Podcast: The real reason you need a will
No money, no assets, no will? Find out why you still need a will and how to make one.
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In normal times we suspect most of us would prefer to put off thinking about what happens to our money after we die. But these are not normal times. In fact, it turns out in between our searches for toilet paper and hand sanitiser, "how to create a will" has been high on our Google search list in our new lockdown life. In fact, traffic to Finder's guide to estate planning has increased by more than 170% since social distancing restrictions were put in place.
It may seem like a grim topic, but it's an important one and something that we should tick off our to-do lists as early as possible. The effort you put into your will can help you get a sense of relief whether you're worried about who your belongings will go to, who will take care of your family or how your funeral will go down.
Even if you're thinking "hey I don't have any major assets or kids why would I need a will?" you will be suprised to her why it's critical that you do. (Spoiler alert - you may be worth more than you would think.)
To help shed some light on how to write a will we spoke to National Manager, Estate Planning, Australian Unity Trustees Legal Services Anna Hacker for this episode of Pocket Money. Anna explainswhy so many Australians are interested in estate planning right now, why wills aren't just for people with families and large assets and what actually happens if you die and you don't have one.
Mentioned in this episode:
- Guide to Estate Planning
- How to nominate a superannuation beneficiary
- DIY wills: An easy solution or risky idea?
- Podcast: What happens when I die?
Read the transcript of this episode
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Anna
Just imagine the sorts of things we see. There's the classic tales of people being cut out and even the court having to sensor wills because of the nasty things that are written in it about prospective beneficiaries.Kate
Hi Sally, How is iso life treating you?Sally
I mean it's treating me all right! But it's alright, we're still here. Pocket Money lives and other dayKate
We are together and alone all at the same time. Hey, in all my travels through Finder land, I came across a really interesting piece of data. The first one is that our research at finest shows that 70% of Australians don't have a will.Sally
That seems wild to me. Sounds like a lot.Kate
But the other interesting thing is when we did this research, we're also seeing 171% increase in traffic to Finder looking for things related to how to make a will. It's something that's on everyone's minds. So do you have a will?Sally
I mean, look, I was gonna say I was so shocked that 70% of Australians don't have a will but here I am. And I don't have one. Do you have one? I assume you do because you have kids and you're a responsible adult unlike me.Kate
Yeah, well, actually. I only got a will when someone pointed out it was a good idea - seeing I had children. It is interesting that people's mindset, maybe, you know, it only happens like you said, if you have kids, or you bought house or I don't know. But it turns out that maybe there's a bit more to having a will than just, you know, supposedly having assets or even having kids. What did you find out about this? And I know you've been digging into it a little.Sally
Yeah, I definitely had some questions of my own around these topics. So to get the inside info on today's episode, we're chatting to Anna Hacker who is the principal of Australian Unity Trust and Legal Services and she also has her own podcast called 'What happens when I die?' Which answers some of these murky questions.Kate
If you're thinking wills are boring, there's some pretty, pretty interesting stuff in there. So must so that Sally and I had our mouths hanging open at one point. That's how spicy it was. So listen in and stay tuned.Sally
We're recording today's episode of Pocket Money from our homes. So just a little apology in advance for any dodgy sound quality along the way.So to talk all things, wills and estate planning, we have Anna Hacker with us here. Welcome to Pocket Money.
Anna
Thanks so much for having me. I'm really excited to be talking to you both. I love talking about estate planning. I'm an accredited specialist in wills and estates. I have been doing estate planning which is a type of law looking at assisting people to write their own wills, do powers of attorney, make sure they've covered themselves in their lifetime and also after death.Sally
So according to some recent Finder research, 70% of Australians don't have a will. So obviously, this is your area of expertise. Why should we all have a will?Anna
Well, it's really critical to make sure that people do have a will. Because if you don't, then it's actually legislation that says how your state will be divided. That means you don't get a say in who actually benefits from your estate. And in some cases, you might have people you don't want to benefit from benefiting, or it might not be in the most tax effective, or the best approach for those beneficiaries. So that's absolutely why people should have a will. But yeah, it's quite scary. 70% and that's what most studies show across the line.Kate
Anna, we've seen a massive upswing in people hitting the Finder site for our content around how to write a will. Do you need a will? I think it's like a 171% increase in traffic around Coronavirus. Why is that happening now?Anna
It's really interesting because we've seen a 61% increase in the number of clients this last few months compared with a year ago. So we're seeing the same number of people who are actually following through and getting their estate planning done, which is huge numbers, because it's really hard to convince people to actually get a will done. It's something that's always in the to do list. I think that's why this has brought people to that point of wanting to get their wills done. I hope that it's not because people are facing their own deaths, imminently, but it certainly is bringing it to the fore. It's making people think about what they need to get in place. They're concerned about their kids. They're thinking about what happens to everything that I've built up, even if they don't think it's actually a lot. They want to make sure that they have control. Because I think that's the case when people don't have control over other things. What they want is some level of control and it's absolutely why rules have attorney all of those estate planning documents are something that people are turning to to say, this is something I can make sure goes the way I want. And that's why we're seeing that huge increase.Sally
And for people who don't have one yet, what do you need to include in your will?Anna
So that's a very complex question and very much based on individual needs. As a lawyer, I would say what you need to do is, see a lawyer to get done. But what most people will do when they go and get a will prepared is they'll have to look at what are their assets, what are their objectives, and that's really the critical part here because a will is really the end product of the estate planning process. So the will is almost not the most important thing. That's why DIY wills are often not really a great thing for people to do because they don't actually have that advice component or advice is really critical. So if you have your objectives, you have your assets, you know, how things are structured, and how they're set up and what you want to achieve. That's probably the most important thing. To have just a document without the advice and understanding what your objectives are, it's probably not worth as much as having that full process done from start to finish.KKate
What sort of things do people not think about when they're putting together a will? I've heard of things like, for example, how you'd like your funeral to go or there are other elements that are there other than just thinking about "I have these things and how I'm going to leave them". So what are some of the common ones people don't think about that they should think about?Anna
Absolutely. It goes far beyond just what your assets are, or what your sentimental items are that you want to give to people. It's about who you want your children to be looked after. And it's not really just those questions. So that leads on to other things, not just who looks after your kids, but how. So people need to think about what is it that they need to put in place so they need to put trusts in place, which sounds really scary, but it's actually pretty simple. But who actually is managing that money for the children? What sort of rules do they have around what they can do to spend it or not spend it? They also need to think about things. And this is something that they often don't the funeral exactly, as you said, People don't usually put the funeral wishes into a will. Or if they do, they don't communicate it to the executor, which is also a critical part. If you have an executive who's going to manage your affairs, they need to know they are actually in that role. That's actually something that a lot of people don't do. But they need to make sure the executor understands what that role is, and what your wishes are, especially to do with things like the funeral or anything that's discretionary is something that they might get a choice about which way to go which path to go down.Kate
And could you explain to us what is an executor? What's their role when you get a will together?Anna
Yeah, so the executor is the person or it might be an organisation because sometimes there's a lot of family conflict or, or it might be complex and you might think you need someone independent to come in and manage this estate, that's that entity or that person that manages and administers your estate. So they do things like close bank accounts, they tell the power company that you've passed away, which means that, that there are no bills coming in, they pay all the liabilities. So they make sure that all the debts are paid, and then they follow the wishes in the will. So if the will is really clear, their job's pretty straightforward a lot of the time, but unfortunately, with the complex lives we have, blended families, wanting to give to lots of assets to different people overseas, there's a lot of complexity. So the executor's role really depends on the will itself. But overall, it's about administering the estate, making sure everything's in order, all the assets are called in. And then the beneficiaries benefit in the way the will said they should benefit.Kate
If you're going to nominate someone, would you nominate a family member or friends, or who would be best? What are some of the examples you've seen that worked well?Anna
Anyone who looks to a family member who is good with money, it has, you know, an understanding of family backgrounds and can manage the different personalities involved in an estate is a really good choice. So a family member is usually the first port of call, when there's not someone that you immediately think of that could fulfil that role. That's when you need to start looking outside of the family, friends are good as well. But again, you need to weigh up is that really something you want to give to a friend who may not know your family very well, who may also then be stuck between the family members they know and the ones that they don't. So you need to sort of weighing those things up looking at an external institution or organisation like a trustee company. That's a really good option if there's conflict and it says complexity. So if there might be various businesses that people just won't know what to do with, they might also be swayed by really emotional things which makes an estate agent ministration really complicated to have that independence and then not the lack of the bias really is the biggest issue. You know, if there's a family member that feels, "everyone's against me", and that particular executor is going to seem to side with other people, that creates cost, it wastes time. It makes it very complicated. So that's when having independent organisations or trusted advisors or financial advisor, an accountant, that sort of person or that role can come in and step in and assist.Sally
It really does seem like a bit of an overwhelming task. So I just wanted to circle back to one of the points that you made earlier just about being prepared. So how do you prepare your will and when you are estate planning, are you able to expand and maybe give a couple of examples?Anna
Yeah, absolutely. So the first thing I'll say is that everyone feels overwhelmed when they come in to do their estate plan and so in a way that I think often makes people feel more comfortable because it's not just them. It's not just their lives, sitting on their shoulders thinking, What am I going to do? I think when people realise this is something that everyone feels and goes through that can make them feel a little bit better. And the best thing is that by the end of the process, you're so relieved. It's the most common thing we hear at the end. I'm so glad I got, I actually got this done, and I wish I'd done it earlier. But to actually prepare and get ready for doing your will, you need to look at what your assets are. So the best thing is to really write down a list, what are your assets? When you think about your beneficiaries, you need to think about who you have responsibility for because you get the freedom to do what you want in your will. You don't have to leave something for everyone. It's kind of a gut feel. It's usually spouses and children. Beyond that, we don't really have a responsibility unless you wish to. So you kind of weigh up what your assets are. You look at them, you look at the way that they are distributed as well. The biggest issue and mistake we see with DIY wills are that people leave superannuation to specific beneficiaries that either can't receive it or if they receive it, they're taxed at a different rate to the other beneficiaries. But in general, unless there's some sort of financial dependence, there might be tax payable.Sally
I assume that a lot of people do DIY wills because they think it's cheaper. But I assume in the long run, maybe that's not the case. But how much does it cost to get a will made especially if you are going to get advice or have a lawyer involved?Anna
Yep, it can range quite a bit. So the price ranges that we have and I'll use us as an example, you can go from a couple of hundred dollars to a few thousand dollars and the few thousand dollars is the bells and the whistles. The trust, you know, multiple trusts, looking at family trusts, maybe family businesses setting up disability trusts for beneficiaries that might need some sort of protection. But that's the range. It's quite big, but it can absolutely first straightforward will, you'll probably only be looking at a few hundred dollars. It's not a big cost. When it gets done incorrectly it costs thousands, 10s of thousands in maybe tax, in maybe legal fees. And I do cringe whenever I see them as an estate planner. And when I do litigation, we love DIY wills, because there's inevitably something wrong with it. And it sounds terrible. I'm not saying I want people to do DIY wills, but they certainly end up paying for it at some point.Kate
I'm thinking about Sally and myself. There's a bit of age gap between us. I've got two kids and you know, pretty substantial mortgage, unfortunately, but I guess that could be considered as assets when Sally doesn't have either of those things. What do you say to someone like Sal, what does she need? What would be the sell to her that having a will is important if you think it is?Anna
Yeah, look, I say and a lot of people probably laugh, but I think that as soon as someone turns 18, they need to think about it first will, your first estate plan? One because I think it's a good habit. It's a good habit to get into, you know, you shouldn't think of it as something that you do when you retire. It's something but as soon as you have any wealth, and you probably have a lot more wealth than what you think if you think about your superannuation and insurance that actually can add up to quite a substantial estate. I have had estates from quite young people that have just had the part-time job down at McDonald's. And then there's insurance associated with this super suddenly their estate, they might have a few part-time jobs, suddenly their estates a half a million dollars. Now that is worth making sure that goes to the right person. And certainly, when you know, we are Maybe in a situation where there's not that obvious, you know, there might not be kids that you need to look at for guardianship. But you know, we do see conflicts in you know, okay, well, is this to parents? Is this to siblings? Is this to a partner? There's lots of options there. Honestly, most people come in and say, Oh, my estate's really easy. It's really straightforward. But there's always something that's just a little bit different.Sally
Wow, that's amazing, because it really is something that I know I personally wouldn't have really thought of until maybe there were children involved, or, you know if I did have a house or investment property or something that I would traditionally consider an asset. But that's such a good point. Because I think that super especially we kind of just thinking about it in the back of our mind. It's not really something that we consider to be an investment or an asset, but it really is.Kate
So I've heard people wiser than me say that, a will is a gift to the people that you love and care about. Is that a good way to think about it? You just mentioned families are messy. You know, relationships are complicated. Would you agree that doing that can be incredibly helpful to the people you leave behind?Anna
I think that the will is absolutely for someone going through probably one of the worst times of their life with grief and the loss of a loved one, to have the will that has some guidance, to maybe not have to think about everything, especially if there are funeral instructions and maybe instructions. You know, heaven forbid someone you know, who has young kids to have some instruction about what's meant to happen for the children as well, that does absolutely take the pressure off. So it is a gift so long as it's done properly, because if it's not, then it's the opposite. No, you can just imagine the sorts of things we see there are the classic tales of people being cut out and even the court having to sensor wills because of the nasty things that are written in it about prospective beneficiaries, but the will is meant to be there absolutely to help.Sally
And we have spoken about how there is a huge uplift in interest around estate planning right now. So if you already have a will, what are some of the elements that you should be looking at, or maybe updating right now, given we're in the midst of COVID-19?Anna
I think that when we talk about looking at a review of your estate plan, we talk about critical moments in your life where there might be a change. That might be when there's kids when there's a new big asset that you need to look at. I think COVID-19 is one of those things that is a precursor to someone doing a review. And it might be that they don't need to change anything. But it just is a reason to look to make sure that what you have in place is what you're intending. When we say you should review your estate plan every sort of three to five years. That doesn't mean it needs to change. It just means you need to make sure what you have in place is, is what you're intending. And interestingly at the moment, because obviously a will you need to see someone face to face to actually sign and witness a will. So that's part of the formal requirements for a will, because we can't see people face to face or people might not want to see us even though lawyers are considered essential, or I think technically, we're not non essential. But anyways, that's a technical side, we are allowed to go and witness wills in people's houses, but people don't want to do that. So some of the states have brought in some really interesting new legislation. And sorry, I'm a lawyer. So legislation is exciting to me, but the legislation talks about doing remote witnessing, so using things like zoom using Skype to actually witness people signing a will and it's probably the most exciting thing to happen in estate planning in like 500 news because, up until now, we've had to be physically in the same room and we have To show that we were in the same room by using the same pen, even, you know, they test ink. In some cases, if they think that the pen was a different pen, and people weren't in the same room, that's how exciting this is. So this terrible thing that COVID-19 and being isolated has actually pushed the law to a point where now we're looking at really different ways of making sure people can get that comfort of having a will sign legally. Not in every state, and it's very specific how it has to happen. But it's still amazing to me. I didn't think I'd say that in my lifetime. The law can be quite behind in a lot of ways. But it's wonderful that they saw that this was a really important thing for people to do. And it's interesting that it happened before we saw the spike in the number of wills being written. I think all estate planners knew this sort of crisis was going to lead to people wanting to update their wills.Kate
Yeah, that's amazing as an add on necessity, drive these changes, and that's a great removal of a barrier, I'm sure. What happens if you don't have a will, and you die, what happens.Anna
So each state has different legislation around how your estates administered, essentially the people that are your next of kin are the people you'd probably expect. It might be a spouse, it might be a parent, it might be children who are the ones that can administer your estate. And then it's divided according to a table in the legislation. So let's say there are a spouse and children, it's divided in a certain way. And again, depending on the state, it's different depending on where you've passed away. If you have children from a current relationship, and children from a previous relationship, it's different again, if you have, let's say, no children, and there's maybe parents then it might go to your parents, it can be quite complex. And in a lot of cases, we need to do things like family trees to work out where someone's estate goes, which can be really costly, it can be really difficult. And with Australia being such a multicultural society, we are often going overseas as well.Kate
What happens with debt? I've heard people say, Well, I'm in debt. So, you know, that'll just die with me. Is that true?Anna
No, it's not. In most cases, debt will continue and the estate has to pay. So there's certainly estates that are bankrupt because there's no money to pay, pay for the debts. mortgages continue and either has to be paid out or transferred to the new beneficiary. Credit card debts. I mean, I know a lot of people think exactly that because they if some people know that they might be about to pass away because of an illness or something. They just do whatever they want and get significant credit card debt, I think under the false assumption that it will all go and it doesn't. So that can be difficult because families then maybe left with A lot of debt. They don't have to pay it themselves personally, the families that are the biggest mistake that they people think, oh, if I inherit, then that means I inherit the debt. Yes, and No, you don't have to pay it out of your personal assets. But you can't inherit an asset. If there's debt sitting there.Kate
I just had a random question. We talked about children, but what about pets?Anna
That's a really interesting one. So there's some, some listeners may find this distressing. I'm going to say this is not what you're expecting, I'm sure. So there's the side of estate planning where people are very focused on making sure their pets look after their might. I've done trusts for pets to make sure pets are cared for, there might be vet bills paid or particular beneficiaries benefit. There's the other side, which is people who want to be buried with their pets. So it's in the will that they will actually have a particular pet euthanized. And buried with them. It's quite shocking. It's not uncommon we've seen quite a few. In the time I've been an estate planner. It's not uncommon at all.Kate
I don't know if I like the answer.Anna
I don't think that was the answer that you're expecting at all. Because Yeah, most people do set up trusts and also money aside, you know, if this person takes my cat, then they get $1,000. Or if a certain welfare organisation looks after my pet and rehomes them, then they get this amount. Yeah, but yeah, the other side, which is a lot more common than you would probably expect is that people have their pets cremated with them, or buried with them.Sally
And I know you've mentioned trust quite a few times. Is a trust different from a will?Anna
So a trust is different depending on where it is. So within a will, there's usually trusts. They generally referred to as testamentary trusts, that just means it's a trust in a will. There are other types of trusts that people set up during their lifetime. They might be called family trusts, unit trusts, unitholder trusts, things that are set up maybe for business or for distributing money to various family members. And that's usually in someone's lifetime. So there are different types of trusts, they can be a part of the will or they might not be if you have trust, you need to deal with them in the will. But you can absolutely set them up as a part of it. So it's the most common one we probably see people benefiting a minor child, and the minor child needs those assets held until they're 18. And that's a trust. It's as simple as that.Sally
If there was one key takeaway that you want people listening to this episode to get what would that be?Anna
The key takeaway for me would be to get advice. You need to make sure that you don't just think of the will as the end of the estate. That is the end of the estate plan, but it needs the advice with it. So absolutely. That has to be what I hope people take away from this is that it is unfortunately complicated. That's not because we want it to be complicated. It just is - life is complicated. We can't make it less complicated. And if you try to, unfortunately, it can mean that your wishes aren't fulfilled. So that's absolutely the key advice.Sally
Well, thank you so much Anna I've learned so much. And yeah, I know that personally. estate planning wasn't on the top of my to-do list, but I feel like now it's something that I should probably start looking into.Anna
Well, you know, I'm always happy to give you some advice.Kate
Yeah, it's great to know like like Sally said, you know, it's a topic people don't like to think about and that is really interesting at the moment that we possibly we've got this downtime we are thinking about sorting out our lives and getting to those things on how to-do lists that we never do. And I think you've really helped frame why it's important I think, you know, a lot of us don't think beyond ourselves right now. And I'm never going to forget the pet story.Kate
Wow, Sally.Sally
What a journey. Got some extra things on my to-do list now.Kate
To-do lists, but also like, I guess I yeah, even though I have I will I've always thought about it sort of just like what I want like and, and sorting out the things I have to sort out but I guess what I've never thought about before is it is actually kind of a gift to the people you love. When my mom died a couple of years ago, unexpectedly, we were just reeling and you know, for us kids and a dad, all just barely coping and having those clear instructions was so helpful. And I never really thought about that.Sally
Oh, definitely, especially because at this point, like, I don't earn my own home, and you know, whether or not children will come into play, we'll have to see further down the road. But yeah, it's just a very interesting topic that I think everybody should consider. And yeah, it's a bit of a tough one to think about. You kind of just want to push it away, but we all have spare time now.Anna
That's right. Yeah. And, you know, I think if you think of it as an investment in you know, think of people that you love, maybe it's a way of reframing it and you know, as Anna said, there's a bit of a cost. I totally get that but having a think about it at least and getting the wheels turning on that as a really good start.Sally
So we covered a lot of ground in today's episode. So for all of the resources that we mentioned, As well as a link to Anna's podcast head to finder.com.au/podcast for the show notes.Kate
Feel free to leave us a review on Apple podcasts or tell a friend about the show and share the love. You can join us on Instagram at Pocket Money podcast and slide into our DMS anytime.Sally
And as always, Pocket Money is hosted by me Sally and the lovely Kate Browne. It is produced by Ankita Shetty and edited by our pal Josh Litherland. And thanks again to Anna for being such a fabulous guest on today's episode. Until next time, pals stay safe.The Finder podcast is intended to provide you with tips, tools, and strategies that will help you make better decisions. Although we're licensed and authorised, we don't provide financial advice. So please consider your own situation or get advice before making any decisions based on anything in our show. Thanks for listening.
The Finder Pocket Money podcast is intended to provide you with tips, tools, and strategies that will help you make better decisions. Although we're licensed and authorised, we (and our guests) aren't providing any form of financial or legal advice. So please consider your own situation and get proper advice about your individual circumstances before making any decisions based on anything on our show. Thanks for listening.
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Pocket Money is hosted by Sally McMullen and Kate Browne, produced and directed by Ankita Shetty, with editing by Josh Litherland.
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