Australia is a dangerous place, just think of the Redback spider, the Blue-ringed octopus, Bay 13 at the Boxing Day Test, or the Deniliquin Ute Muster. It’s also full of people who don’t understand the importance of having a Will. This is a problem.
The roughly 45% of Australians who don’t have a valid Will probably haven’t asked themselves what would happen to their estate if they died tomorrow. The government steps in. It’s not an ideal scenario by a long shot, and even though you won’t be around to worry about it, you may well be leaving your loved ones in the lurch.
(By the way, it’s not just the Real Housewives of Melbourne who have estates, you have one too, it refers to the total of your property and assets.)
Passing away without a will is known as ‘dying intestate’, and there is intestacy legislation that governs what happens next (which is not to be confused with ‘dies interstate’, although that can also be a problem).
Each state and territory have a slightly different approach to this problem. We’ll take the great state of Victoria for our example (a random pick, we swear).
Ed and Ange will be our hypothetical Victorians, in their 70s, married for 40 years, three kids. Nice people. Ange passes away on a walking trip in the Grampians. While the family begins preparations for the funeral, they realise she hasn’t had a Will drawn up.
Victorian intestacy law requires that Ange’s debts must be paid off first. Next, the first $100,000 of her estate goes directly to Ed. Finally, the rest of the estate is divided between spouse and children, ⅓ and ⅔’s respectively.
It’s a simple scenario. But life often isn’t this neat. Say, for instance Ed and Ange had split acrimoniously years earlier but failed to get a divorce – which isn’t that uncommon. Their children might be deeply troubled by the prospect of Ed receiving a fair chunk of the estate.
Or to make it even more difficult, Ed had a child from an earlier marriage who remained close to Ange. After Ed’s death, the law no longer recognises this person as a stepchild. Regardless of how much Ange loves her stepchild, if she also ignores the importance of a Will, they get nothing.
Life is messy. Don’t rely on state legislation apportion your estate to your loved ones. The law can’t understand the love and complexity of your life.
Encouraging young people to get a Will is quite difficult. Estate planning and succession planning give most people the shivers. On the one hand, these are dry legal documents that excite the emotions about as much as the local council elections. On the other, it reminds us of our mortality. Not exactly a winning combo, is it?
Like it or not, death within the family can bring complex hurdles to the surface. Which is why this kind of planning is crucial for a family’s emotional, financial, and legal security. Life insurance payouts need to be managed, assets are evaluated, and testaments followed. The last things you want on your mind.