As an accountant, I regularly encounter clients who haven’t yet thought about drafting a will. A will is a fundamental component of personal financial planning, ensuring that your assets are distributed according to your wishes upon your passing. Neglecting to have a will can lead to complicated legal situations for your loved ones. Here’s a basic overview of what a will is and why it’s essential.
1. What is a Will?
- Definition: A will is a legal document that outlines how you want your assets (known as your estate) to be distributed after you pass away.
- Executor: It appoints an executor, who is responsible for carrying out your wishes as outlined in the will.
2. Components of a Will
- Asset Distribution: Details how your assets, including property, savings, and personal items, should be distributed among beneficiaries.
- Guardianship: If you have minor children, a will can specify who you wish to care for them.
3. Why You Need a Will
- Control Over Asset Distribution
- Personal Wishes: A will ensures that your assets are distributed according to your personal wishes, not just according to legal defaults.
- Protecting Your Family’s Future
- Guardianship Decisions: It allows you to make guardianship decisions for your children, providing you with peace of mind about their future care.
- Minimising Legal Complications
- Legal Clarity: A will provides clarity to your family and can minimise legal disputes or confusion about your estate.
- Financial Planning and Tax Considerations
- Estate Planning: As part of broader estate planning, a will can help in organising your financial affairs, potentially including tax planning considerations.
4. When to Create a Will
- Any Adult: It’s advisable for any adult to have a will, especially if you have assets, are married, have children, or run a business.
- Regular Updates: Update your will after major life events like marriage, divorce, the birth of a child, or significant changes in your financial situation.
5. Legal Requirements for a Will
- Validity: For a will to be valid, it must be written, signed, and witnessed according to state or territory laws in Australia.
- Legal Advice: It’s recommended to seek legal advice when drafting a will to ensure it meets all legal requirements and fully captures your intentions.
6. What Happens Without a Will?
- Intestate: If you die without a will, you are said to die ‘intestate.’ In this case, your assets will be distributed according to predetermined legal rules, which may not reflect your personal wishes.
7. Seeking Professional Guidance
- Accountants and Lawyers: While an accountant can assist with the financial planning aspects of your will, including potential tax implications, a lawyer is necessary to draft and validate the document.
Having a will is a critical aspect of personal financial management. It ensures that your assets are distributed according to your wishes, provides for your dependents, and can help prevent legal complications for your loved ones. In conjunction with professional advice, a well-drafted will is a key component of responsible financial planning and peace of mind.
