Preparing for the worst: top five estate planning mistakes
by Melisa Sloan
5th December 2022
THE BEST WAY to take care of your family and loved ones in the event that you are no longer here is by putting in place a comprehensive Estate Plan.
The documents that comprise your Estate Plan must be well drafted to ensure that your wishes and intentions are clear so that everything happens the way you would like it to happen upon your death.
If your estate planning documents, such as your Will, are incomplete or ambiguous, it may result in people that you do not wish to receive your assets receiving them, or prospectively a claim being brought against your estate, which would be both costly and time-consuming.
Let’s look at the five most common mistakes to avoid when putting your estate plan in place.
Putting in place a DIY Will
If you are inclined to use a “do it yourself (DIY) Will kit” or personally prepare your own Will to save money, be warned that it may often cost your estate money after you die.
DIY Wills are often ambiguous, and your wishes and intentions may not be clearly defined, and at worst, your Will could be deemed invalid.
A high level of care is required to make your Will a legally binding document, and your Will and other estate planning documents should be put in place by an estate planning lawyer, who will be able to provide you with the appropriate legal advice in respect to your circumstances and ensure that you have a comprehensive, well-documented estate plan in place that is reflective of your wishes.
Poor choice of Executor
In appointing someone as an Executor of your Will, you give them the keys to everything you own and control.
You, therefore, need to appoint someone that you trust implicitly to undertake this role.
Appointing someone who resides overseas as your Executor can present challenges, as can appointing an elderly parent in some instances.
Often people elect to appoint two executors jointly, and if you are inclined to do so, I would encourage you to think of the following:
Do they know each other?
Will they work together as joint Executors of your Will?
Is there any conflict between them?
Will they focus on your wishes and the best interest of the beneficiaries?
Essentially, when appointing an Executor, you select the person you trust the most.
Gifting assets that you do not own
In putting your estate plan in place, it is important to understand what assets you own individually and what assets you control.
Many people fail to understand that you cannot gift joint assets, trust assets, or company or partnership assets in your Will.
You may only gift assets if you personally own them.
Joint assets, such as a joint bank account or a property owned jointly with another person, cannot be gifted as such assets will automatically pass to the surviving joint owner.
Concerning your superannuation, most superannuation funds allow you to nominate a beneficiary by putting in place a binding death benefit nomination, directing where you would like your superannuation to be paid at the time of your death.
Not putting the Power of Attorney documents in place
Putting in place a Power of Attorney document allows you to appoint someone to make financial, legal, guardianship and medical decisions on your behalf if you become incapacitated and can no longer make your own decisions.
If you do not put this document in place, someone may be appointed as your guardian and administrator to make these decisions on your behalf, and they may not be the person you would have chosen to make these important decisions.
It is, therefore, imperative that the Power of Attorneys are an integral part of an estate plan.
Failing to update or review your estate plan
An estate plan you put in place 30 years ago is unlikely to be relevant today.
If you don’t review your estate plan regularly to accommodate your changing circumstances, you may leave yourself and your beneficiaries exposed.
By regularly reviewing your estate plan, you will be identifying any major life events and the need to update your Will to ensure that it is current and reflects your wishes.
The content of this column is not intended as a substitute for seeking professional advice.
If you need the services of a legal professional for any content covered in this column, consult the relevant professional.
Melisa Sloan is an Estate Planning Lawyer based in Park Orchards; find out more about her business at madisonsloanlawyers.com.au.