Your Will is a document that if drafted properly should be legally sound for the remainder of your lifetime. This does not necessarily mean that a Will made 60 years ago will be as secure as one made 5 years ago.
A Will made a very long time ago may no longer perform the legal operation you anticipated, as happens from time to time with changes to the law. Alternately your old Will may not represent your current wishes, asset structure, or the circumstances of your family. There are many reasons to update your Will, but when is the right time to do it? We examine life decade by decade to identify some of the opportune moments to update your testamentary documents. Overall, we recommend that you review your estate plan every 3 to 5 years to ensure it reflects your circumstances.
Your Twenties (when should you draw up a will)
While your twenties are probably more about partying than planning, as soon as you start acquiring assets, whether it is property or your first car, you should have a Will to ensure that your assets pass to your intended beneficiaries.
Death seems like an unlikely event when you are young and healthy, but young people are over-represented in injury statistics. Even if you don’t have substantial assets, if you work full time and have superannuation, you are likely to have a considerable sized insurance policy as part of your super. If you’re living with a de-facto spouse and don’t have a Will, under intestacy law (the law which determines how assets pass if you don’t have a Will), your girlfriend or boyfriend may automatically receive benefits from your estate and this may not be your intention.
Thirties (kids come along)
Your thirties can be a bit like the children’s verse – ‘first comes love, then comes marriage, then comes baby in the baby carriage’. Your Will needs to be updated to reflect your changing family circumstances.
Even if you did a Will in your twenties, what most people don’t realise is that marriage actually revokes a Will. Marriage can also bring more than two people together. Where partners have children from previous marriages, whole families are combined and it’s important to decide whether you will favour your biological children in your Will or whether all children will be treated equally.
If you have children, you should also consider who will look after them and act as their guardian should something happen to you. You need to ensure that you leave your estate in a manner that will protect vulnerable children from third parties and from themselves. This may mean ensuring that 18 year-old children do not have unfettered access to their inheritance, but instead, their inheritance can be used for productive purposes and managed on their behalf until they reach a particular age. A testamentary trust may be more suitable in this circumstance.
You should also consider what would happen if the bread winner in the family died. Would the surviving parent have to work? Could they stay at home and continue to look after the children? What are the existing debts and would there be sufficient assets and funds to cover these? If you have young children, a testamentary trust can offer your children both tax effectiveness and asset protection benefits.
Stay tuned to conclude our journey in part 2 of this article.
If you have any questions or concerns please contact our Private Wealth Director Angela Backhouse on 02 6188 3600