There are various ‘Will Kits’ available on-line – most are cheap or ‘free’ and all you need to do is download them and fill in the blanks. Many websites boast that you can prepare your Will ‘without spending hundreds of dollars on legal fees’.
Simple, right? Not really.
Generating an on-line Will may seem easy, but the ‘hundreds of dollars’ that you might save will never make up for some of the possible pitfalls in preparing a Will without sound legal advice.
When you generate your own on-line Will, you do not meet anyone to discuss your wishes and options. This is the most significant issue with self-generated legal documents. You do not have the opportunity to discuss your family or circumstances, and a lawyer does not have the opportunity to identify issues unique to you, that could otherwise be addressed with careful planning and/or drafting.
A lawyer with an understanding of succession planning and law will guide you through this process.
The following are some of the important considerations that an experienced lawyer will address, which a Will Kit may not.
Your lawyer will prepare an estate plan, not just a Will
A lawyer will take a holistic approach and will consider all aspects relevant to your estate plan. Simply planning how your assets are distributed when you pass away and whom will be in control of that process is only one part of estate planning. Consideration of your health, advancement in age and any special needs flowing from such inevitabilities ought to be explored with a lawyer to then plan for the management of your financial and personal affairs.
A lawyer will also consider and advise you in relation to how your assets are held – whether that is jointly, separately or solely – as such modes of holding can determine how and to whom those assets may be left. For example, when assets are held jointly with another person, the surviving person will automatically receive the deceased person’s share when the deceased passes away. A contrary direction in a Will to leave joint property to somebody other than the joint tenant will not override this legal principle. A lawyer will advise you how to resolve that issue so that you can gift your share to whomever you wish in your Will.
Your lawyer will also discuss your superannuation and death benefits, which do not automatically form part of your deceased estate. In most cases, your benefits will be paid directly to a superannuation dependant either at the discretion of the superannuation trustee or in accordance with a death benefit nomination.
Different categories of beneficiaries are taxed differently under taxation law and your lawyer can advise on these tax implications, so you can make an informed decision.
Preventing a gift from failing
A common pitfall with Wills Kits is the risk that a gift to a beneficiary may fail. ‘Ademption’ occurs when specifically described assets in a Will no longer exists at the time of the deceased’s death. Consequently, the intended beneficiary of that gift may lose out from receiving a benefit from a deceased estate altogether. The ademption of a gift, can have a significant impact on the value of assets received by a beneficiary, particularly where the asset is significant such as real estate or a prestige motor vehicle.
Fortunately, the intestacy laws contain certain exceptions to the rules of ademption and a beneficiary may be saved from missing out entirely on their inheritance. However, a properly drafted Will can prevent such injustices in the first place, and save the estate incurring more substantial legal fees at a later time to resolve such injustices.
Protecting your assets and tax planning
Your lawyer will advise on how to best structure your Will to protect your assets against distribution to an unintended beneficiary (such as a child’s estranged partner or the creditors of a bankrupt beneficiary).
A testamentary discretionary trust may be recommended. This is a trust created in your Will that comes into effect after you pass away. The trust is administered by a pre-appointed trustee or trustee(s) of your choosing. The trustee(s) determine how and when estate assets and income are managed and distributed.
If properly managed, the flexibility of a discretionary trust allows beneficiaries to access favourable taxation treatment with respect to their inheritance and provides protection and safeguards for vulnerable beneficiaries. With careful planning, the timing of transferring estate assets may also postpone or minimise capital gains tax liabilities.
An online Will Kit is unlikely to consider these matters and, in any event, cannot provide the legal advice necessary to decide whether this type of Will is appropriate in your circumstances.
Guarding against family provision claims
A successful Inheritance (Family Provision) claim may result in the distribution of your assets being substantially different to the distribution you intend to make in your Will.
Inheritance (Family Provision) rules vary between the States and Territories within Australia; however, an eligible person generally includes a current or former spouse or domestic partner, a biological child, adopted child or stepchild of any age, and certain dependent members of the deceased’s household.
Without over simplifying such a claim, an eligible person may make a claim against the estate of a deceased person if that person has not been adequately provided for by the deceased and can demonstrate that there is a need for provision or greater provision. Whilst claims of this nature may be completely warranted in some circumstances, such claims are usually an unwelcome interruption to the estate distribution and will result in additional time, delay and cost when finalising the estate.
Your lawyer can identify potential claimants under the Inheritance (Family Provision) rules relevant in your jurisdiction and, if necessary, advise you in relation the steps you can take to safeguard, or better safeguard, your intended beneficiaries.
Discussing and planning your legal and personal affairs with your lawyer is a small investment that might save your family and beneficiaries thousands of dollars in legal fees in future.
Your lawyer will ensure your Will is valid, correctly signed and protects your assets and your beneficiaries. Your lawyer will advise how future changes may affect your estate plan and will usually provide a friendly reminder to review your Will when your circumstances change.
Yes, you can prepare a valid Will online. However, you risk the online Will not:
- being a valid Will because it is non-conformant with formalities;
- being tailored to your unique circumstances;
- achieving exactly what you want; and
- taking advantage of structures to protect assets and save tax.
Meeting with a lawyer to discuss your estate plans and to finalise a well considered Will that caters to your circumstances is money well spent.
If you or someone you know wants more information or needs help or advice, please contact us on 08 8443 4888 or email [email protected].