25 July 2023

Don’t let these estate planning mistakes cost you – how to avoid an estate dispute

Don't let these estate planning mistakes cost you - how to avoid an estate dispute-SHL<br />
Writing a Will is an essential task that ensures your family and those closest to you are taken care of after your death.

But all too often we see that simple mistakes can derail even the most well-intentioned Will, leaving loved ones confused, not getting their fair share, and sometimes not getting any share at all.

In this blog, we tackle the most common estate planning mistakes and provide pointers on how to avoid them. Remember that this blog is just for information purposes only. We recommend reaching out to one of our qualified Wills and estates lawyers for any questions you may have.

Here are the 15 most common estate planning mistakes we see most regularly.

1. Forgetting to update your Will

Outdated Wills top our list of common mistakes in Wills. Reviewing your estate planning documents every few years will ensure it accurately reflects your current family situation and meets your needs.

Too often, we see Wills made years ago that simply no longer fit the bill. These Wills may once have been perfect at the time but are now outmoded and don’t reflect the current landscape.

For example, they may have been made when the children were babies (or even before having children) or when asset positions and relationships were very different.

Life changes quickly, and so must your estate planning. Our Wills and estates lawyers recommend a quick annual scan of your Will and a review every 3-5 years to ensure that your estate planning reflects your world.

Relationships, business interests, and beneficiaries can change over time, and your estate planning should keep up with these changes.

2. Failing to consider the needs of your beneficiaries

Of all the common mistakes in estate planning, failing to consider the unique needs of your beneficiaries can be the most detrimental to future generations.

Many Wills treat all beneficiaries equally, but this approach doesn’t take into account the different circumstances and requirements of each beneficiary. People are all unique and the ‘one size fits all’ mentality we see in some Wills often creates a disastrous failure when it comes time to reading the Will.

For instance, a minor child who is dependent on their parents has very different needs compared to an adult child who is financially independent. Also, children with special needs or learning difficulties may require more support than their siblings and may require the creation of a special trust to look after them.

We can assist with developing customised estate planning strategies to ensure that your beneficiaries’ varying needs are appropriately addressed.

3. Ignoring your legacy now

It’s often thought that estate planning is a last-minute exercise made near the end of one’s life. This assumption, although common, is false.

Your legacy is built over time and can involve a succession plan that outlines strategies that need to be put in place today. This may include gradually transferring assets and businesses before death or equalising things that have already happened.

Incorporating life insurance into the plan can increase the asset pool and pay off debts like mortgages. By starting with the end goal in mind, it’s possible to create a legacy that aligns with your wishes and benefits future generations. But this kind of planning cannot be left to the last minute and takes deliberate strategy and thought.

4. Thinking marriage makes a Will unnecessary

Many people (falsely) assume that marriage makes a Will unnecessary. This persistent myth, that “my spouse will simply get it all” often leads to unintended consequences. In modern society, with complex family landscapes and different types of relationships, dying without a Will can have many complex and unexpected outcomes.
Without a Will, your estate is carved up according to a formula in a piece of legislation called the Administration Act. Who gets what is a combination of how much you have and who you leave behind.

For example, a spouse may not automatically inherit everything and dependent children, stepchildren, de facto spouses, parents and even more distant relatives like siblings, or nieces and nephews and uncles and aunts, may pick up if you don’t have a Will.

It’s also important to recognise the claims of de facto partners who may have specific entitlements to superannuation and insurance benefits. Having a Will in place can ensure that your wishes are carried out and your loved ones are provided for.

5. Making promises you can’t keep

Promising assets to someone without following through can cause serious problems down the line. This is often seen in family businesses or rural families where a promise made years ago goes unfulfilled.

Such promises can be the subject of a challenge and may even be enforceable in court, going against the wishes expressed in the Will. Avoid making promises you can’t keep or build a strategy and estate plan to make sure the promises can be kept helps avoid any misunderstandings or costly conflicts later on.

6. Leaving it too late

One of the more avoidable estate planning mistakes is leaving it too late to write a Will. This is particularly the case for the elderly who may be closer to death and experiencing questions of mental capacity. This can result in suspicious or irrational Wills that favour one beneficiary over others, leaving family confused and increasing the likelihood of a legal challenge. In worst case scenarios, a Will may be declared invalid by the Court if its proven the will maker did not have sufficient mental capacity at the time they made it.

Writing a Will is an essential part of your legacy and can greatly benefit those closest to you – and writing it can be easy with the right help. If you need help getting started, reach out to our team of estate dispute lawyers who are experienced in drawing up secure and legally binding estate planning documents.

7. Leaving beneficiaries out of the Will for no good reason

One of the more common estate planning mistakes people make is leaving out beneficiaries for no good reason.

For instance, some may exclude a child with a history of drug or alcohol addiction or bankruptcy. However, addiction or bankruptcy should not be the sole reason for their exclusion, as this can lead to legal challenges. It is understandable that a will maker may not want to leave money to a child who has high-risk behaviours, but that does not stop a challenge.

Fortunately, testamentary trusts are available as an option in Wills. They can be used to provide a benefit to a high-risk beneficiary while safeguarding the assets from going to waste. Testamentary trusts are one of the most valuable things in the will maker’s tool kit and can be customised for very specific outcomes.

8. Failing to revise a Will after a divorce or remarriage

Getting married or divorced automatically revokes a Will. Without a Will, the law of intestacy applies, which is a strict formula dividing assets among family members regardless of their needs, age, or relationship with the deceased. This often results in disappointment for everyone involved.

9. Overlooking non-estate assets

Estate and non-estate assets carry key differences when making a Will.

Non-estate assets, such as superannuation, family trusts, and jointly owned assets do not fall under the instructions of a Will and require separate consideration. Failing to properly account for these assets can lead to unexpected and unequal distribution of assets, or tax consequences, which can increase the likelihood of legal challenges.

Working with estate planning lawyers to ensure all assets, including non-estate assets, are properly addressed in your Will can help avoid unintended issues.

10. The ‘just give them something’ myth

Giving someone a small amount in your Will does not necessarily prevent them from challenging it. What matters is whether the amount left to them is adequate and proper in all the circumstances, which is a subjective assessment that varies from person to person and changes over time.

This myth is often paired with the idea that adding a clause to disinherit challengers will work, but such a clause has not legal effect and are simply ignored by the Court.

11. Thinking you don’t need a Will because you don’t have many assets

Believing that a Will is unnecessary due to a lack of assets is a common misconception, especially among young adults who are new to the workforce and have limited savings or real estate property. Many people overlook their superannuation and life insurance policies, which can add up to a significant amount.

For example, a life insurance policy attached to a super fund can often be worth up to $250,000 or more. Unexpected deaths due to accidents or workplace injuries can also result in further assets being added to the estate.

It’s important to have a Will regardless of the size of one’s assets to ensure they are distributed appropriately and according to your wishes.

12. Thinking a DIY or off-the-shelf Will is enough

Relying on a homemade or online template for a Will can be a costly mistake. They are often inadequate, and ambiguous, and result in legal disputes after death.

In our experience, the cost of fixing them up is usually much greater than the cost of having a professionally drafted Will. The resulting monetary and emotional costs can be significant and greatly reduce the amount of inheritance for the beneficiaries.

13. Choosing the wrong executor or trustee

Choosing the wrong executor or trustee is one of the most common estate planning mistakes that can cause signifiant issues down the line. Executors and trustees have different roles and responsibilities, and selecting someone who can fulfil these duties competently and impartially is critical.

Naming a family member or friend may seem like a good idea, but they may not have the knowledge or skills required to manage complex estate matters. It’s also important to consider the potential for conflicts of interest or personal biases when selecting an executor or trustee.

Professional Wills and estates lawyers can provide peace of mind that your estate will be handled efficiently and objectively.

14. Failing to account for taxes and debts

Many people overlook the fact that their estates may be subject to taxes and may also have significant debts attached.

It’s important to remember that any outstanding debts and liabilities can further erode the value of the estate, leaving little for the intended beneficiaries. Without proper planning, beneficiaries may face unexpected tax bills or be left with insufficient funds to cover outstanding debts. There are often simple strategies you can employ in will making to avoid stamp or transfer duty on real estate or imbalance between beneficiaries where different taxes apply to different assets.

15. Forgetting to communicate your Will to your beneficiaries

Another common mistake in estate planning is failing to communicate your Will to your beneficiaries. This can cause confusion and conflict after your passing, especially if your beneficiaries were unaware of your wishes and expectations.

When you ensure that your loved ones are aware of your Will and understand its contents, this can help to minimise any potential disputes or challenges down the track.

Your Will is a private document and you don’t have to show it to anyone. But we find very commonly that having open and frank disclosure with your family about what is in your Will can really help prevent fights later on.

In worst case scenarios none of the family may know about the existence of the Will and so it is never found and the division of assets according to the intestacy formula can unfairly apply, leaving very unhappy beneficiaries.

Avoid these mistakes: contact our legal team today

If you are worried about mistakes in writing your Will or concerned that the process will be costly, remember that when you hire a professional lawyer you can trust that your legacy, Will and testament will be legally secure, and its administration fast and efficient.

At Solomon Hollett Lawyers, our team of experienced estate planning attorneys are ready to assist you in drawing up a comprehensive estate plan and finding the right solutions to your needs. Contact our team today for a free 15-minute consultation.

Morgan Solomon is one of the State’s leading succession lawyers. His legal experience spans over 20 years and works with clients to navigate and resolve complex Wills and estate planning and probate, inheritance issues, estate disputes and litigation and business succession. He also has a wealth of experience in general commercial law. Morgan is adept at making clients feel at ease no matter the situation they are in, working with them delivering smart legal strategies and working hard to find fast and equitable outcomes.