheaper way to achieve most outcomes, however we would certainly suggest treading with caution here as there are many ways that a Will or other estate planning document can be made invalid, or you may have missed an opportunity or a certain structure that could more efficiently achieve your goals. Further, it’s also important to have a regular reminder to check that your Will and overall estate plan reflects your current wishes, which often a Financial Planner will do for you to ensure that it’s constantly front of mind for you.

Question 6 – “How often do I really need to check my Will..?”

As a general rule of thumb, we’d suggest checking that your Will and any other important estate planning documents are reviewed on a bi-annual basis, or every two years, as a minimum, or when your circumstances may change. We commonly like to check in with our clients on an annual basis to ensure that their Wills are up to date as there are many changes that could take place requiring the Will to be updated that may have been overlooked.

These could include:

  • Having a new grandchild enter the family.
  • Your son or daughter entering into a new relationship.
  • Divorce or separation.
  • Purchasing a new asset.

We’ve just highlighted some of the common occurrences here that many may overlook, however, can have a significant impact on your overall estate plans.

Question 7 – “Doesn’t preparing a Will cost thousands of dollars..? I’ll wait until I have more to protect”

The cost of having a Will and other important estate planning documents has come down considerably over the years, to the point now where a Will can be prepared by a qualified lawyer for as little as $350, and potentially even lower in some cases. Getting your estate plan in order, and ensuring that your loved ones would be protected and cared for in the event of your passing is accessible to most, and there really are no valid excuses for putting this off.

Question 8 – “I live in Singapore, but have a Will in Australia…that’ll be sufficient, right..?”

The good news here is that both countries are part of the Commonwealth, so the Will of Australia would generally be considered in Singapore, however, it does not mean that it will be a straightforward process and completely accepted on a like-for-like basis. Having one Will that covers both your Australian and Singapore assets, may mean that Grant of Probate is required in Australia first to distribute the Australian assets, followed by the Executor flying to Singapore, having the Will resealed, Grant of Probate provided, and the Singapore assets distributed, which can be timely and expensive.

It may also mean that certain Australian Trust structures may not be recognised under the Australian framework and your wishes are not carried out exactly as you intended. If you have assets in multiple jurisdictions, then we would certainly suggest seeking professional advice here to check whether you should have multiple Wills, how each would or wouldn’t be recognised in other jurisdictions, and ensure that both you and your loved ones have peace of mind.

If you have any questions or concerns about where to get started, reach out to our team at Ally Wealth Management, and we can introduce you to trusted professionals to assist with Estate Planning in various countries around the world.

 

 

Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.

Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.

Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.

General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.