Why a Will isn’t enough, but an Estate Plan is

By: Lucy Percy

Principal Lawyer  Head and Heart Estate Planning 

If you don’t have an up to date Will, you’re in common company.  Research shows that up to 75% of Australian adults are in the same situation.  As a Wills and Estates lawyer I spend a lot of time thinking about why that is.

For some people it’s the drag of researching and starting another life admin task; already crushed by the mental load it simply seems too much!  For others, it’s the head-in-the-sand approach that protects them from facing their reality.  Especially common if relationships and financial circumstances are less than how you’d imagined them to be by now.  My favourites are the small group suspended from action by their superstitions; quite simply I can tell you that preparing for death is not causative of death.

At some point, 25% of us rise from the pack and start googling “how to make a Will”, “do I need a Will”, “are Will kits ok”.  Maybe you ask for the details of the place your friend got theirs done, or saw someone on social media.  The word-of-mouth encouragement of friends and family, or stern advice from your accountant, family lawyer, or financial planner is enough to motivate you to take action.

But no sooner do you find a solution to your Will problem, and you hear the words: “Estate Plan”.  After all of that effort you learn that having a Will alone simply isn’t enough! 

I am so committed to making sure that every client has an Estate Plan, and not just a Will that I simply don’t sell Wills on their own.  That’s right, working with me is an all-or-nothing package deal, and I want to tell you the top 3 reasons why having a Will alone isn’t enough.

"A Will only operates after your death"

What happens then if you are alive but lose capacity to make decisions for yourself.  If you lost capacity, for a short time (say, a serious illness or accident in hospital) or permanently (think, acquired brain injury, or degenerative disease) you will need someone to help you pay your bills, apply for insurance or Centrelink benefits, deal with your bank, decide where you’d live, who can visit you, buy you shampoo and choose your clothes. 

Every single financial or personal decision that you make for yourself today, would still need to be made tomorrow.  And so the documents that you need to give someone you trust the power to do that for you is in an Enduring Power of Attorney-Financial and an Enduring Guardianship (known by various names in each State).  There are no next of kin rights for your loved ones to step in and do this for you, they need to apply to your local State’s tribunal and apply for the power through a hearing. 

"Not all assets can be gifted by a Will"

That’s right, the laws that govern Wills cross over with many different areas of law.  Such as superannuation law, trust law, property law.  And sometimes the assets that are governed by those laws prevail over whatever you might put in your Will.

Here are some examples of assets that will fall “outside” of your Estate:

1. Superannuation - your super is held inside a trust. And that trust has it’s own set of rules, and also has some national legislation that all need to be satisfied before your Will can have any impact over what happens to your benefits in super.  You can pay people you know personally, or you can nominate your Estate so that it’s gifted by your Will.  You need advice about how to make these plans legally binding and to understand the tax impact of these decisions

2. Jointly held property - if you own any property with another person jointly, the property won’t be an asset that you can gift under your Will. Property laws in each State mandate that the survivor of the joint owners will receive all the property.  There have been many Wills that gift “my half of the house”, and it has failed because the house never came into the Estate as it passed to the survivor automatically.  It is possible to gift property owned with a co-owner, but you must own the property as tenants-in-common. 

You need a plan that reflects the legal and non-legal parts of your life

How often do you notice the impact of laws in your day-to-day life?   Most likely not very often!  What happens then when you lose capacity or you die and the only documents that your attorneys (Enduring Power of Attorney) or executor (Will) has to refer to and follow only deal with the legal aspects of your life.  All of my clients are provided with a Letter of Wishes template to prompt their thinking about the non-legal aspects of their Estate Plan. 

For example:

• What digital assets and accounts do you have, do you want your attorneys or executors to be able to access them;
• Are you an organ donor, do you have medical treatment preferences or end-of-life values that you want followed;
• Do you run a business, how should your attorney or executor wind that up? Or is it saleable, and if so is there a likely buyer
• Have you left someone out of your Will and you want to explain why;
• Are you in a relationship and you want to record the facts about how long you’ve been together, your living arrangements, and financial arrangements to prevent them from making a claim when you’re gone;
• What would you like your funeral to look like, will you be buried or cremated.

We do a separate Letter of Wishes for clients with children, that is given to their Guardian to pass on your values and plans for your children to them when they will need your input the most.

To give you the certainty that we all need to rely on when the worst-case scenario happens to us, you need an Estate Plan.  A Will is an essential part of that, but only a part.

Head and Hearts Estate Planning is for couples with young families wanting to take charge of their responsibilities to each other and their children.