The Importance of Having a Will
Current statistics show that approximately 50% of Australians do not have a Will.
The importance of having a Will should not be overlooked. The most important reason for making a Will is to make sure that, after your death, your property is distributed in the way you would have wished it to be. Making a Will removes the doubts and difficulties that can arise when there is no evidence of your wishes.
Even if you do not have a lot of money or you do not own a house, you may want to leave other valuable or sentimental items such as art works, coins, jewellery, antiques, letters, or photographs to particular people or institutions.
If you do not have a Will, you do not have any say about how your estate is distributed. Further, it can cause complications, delays, stress and extra costs for those you leave behind.
If you die without a Will, your estate will be distributed to specific relatives of yours according to a fixed formula set out by the Administration Act 1903 (WA) (Act). In most cases, this is likely to be different to the way in which you would have wanted to leave your estate. For example, under the Act:
- your spouse won’t be entitled to all of your estate which may leave them without adequate provision;
- your separated spouse may be entitled to a share of your estate even if that is not what you would have wanted;
- your stepchildren won’t be entitled to any part of your estate, regardless of whether you considered them to be your own; and
- your estranged children will be entitled to part of your estate, regardless of how poor your relationship with them was.
If you die without a Will and you do not have any spouse, children, parents, siblings, nieces, nephews, grandparents, uncles, aunts or first cousins then your estate will go to the government.
Consider the example of John, aged 55 who died suddenly without a Will leaving behind a de facto spouse of 3 years, a separated wife, his parents and four siblings. John’s estate has:
- his residential home, where he lived with his de facto spouse, worth $650,000 (which is debt free and in his sole name);
- a bank account which holds $75,000; and
- personal effects valued at approximately $50,000.
Pursuant to the Act, John’s estate would be distributed roughly as follows:
- his de facto spouse would be entitled to ½ the personal effects, ½ of the first $75,000 and ¼ of the net estate, being $225,000;
- his separated wife would be entitled to ½ the personal effects, ½ of the first $75,000 and ¼ of the net estate, being $225,000;
- his parents would be entitled to $6,000 and ¼ of the net estate, being $165,500; and
- his siblings would be entitled to ¼ of the net estate, being $159,500.
Under this outcome, John’s separated wife will share in his estate even though this was not what he intended. Further, John’s de facto spouse will not likely be able to keep the home she had been living in with John as it would be less than her entitlement under the Act. John’s family might have to sell the home in order to pay out the entitlements, leaving his de facto spouse homeless and with only $225,000 (including ½ of the personal effects) to buy an alternative home.
Consider the further example of Mary aged 38 who died suddenly without a Will leaving behind a husband of 5 years and 2 children aged 9 and 6. Mary’s estate has:
- a 50% interest in the residential home, where she lived with her husband, worth $500,000 (which is debt free);
- a bank account which holds $5,000; and
- superannuation of $200,000 with GESB.
Pursuant to the Act, Mary’s estate would be distributed roughly as follows:
- her spouse would be entitled to the personal effects, the first $50,000 and 1/3 of the net estate, being $185,000; and
- her 2 children will be entitled to share equally in 2/3 of the net estate, being $135,000 each.
Under this outcome, Mary’s 2 children will receive more than her spouse and the shares of the 2 children will need to be held in a trust for them which complies with the stringent requirements set out in the Act. Further, Mary’s spouse might have to sell the home in order to pay out the entitlements.
A scenario such as the two described above can be avoided by making a Will.
Contact Everest Legal for more information or advice on making a Will.