Every Step: How to make your will watertight and ensure a fond farewell

WHEN it comes to your farewell, how can you ensure your will is watertight and your funeral goes smoothly? Karina Barrymore investigates.

It helps to talk to a solicitor to ensure your last will and testament is watertight.

Q. I want my farewell to be a fond one. How can I ensure my will is watertight and my funeral goes smoothly?

EVERYONE needs a will. Even if you don’t have any valuable assets, you still need to tell people what you want done with your possessions and for your funeral.

Most people will have a few assets, even if they are not valuable, that they want gifted in a certain way or to certain people.

In its simplest form, a will can be written on a piece of paper and signed in front of, and by, two witnesses. There is no need for a fancy form or legal stamp.

But if you want to be sure your words are interpreted correctly, get a lawyer to take a look — even if it is just a hand-written note or a will kit from the local newsagent.

According to Victoria Legal Aid, if you die without a will, there is a standard procedure that involves the Supreme Court appointing an administrator.

In most cases, the court will appoint the person who is going to be the biggest beneficiary — usually a spouse or next of kin.

The court uses a formula to decide who is likely to be the biggest beneficiary.

New rules about to be put in place for this formula allocate the first $451,900 of an estate and one third of the balance to a spouse or partner of more than two years, including same-sex partners.

The remaining two thirds is allocated to any children.

If there is no application for administration and no next of kin, the assets are given to the government.

WHAT ABOUT THE FUNERAL?

Aitken Partners principal lawyer Kathy Wilson says the “legal starting position is that a corpse is not property”.

“There are no ownership rights to a corpse but an executor is responsible for funeral arrangements,” Ms Wilson says.

Funeral arrangements can be the biggest cause of disputes after a death, and funeral directors should check that people arranging a funeral have the authority to do so.

“Funeral directors sometimes just listen to the person making the arrangements and signing the agreement,” Ms Wilson says.

“This can cause a lot of problems especially if there are second marriages or cultural and religious issues.

“In many cases, it’s too late to do anything about it but sometimes it’s possible to intervene, find the executor and give other instructions for the funeral.”

Executors are responsible for ensuring assets are divided according to the will.

WHO SHOULD BE YOUR EXECUTOR?

Often a beneficiary makes the best executor.

“The role of the executor is to collect the assets, pay the debts and divide everything up according to the will,” Ms Wilson says.

“Beneficiaries are going to receive the money anyway so it’s usually a good starting point for an executor.

“However, sometimes that’s not always best — perhaps the beneficiaries are too young or it’s a complicated will.

“Other options are a trusted family member such as a brother or a sister, or a professional adviser including a trustee company, an accountant, financial planner or lawyer.”

Executors do sometimes get paid for their time and effort, however, the court can now overrule some payments and fees if they are too high.

HOW DO RELATIONSHIP CHANGES AFFECT WILLS?

If you are single and have a will, no problem.

However, if you get married and don’t change the will to include your new spouse, that will is automatically invalid.

In this situation, you are considered to die without a will, intestate, and the court will decide who administers your assets.

If you separate from your spouse, your existing will remains valid and your ex-partner will still inherit.

In some cases, a divorce can also revoke your entire will, making you intestate, or it may just revoke your ex spouse as executor or beneficiary.

The rule of thumb is always change your will if you get married, separate or divorce.

This article is part of the Every Step series from the Herald Sun business team, walking you through life’s big financial decisions from the cradle to the grave. To see all the articles in the series, click here.

FUNDING YOUR FAREWELL

Funeral costs range from about $4000 to tens of thousands of dollars, depending how elaborate it is. There are several options to pay, including:

Insurance

You may not get your money back or your funeral paid if you stop making payments before you die. Insurance premiums increase as you get older. It is worth checking with superannuation funds for details of death or funeral payouts.

Bonds

Typically you pay an upfront deposit and ongoing fees. The money is invested. If the bond is not paid in full there may not be enough to pay for the funeral. Any balance minus fees will be paid when you die.

Pre-paid funerals

The cost is paid in advance either in full or part payments. Money is refunded, less fees, if you cancel. This money should be held in a registered funeral fund, for protection in the event the funeral director closes.

Savings Account

A separate bank account for funeral costs is the safest way to pay for your funeral. There are no exclusions or penalties if you stop making deposits.

Source: Moneysmart.gov.au