Time to read : 4 Minutes
Getting a will is one of those tasks you know you should do, but may be putting off… for now anyway. Maybe it’s boring, morbid, or you just assume you’ll have plenty of time to do one in the future.
But life is unpredictable. Accidents and illness can happen at any age, and death can take us by surprise. Despite this, Aussies largely don’t seem to be on the front foot when it comes to getting a will:
Almost 60% of eligible Aussies (approximately 12 million of us) don’t have a will.
About 64% of parents with children under 18 don’t have a will.
Around 52% of Aussies die without making a will.
And on that last point, dying without one can cause a real headache and a financial strain for those left behind.
You can’t take your savings, house, or investments with you when you die, so what happens to them all? Let’s take a deep dive and find out.
What is a will?
A will is a legal document that sets out:
Who should inherit your assets. This includes money, your super, any property you own, as well as sentimental items.
Who should take care of your children or pets (if applicable).
Who you want to manage your estate.
Why is it a good idea to have a will?
Having a will makes sure what you want to happen will happen after you die. It avoids any confusion or disputes as well as any delays in the distribution of your assets.
If you’re in a blended family or a de facto relationship, a will is especially important. In these settings the people in your life may feel entitled to what you’ve left behind. Your will states whether that’s the case and quashes any confusion.
You may also want a friend, a charity organisation, or something outside your family group to be included in your will. If you don’t leave clear instructions on this, it’s unlikely to happen.
What happens if you don’t have a will?
If you die without a valid will this is called “dying intestate”. Your next of kin (usually a spouse, adult child, or parent) will then need to apply to the state Supreme Court for permission to manage your estate. This process is known as applying for a “Grant of Letters of Administration” (also known as Letters of Administration).
It will be the court’s job to appoint an administrator who will take control of your assets, pay your debts, and distribute the remainder. But this process can be a slow and complex one.
The administrator is usually a family member, but in some cases an independent administrator may be appointed. This could be:
a trustee company
a solicitor
the Public Trustee.
The downside of not having a will
The intestacy route can be a nightmare for your loved ones. Let’s take a quick look at what this could mean for them.
Long delays
Applying for Letters of Administration can take months and in the meantime, it’s likely your assets will be frozen. This doesn’t just mean your family can’t get on with the process – it can also complicate financial matters like paying a funeral, and any debts like covering your mortgage.
This can cause a lot of additional emotional and financial stress for your loved ones having to navigate this all after you are gone.
Legal costs
There are legal costs for the application. These are set by the supreme court in each jurisdiction and vary from state to state. For example, in NSW a Notice of Intended Application fee is $57 but there is also a Supreme Court filing fee which is based on the gross value of your estate. This can run in the thousands for the person applying to be an administrator.
Be aware: while these fees are paid in stages, they need to be paid upfront for the applications to progress. If there are any disputes or unclear entitlements in the process, a solicitor may also be needed and the costs can really blow out.
Stress
Losing a loved one is an incredibly challenging time. Add in court paperwork plus family tensions and it’s a lot of extra pressure to put your grieving family through.
Your wishes may not be followed
By dying without a will, your last wishes could be overturned by intestacy rules. Depending on how the legal process takes shape, your assets may go to people you didn’t intend… and that can mean others may be left out.
How are assets distributed if you don’t have a will?
Besides the costs being different, how your assets are divided under intestacy laws can also differ from state to state.
In Victoria and New South Wales, your partner or spouse will inherit a “legacy” – a set amount of money decided by the state which is indexed each year. After that, they’ll receive 50% of what’s left in your estate. The remainder will be distributed among any children you have from a previous relationship.
It’s a similar process in Queensland, where the first $150,000 of the estate is given to the spouse, and whatever is remaining is divided equally between the spouse and any children.
Other states have other rules, but it’s important to note this can mean your assets go entirely to your spouse or partner if you die with less than the legacy amount. If you have children from a previous relationship, they could miss out unless another agreement is reached.
If you don’t have a spouse or partner, whatever you leave behind will be divided amongst your children. If you don’t have children, your parents, siblings or other extended family members will be next in line.
Be aware: if no relatives can be found, your assets may be passed to the state government through a process called bona vacantia. What that means is your hard-earned assets could literally end up in the state government’s bank account. All the more reason to protect your finances with a will.
What happens to outstanding debts?
Unfortunately, debt doesn’t disappear once you die. Before your estate can be settled and any money passed on, your debts must be paid. This includes any unpaid rent or mortgage repayments that are in arrears, credit cards, or personal loans.
If your assets don’t cover these debts, your estate is declared insolvent. In this case, your loved ones won’t receive anything, but they won’t be expected to repay your debts unless they were co-signers (such as a mortgage with a spouse).
Bottom line
No one likes to think about death, especially if you’re young and healthy. But not having a will can cause a domino effect of financial hardship, delays, and conflict for the people you leave behind.
Having a legal will doesn’t just save time, it also means the wealth you’ve worked hard to build will be distributed the way you want it to be, when you go.
Getting a will is easier and cheaper than you may think, and can be done online or with the help of a solicitor for a few hundred dollars.
Remember, death can happen suddenly. A will can save your loved ones thousands of dollars, months of stress, and give you peace of mind that your wishes will be taken care of when you’re no longer around.
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Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
