Wills and estate planning basics for older Australians

Making a will is one of those tasks that is easy to keep putting off, right up until it becomes urgent, and by then it is often too late to do it calmly and well. Getting it sorted while you are healthy is a genuine gift to the people you leave behind: it makes a hard time simpler, cheaper, and less likely to end in conflict.

The short version: a will sets out who receives your assets when you die and who is in charge of making that happen. Estate planning is the bigger picture around it, the will plus the arrangements that deal with your finances and health while you are alive, and with the assets a will does not automatically cover, such as superannuation.

This guide explains what a will does, what happens without one, and the handful of documents that make up a complete plan.

What a will actually does

A will is a legal document that takes effect when you die. In it you set out how your estate, meaning the assets you own and can give away, is to be distributed, and you name an executor to carry out your wishes. If you have dependent children or others you care for, a will is also where you can nominate a guardian.

To be valid, a will generally has to be in writing, signed by you, and witnessed correctly. The exact formalities vary by state and territory, and getting them wrong is one of the most common reasons a will is challenged or fails, which is why do-it-yourself will kits carry real risk for anything beyond the simplest situation.

What happens if you die without a will

If you die without a valid will, you die "intestate", and the law decides who gets what. Each state and territory has its own intestacy formula that distributes your estate among your relatives in a set order, spouse, children, then wider family. That formula may not reflect what you would have chosen. It makes no allowance for close friends, stepchildren in some cases, or charities, and it can create hardship or dispute in blended families.

Intestacy also tends to be slower and more expensive to administer, because someone (usually a family member) has to apply to be appointed administrator before anything can be sorted out, at exactly the time your family is least equipped to deal with paperwork. A valid will avoids nearly all of that.

The executor: choosing the right person

Your executor is the person who administers your estate: locating the will, applying for probate if needed, paying debts and taxes, and distributing what remains to your beneficiaries. It is a real job, sometimes a demanding one, so choose someone trustworthy, organised, and ideally younger than or around your own age so they are likely to be able to act. You can appoint more than one, and you can appoint a professional (a solicitor or a state trustee) if your affairs are complex or you would rather not burden family.

What a will does not cover

This is the part that surprises people. Several significant assets can pass outside your will, so a will alone may not be a complete plan:

• Superannuation is usually the big one. Your super, and any life insurance held inside it, is not automatically part of your estate. It is paid according to a death benefit nomination you make to your super fund, or, if you have not made a valid binding nomination, at the trustee's discretion. If you want your super to go to a particular person, or to flow through your will, you generally need a valid, up-to-date binding death benefit nomination; check what your fund requires.
• Jointly owned property held as joint tenants usually passes automatically to the surviving owner, outside the will.
• Assets held in a family trust or company are not owned by you personally, so they are not dealt with by your will either.

Because of this, a will needs to be planned alongside your super and other arrangements, not in isolation.

Estate planning: the documents that work together

A complete plan for later life is really a small set of documents, each doing a different job:

• Your will deals with your assets after death.
• An enduring power of attorney lets someone you trust manage your financial and legal affairs if you lose capacity while alive. A will does nothing while you are alive; this is what covers that gap.
• An advance care directive records your health and medical wishes, and in most states appoints someone to make health decisions for you if you cannot.
• Superannuation death benefit nominations direct your super, which sits outside the will.

Together these cover the three situations that matter: decisions about your money and health while you are alive but unable to decide, and the distribution of your assets after death. Missing one leaves a gap the others do not fill.

When to review your will

A will is not set and forget. Review it after any major life change, including marriage or entering a de facto relationship, separation or divorce, the birth of children or grandchildren, a significant change in your assets, or the death of a beneficiary or your chosen executor. In most states, marriage revokes an existing will unless it was made in contemplation of that marriage, a trap that catches people out, so revisit your will if you marry.

Getting help

For a straightforward estate, a solicitor or your state's public trustee can prepare a will relatively simply and affordably. Get proper legal advice if your situation is more involved: blended families, business or trust assets, someone with a disability who needs provision made carefully (for example through a special disability trust), potential for a family dispute, or tax considerations such as a testamentary trust. The cost of advice is small next to the cost, financial and emotional, of a will that fails or is contested. Because estate planning overlaps with retirement income, the Age Pension and aged care fees, coordinating it with financial advice is worthwhile for larger estates.

Frequently asked questions

What happens if I die without a will in Australia?

You die intestate, and your estate is distributed according to your state or territory's intestacy laws, a fixed formula favouring your spouse and children, then wider relatives. It may not match your wishes, and it is usually slower and more costly to administer than an estate with a valid will.

Is my superannuation covered by my will?

Usually not automatically. Super is generally paid according to a death benefit nomination made to your fund, or at the trustee's discretion if you have not made a valid binding nomination. To control where your super goes, make a valid, up-to-date binding death benefit nomination and check your fund's rules.

Do I need a lawyer, or can I use a will kit?

A will kit can work for very simple situations, but small mistakes in wording or witnessing can invalidate a will or cause disputes. For anything beyond the simplest estate, a solicitor or your state's public trustee is well worth it.

What is the difference between a will and an enduring power of attorney?

A will only takes effect after you die and deals with your assets. An enduring power of attorney operates while you are alive, letting someone manage your financial and legal affairs if you lose capacity, and it stops at death. Most people need both.

How often should I update my will?

Review it after any major change, marriage, divorce, new children or grandchildren, a big change in assets, or the death of an executor or beneficiary. Note that marriage revokes an existing will in most states unless it was made in contemplation of that marriage.

This is general information, not legal or financial advice; wills and intestacy laws differ by state, so consult a solicitor or your state's public trustee for your situation.