According to research carried out by Finder.com, more than half of Australian adults don’t have a will set up.
Furthermore, a Digital Edge survey in October 2022, highlighted by Australian Seniors News, revealed that 42% of Australians haven’t had conversations with their loved ones about their inheritance plans, even though 75% of those surveyed agreed such discussions are important to have.
To an extent, those figures are understandable. Making a will forces you to consider your own mortality and talking to your children about your wealth can be uncomfortable.
But, bearing those statistics in mind, discover four important reasons why having a will is essential. Also read about why, once it’s in place, you should talk about it with your adult children.
4 reasons why having a will in place is so important
Not having a will in place can result in serious problems for your loved ones when you pass away.
The recent pandemic demonstrated how easily unexpected events can affect your life and threaten your future health and wellbeing.
There are four commonly cited reasons why making a will is so important.
1. You can ensure your executors can distribute your assets in the way you specify
Dying without a will – known as dying “intestate” – means there’s a chance your wealth won’t be allocated the way you would have liked.
The laws around intestacy vary between states, but the most common outcome is your assets will be distributed between your surviving partner or spouse and your children.
It’s possible this may not be your preferred outcome. Likewise, you may have some specific assets you want certain individuals to inherit.
A will can also help avoid uncertainty around issues such as the future guardianship of your children, and the arrangements for your funeral.
2. You’ll help minimise stress for your surviving relatives at a difficult time
The period after your death is likely to be a highly stressful one for your family.
Not only will they be contemplating a future without you, but they are likely to have concerns about your funeral, and how your assets are to be shared.
Having a will in place gives them one less thing to worry about. Knowing you’ve made these arrangements will also be a comfort to them going forward.
The alternative is a potentially traumatic period when they will not only be grieving your loss, but also uncertain about financial issues.
3. You could help avoid potential family conflict
Having a will set up can help avoid the possibility of family feuds and legal action over the distribution of your assets.
Not only can this be highly acrimonious and last for a long period, but it can also be expensive for all concerned.
For example, if you have previously divorced and do not have a will in place that clearly outlines the distribution of your assets, there may well be competing claims that will need to be resolved in a court of law – with all the expense and acrimony that could entail.
4. You can secure the financial future of your family and loved ones
As well as decreeing your desired distribution of your wealth, a will also enables you to secure the financial future of your loved ones.
You’ll have the knowledge that, regardless of what happens to you, they will be on a sound financial footing, even if you aren’t there to provide for them.
One further point to remember is that, if you are married or in a civil partnership your spouse or partner should make a will too.
Experts anticipate a massive increase in inherited wealth
A 2021 study by the Productivity Commission reported in Financial Review came up with some remarkable forecasts about the amount of assets that will be transferred between generations in the coming decades.
It suggested that Australian “baby boomers” – those born between 1946 and 1965 – are expected to pass on an estimated $224 billion in inherited wealth each year by 2050.
The figure will represent a 400% increase over the next 30 years.
Conversations about inheritance are awkward but important
Finance and death can be uncomfortable subjects for discussion, which can help explain the 42% of Australians you read about earlier who have not yet had such a conversation with their families.
From a simple financial perspective, it’s important to put plans in place for the future or you risk leaving your loved ones facing a period of uncertainty, and potentially crippling legal costs if you haven’t made your wishes clear.
Then there’s the further uncertainty of close family members not knowing if they will inherit assets from you. Savings.com highlighted that 23% of Australians are waiting on inheriting money from their parents while currently making ends meet in order to “have a good life”.
By talking to your children about your inheritance planning, you can help put their minds at rest. It can also help them prepare to receive a potentially substantial sum of money and start to plan accordingly.
Even if you’re reluctant to discuss full details of your wealth, just the knowledge you have a will in place can provide reassurance for them.
Get in touch
If you have any queries regarding your will and other estate planning arrangements, please get in touch with us.
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This article is for information only. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances. All contents are based on our understanding of ATO and HMRC legislation, which is subject to change.