Estate planning is a critical process that ensures your assets are distributed according to your wishes after your death. However, several myths and misconceptions can lead to poor decision-making. Here, we address some common myths to help you make more informed choices.
Myth one: The Government Takes Your Assets if You Die Without a Will
A prevalent myth is that the government automatically claims your assets if you die without a will. In reality, dying without a will means you have died ‘intestate’, and your estate is distributed according to the rules of intestacy. There is a long list of relatives that may receive your assets which includes your spouse, children, grandchildren, parents, siblings, aunts, uncles and cousins. The government only receives your assets if no relatives can be found to receive your assets.
Myth two: Online and DIY Wills Are Sufficient
While online and DIY wills offer convenience and affordability, they may not address complex legal issues or specific personal circumstances. The site may also not be user friendly, leading to unfortunate mistakes being made.
For instance, a client’s mother used an online will template that did not allow for multiple beneficiaries, inadvertently leaving his entire estate to one child. Correcting such errors can be costly, potentially ranging from $10,000 to $20,000. Therefore, while these options may save money initially, they can lead to significant expenses later.
Myth three: Wills Are Only for the Wealthy
This misconception is far from the truth. Regardless of the size of your estate, a will is essential for ensuring your assets are distributed according to your wishes. Without a will, your assets may be distributed according to intestacy laws, which might not align with your preferences.
Additionally, without a will, your estate may require a grant of Letters of Administration, which can be costly and time-consuming, even for small estates. For example, accessing as little as $1,000 in a bank account may require this grant, highlighting the importance of having a valid will.
Myth four : Superannuation Is Distributed According to Your Will
Many people mistakenly believe that their superannuation is part of their estate and will be distributed according to their will. However, superannuation is held by the trustee of the super fund and is not automatically included in your estate.
To ensure your superannuation goes to your preferred beneficiary, you need a valid Binding Death Nomination (BDN). Most super funds require you to update this nomination every three years. Without a current BDN, your superannuation may not be distributed as you wish, potentially causing issues for your intended beneficiaries.
Understanding these myths and the realities of estate planning is crucial for effective personal and financial planning. By dispelling these misconceptions, you can make informed decisions to protect your assets and provide peace of mind for you and your loved ones. If you require any assistance in your own estate planning, please call our office and we can arrange a 30-minute no obligations appointment to discuss your estate planning matters.
