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According to the Australian Bureau of Statistics, 2018 saw a historically high sealing for renovations in Australia, dubbed as the “Year of the Reno.” Interestingly, Australia-wide, home renovations exceeded $9 billion.
However, with that being said, a recent survey found that only 25% of seniors have funeral arrangements in place. In reality, what this really means is that renovations are at an all-time high, but many Australian citizens do not, in fact, contain a will or an estate plan.
Having a will is arguably one of the most important things you can do for you and your family, especially if you own or have renovated a house. Not only can a will legally protect your spouse, children, but it can also set, it can spell out exactly how you would like things handled after you have passed on. Here’s what you need to know about leaving your property to loved ones.
Collating your assets
Making a list of all your valuable assets helps to ensure that you’re not accidentally leaving any significant property out of your will. If you have significant property or assets, or particularly elaborate investments or financial arrangements, seek assistance from a will and estate lawyer.
They’ll be able to review your assets and determine the most tax-efficient way to distribute them and can help you consider things like if your planning to renovate, does your will account for what will happen if you were to pass away mid-work?
If your assets are not overly complicated, you simply need to decide who will receive your assets and how they will be distributed. In the case when a spouse survives your passing, a right of residence will allow them to stay in your home after you die.
You can specify that your spouse pay council rates, water rates, and home insurance premiums if you like, and you can also state that the home may be sold to pay for a smaller property, home unit or retirement village unit.
Understanding the way debt works after your passing is an important thing to consider. Your goal, after all, is to ensure that your loved ones are taken care of and not burdened.
The general rule is that your debt, be it a mortgage, private loan, credit card or car loan, will need to be paid back. In most cases, the appointed executor of the estate will use your assets to ensure this happens, although your debt may also be paid out from proceeds of a life insurance policy.
In the event that there is a substantial amount of money within the estate to pay off the mortgage, the inheritors may elect to keep the property. If your estate or insurance payout cannot pay the debt, then other people may be responsible for repaying it if:
- They guaranteed the debt
- The debt is in joint names, such as a home co-owned by husband and wife
- The debt is secured against a particular asset owned by someone else
Discuss any outstanding debt with your lawyer and let your family members know what the procedure will be. Debts can be erased if there are not enough assets or money to pay them off, however, creditors have been known to have collection agencies that harass heirs into paying debts.
That’s why it is a good idea to let your family members know that this is not legal, and make sure that they are aware of their legal property responsibilities.
Protecting your will from challenges
Is it possible to challenge a will? The simple answer under Australian law is “yes.” Here’s more information about how your will could be contested. The best way to protect your will from being challenged is to:
Make sure your will is properly executed: Have a lawyer assist you in drafting and executing the will and have it signed by two witnesses that aren’t your family members.
Explain your decision: If family members understand the reasoning behind your decisions they may be less likely to contest your will. Talk to your family members and if you feel it necessary, write your reasoning down.
Include a no-contest clause: An effective way to prevent a challenge you may suspect is coming is to include a no-contest clause. This will only work, however, if you are leaving something of value to the disgruntled family member – enough that it’s not worth running the risk of a challenge.
Prove competency: Make sure the lawyer drafting your will tests your competency. You could also see a doctor and answer a series of questions to prove you’re of sound mind. You can also record yourself freely signing the will.
Remove the appearance of undue influence: Don’t include the family members that are inheriting your assets in the drafting of your will. Family members should not be present when you discuss your will with your lawyer or when you sign it.
Whether you’re living in your first one-bedroom apartment or if you’re in the retirement phase of your life, you may think that a will is just a document stating who will receive your assets after you pass away, but the process involves much more than that. And, if you do own a home, or plan to renovate your house, then it is vital to be organised.
In that way, you’ll be able to understand the exact procedures to make sure that your estate remains with whom you originally wanted it to be with and whilst at the same time, protect your legacy and assets.