Why you need to draw up a legal will
Creating a binding document that spells out your wishes once you’re gone is one of the most important things you’ll do in life.
The first thing to remember when it comes to estate planning is that your money belongs to you, and it’s there for you to do with as you please.
That includes spending the lot on yourself and your loved ones before you die.
In practical terms, however, at least some of your money and possessions will outlast you and it’s your responsibility to say what should happen to them.
Commonly, this will mean carving it up between relatives – typically your spouse, children and grandchildren, close friends – and good causes you might want to support.
A gift in your will to a charity or not-for-profit organisation is also known as a bequest, and many people regard it as a way to continue supporting causes close to their hearts long after they are gone.
Charitable bequests can be made alongside distributions to family members and friends, or your entire estate can be distributed to charities. Before leaving a gift or bequest in your will, make sure your estate plans are in order.
An estate plan records what you want to happen to your assets after death. It can include documents such as:
Your will.
A testamentary trust (as part of your will).
Superannuation binding nominations.
It also covers how you want to be cared for, medically and financially, if you can no longer make your own decisions. This part of your estate plan may be in documents such as:
Powers of attorney, which gives someone limited control over your finances.
Power of guardianship, which gives someone the right to choose where you live and make decisions about your medical care.
An advance healthcare directive, which outlines your needs, values, and preferences for your future care.
The documents you choose will depend on your situation and what affairs you are comfortable trusting others to manage on your behalf. Get legal advice if you are not sure.
A will is a legal document stating what you want to happen to your assets when you die. It is part (but not all) of your estate plan.
Your will can cover things such as:
How do you want your assets shared?
Who will look after any young dependants?
Any trusts you want to set up.
How much money you would like to give to charities.
Plans for your funeral.
It is vital to have an up-to-date will. If you die without one, the law decides who will get your assets – and that may not align with your wishes.
You can get your will written by a solicitor (for a fee) or by a Public Trustee. A Public Trustee may not charge if:
You are a pensioner or aged over 60, or
Nominate them to carry out the instructions in your will (that is, to be your executor).
The rules vary, so visit the Public Trustee office website for your state:
Ensure you put your will in a safe place and tell someone close to you where it is.
There are several types of gifts your beneficiaries could receive:
A monetary gift: You may want to include specific wording that takes account of inflation so that the gift does not lose value over time.
A specific asset: This could be real estate, shares, a motor vehicle, furniture, jewellery, or other things you own when you die.
Your residual estate: This refers to what remains of an estate after all debts and expenses have been paid and the specific assets and monetary gifts have been distributed.
If you choose not to allocate any monetary gifts or specific assets, you can make a gift of your whole estate, rather than the residual estate.
Your will must be written correctly to ensure it gives away your whole estate. Any part of your estate not captured by your will is dealt with under intestacy laws.
A binding nomination directs to whom your super fund trustee gives your superannuation benefit when you die.
If you do not nominate someone, the super fund trustee will decide who receives your money.
If you have a family trust, it continues after your death. The trust determines who gets your assets, even if your will says something different.
When making a gift to a charity in your will, it is important to consider the type of gift to make.
You can leave as a gift in your will:
Cash, stock, and bonds.
Real estate.
Personal property, such as a car, jewellery, or artwork.
Non-probate assets, including your life insurance policy or superannuation account.
If you are considering leaving a gift to a charity in your will, you should be aware of issues that may arise.
It is important to identify the charitable organisation by its correct legal name. If the charitable organisation stipulated in your will is not named correctly, then it may confuse and become difficult for your executor to distribute your gift after your death.
Some charities can be known by the public as one name but may have a different registered name.
Also, some organisations have similar names and goals, or there could be a subtle difference between the national and international names of the organisation.
To avoid mistakes, ensure you include the Australian Business Number (ABN) or Australian Company Number (ACN) and the address of the charitable organisation in your will.
The national charity regulator, the Australian Charities and Not-for-profits Commission (ACNC) has a search tool you can use to find the correct naming details of any registered charity.
Further reading: Smith Family Law, Include a Charity, Moneysmart.gov.au
Disclaimer: Any links provided are for general information only and should not be taken as constituting professional advice. National Seniors is not a financial advisor. You should consider seeking independent legal, financial, taxation or other advice to check how any information provided relates to your unique circumstances.
