8 common myths and misconceptions in Wills and Estate Planning

Author: Skye Morrison

Publish Date: March 18, 2009

There are many myths and misconceptions in Wills and Estate Planning. This article will address 8 of the most common myths to put you in a better position to make an informed decision.

Myth # 1: I have a Will, so I don’t need to think about it again.

Certain circumstances in your life may mean that your Will needs updating.

• Recently married or divorced?
• Death in the family?
• Bought or sold any assets?
• Have you had children?
• Children all grown up?
• You or your children started a business?

If you answered "yes" to any of these questions, you need to review your Will.

Myth # 2: I’m still young, so I’ll make my Will, Power of Attorney and Appointment of Enduring Guardian documents when I’m older.

Firstly, no one knows when their life will come to an end. Secondly, you must give instructions and sign these documents while you still have capacity. If something happens and you become mentally or physically incapacitated and you do not have a Power of Attorney or Appointment of Enduring Guardian, it is too late and an application to the Guardianship Tribunal would need to be made by your family.

Myth # 3: I have told my family or written a note about the distribution of my estate. I don’t need a Will.

Certain requirements must be observed when making a Will. Firstly, you must have capacity. That is, you must understand the scope and nature of your estate and the Will you are writing. Secondly, certain formalities must be observed when making a Will; it must be written and witnessed in the correct way and by the correct people.

Myth # 4: I don’t need a Power of Attorney document if I own everything jointly with my spouse.

Yes you do. If you own your home jointly with your spouse and your spouse becomes incapacitated, your property may need to be sold for various reasons (for example; the property is too big for one person or is not suitable for your now incapacitated spouse). The property sale contract must be signed by both of you unless your spouse has given a Power of Attorney. Then the sale contract must be signed by you and your spouse’s attorney.

Myth # 5: A "simple" Will is sufficient for my estate.

Consider the following circumstances and determine if any of your beneficiaries:

• earn income which places them in the top marginal tax bracket?
• have a gambling or substance addiction?
• struggle with their finances?
• suffer from an intellectual disability?
• work in a job which exposes them to creditor or liability risks?
• have their own business?

If you answered "yes" to any of the above, a testamentary trust Will may be appropriate.

Myth # 6: I can stop someone from making a claim on my estate.

Failing to provide for a spouse or a child, or other person considered to be an "eligible person" under the Family Provision Act, could expose your Will to a challenge, even where there is a good excuse for the exclusion. Leaving that person a small gift or small amount of money does not bar the eligible person from claiming on your estate.

It is important to discuss the contents of your Will with a solicitor and provide detailed instructions about your family dynamics.

Myth # 7: My superannuation will go to my beneficiaries under my Will.

Superannuation may or may not be an estate asset. Assets held in a superannuation fund are often distributed at the discretion of the Trustees of fund and don’t form part of the estate. Will makers may allow an adjustment of the entitlements to account for benefits received from their superannuation.

Myth # 8: Assets held jointly can be disposed of under my Will.

Assets, such as a house, car, shares and bank accounts, which are held jointly, pass to the surviving owner(s) immediately on the death of one of the joint owners. If this is not your intention, joint ownership can be severed and you can then specify where your share of the asset will go once you pass away.

For further information on how we can help you with your Will and Estate Planning, please contact John Loughnan, Skye Morrison or Kathryn Halyburton on 02 4907 6300.

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