21 Jul 2010
Writing a will. ItΒs something many of us never quite get around to doing. We tend to assume those we love will automatically be provided for in the unfortunate event of our death; that the plan in our head will come to fruition regardless of a formal piece of paper.
But the new laws about wills, which came into effect in March 2010, mean that unless our intentions are on paper, our estate may not be divided quite the way we planned.
Key to the new laws is the premise that, in the absence of a will, the spouse inherits everything. Children are no longer included.
The presumption is that children will naturally inherit later on, when the remaining spouse dies. So theyΒll be covered. Just not immediately.
This seems fairly clear cut. Most lawyers will tell you that the majority of people who draw up wills tend to leave everything to their spouse anyway, on the understanding that they will naturally distribute the estate fairly.
But the new laws do present a few potentially murky areas.
Consider this; the remaining spouse has a falling-out with one of the children, with the result that that child ends up being excluded when the estate is distributed.
In the event that the deceased had children from a prior relationship, the rules change. In that situation, the spouse is entitled to the new Βstatutory legacyΒ of $350,000, plus the deceasedΒs personal effects, and half of the remaining estate. The other half of the estate is shared amongst the deceasedΒs children.
Not quite as straight forward as it once was.
Another change in the law relates to multiple spouses. ΒSpouseΒ now means a person who has lived with the deceased for at least two years, whether married or not. When there is more than one spouse, the estate must now be shared equally between them.
Determining the split between multiple spouses has the potential to be both financially and emotionally costly.
According to Tony Mitchell, specialist in wealth protection at Stacks Law Firm, ΒThe new laws add a degree of uncertainty about what happens to a personΒs estate when they die. It really reinforces the need to have a will, and to regularly review it, particularly in the situation where people have split up from a partner but have not divorced.Β
The laws aim to make sure that all of the important people in the deceasedΒs life receive part of the estate; if not immediately, then at least eventually. But the governmentΒs idea of fair division may not be yours.
Perhaps best to put your intentions into a formal will and avoid making things even more traumatic for your family.
