Stephen Gethin, Legal Director at Fortuna Advisory Group, answers some commonly asked questions around how your assets are effected if you pass without a formal will.
"If you die without a will, the property that you leave behind gets divided up between your relatives according to a formula specified in an act of Parliament. People might assume, oh, well, it's probably going to go to my partner if they survive me, and if not, then to all of my kids. It actually doesn't work like that. Your partner gets some if you survive by a partner, and then the rest of it is divided between your partner and your surviving children. That could actually cause a problem that could result in the family home being needed to be sold, particularly if you had a child you didn't particularly get on with and they needed some money. So it's very strongly advised to make a will. "
In addition, if you have an estate of a significant value, you can also achieve some significant tax savings for your beneficiaries by a properly drafted will, which is why a will is always strongly reccomended.
"Superannuation isn't left directly under your will. It's not actually part of your property. It belongs to the superannuation fund, although it's obviously obliged to be paid to you. But, if you just make a will leaving all your property to certain people, that will not automatically pass your super. Your super is passed on normally by giving the trustee of the super fund what's called a death benefit nomination. And that can either direct that they pay it directly to certain next of kin within a limited class such as your spouse and any children, or you can direct the super fund trustee to leave it to your executor. And then you have a clause in your will that says if my executor gets my super from the super trustee, then they must deal with it in a certain way. "
"It's important to plan for that because super, unlike a normal asset that you leave to someone - the superannuation that passes through your will or passes directly from your super fund to a beneficiary, will be taxed at either 15 or 17%. So there are strategies that you can use when you have directed your trustee to leave it to your executor to make sure that it's distributed to certain people who won't have to pay that tax. "
In summary, the importance of having a formal will cannot be overstated. Without one, assets may be distributed in a way that is contradictory to common assumptions, potentially leading to unintended consequences like the forced sale of a family home. Not only does a will provide clarity and control over asset distribution but also allows for strategic planning, particularly in dealing with tax and complex assets such as superannuation.