Why you should REALLY make a will

Too many times in my legal career I have been contacted by families to discuss the legal issues arising from the death of someone who has died suddenly and probably way too soon. When there is no will, or the will is hopelessly inappropriate because it was made 20 years ago, there is a sense of dread.

There is a statutory formula in all the states of Australia which is applied when someone dies without a will. But the statutory formulas vary from state to sate and minute changes in circumstances can produce dramatic differences, depending upon which state you resided. Broadly speaking everything will go to your next of kin.

In Victoria, your next of kin will be your spouse or domestic partner. To qualify as a domestic partner (in this area of the law), you must be residing permanently up to the moment of death for a period of at least 2 years. If you have a child born during the relationship you will be considered as a domestic partner even if you have not lived together for the 2 years.

If you have no partner nor children, then everything passes to your parents, but things can get complicated. What happens if you were raised by your single mother, and your father has not participated in your life for 30 years? Well, the estranged parent will still qualify for one half of your estate. These are good examples why no one should risk the statutory formula applying to their life circumstances and instead make sure you have a will.

A lot of people will think “but I don't have any assets so why does it matter”?

Most people are a member of a superannuation fund. Apart from the contributions, there is usually life insurance as part of the superannuation benefit. A death benefit of $200,000–$400,000 is not uncommon.

But the superannuation does not necessarily get applied in the same manner as the statutory formula when you die without a will. The trustees of the superannuation fund have a very broad discretion as to how the payment can be made. Each fund will have slightly different rules. Emphasis is placed upon your financial dependents. And here's the thing — your domestic partner does not have to be part of your life 2 years to qualify! A relationship of only 3 or 4 months might be more than enough to satisfy the superannuation fund that payment should be made to that person.

An example of where these rules can have significant effect was the situation where a young man died without a will and his parents were the people entitled to benefit under the statutory formula. However, his superannuation benefit of $400,000 was paid by the trustees to the female friend who was living in the house. The parents thought that this girl was merely a boarder and to the best of their knowledge there were separate bedrooms. This young man died at 30 years from a sudden illness and the female friend claimed that they had been a couple for over 12 months and were nearly engaged! This was a great surprise to the parents who saw their son on a weekly basis. What might have been described as a "friends with benefits" situation resulted in the friend getting the superannuation benefits as well!

How can these disastrous outcomes be avoided?

The answer is extremely simple. Make a will and make a binding death benefit nomination with your superannuation fund. If you have a will, make sure you review it to regularly to make sure it makes sense for your current life circumstances and think about what makes sense for your superannuation death benefits.

Your death, particularly if you die suddenly at a younger age, will be catastrophic for your family and friends. Making a will and having a superannuation nomination in place will not make them happier nor will it lessen the sadness and sorrow of your death. But if you die without a will (or with a will which is horribly out of date) then the confusion, stress and anger can be catastrophic. In the examples that I discussed, it meant that the loved ones of the person who died had to fight for a just outcome, and sometimes the just outcome will never occur.

You owe it to your loved ones to sort out your will and affairs at the earliest opportunity.

O’Farrell Robertson McMahon's Wills & Estates Accredited Specialist Russell Robertson is able to assist you with all matters regarding preparing or reviewing your Will. You can book an appointment to see Russell online or by phoning 03 5445 1000.