Why Financial Planning Professionals Should Advise Clients to Update Their Will

Writing a Will is a key part of the estate planning process. It is important that all adults have a professionally prepared Will to ensure loved ones are protected and their estate is distributed according to their wishes after death.

However, once written, it is important not just to put it away and forget about it. These documents reflect intentions at a point in time. The older the documents are when they are needed to be used, the greater the risk of a challenge at a time the client will not be available to defend them.

Reviewing, confirming or amending the estate planning documents and keeping them up to date reduces the risk of interference with testamentary wishes.

A Will can be automatically or inadvertently cancelled

Given the importance of a current valid Will, it would be more than unfortunate to invalidate a Will ‘accidentally’ - but it can happen. Therefore, it is important to understand the effect of unintended consequences arising from certain events. 

At these times, estate planning may not be the uppermost in the client’s mind, but it is sensible to consider an updated Will, when certain key life events occur to prevent their Will from becoming out of date or completely invalid.

These situations can be complicated, and professional legal assistance is recommended. They include:

• Marriage - a Will is normally revoked unless it was made in ’contemplation of a specific marriage’. 
• Divorce - any bequests to the former spouse are cancelled (as may be desired), but it will not cancel their appointment as trustee for any property that has been left to children they had together.

Separation

Separation does not invalidate a Will, meaning that any assets bequeathed to the former spouse would be distributed to them on the client’s death if they had not made amendments to their Will. This is an unsatisfactory situation for couples who have recently separated.

To help with understanding these issues fully, the specialist family law team at Szabo & Associates Solicitors are able to advise on any situations relating to marriage, divorce and separation as well as all other aspects of family law.

Situations when updating a Will needs to be considered

There are a number of key events that mean a client should seriously consider updating their Will. These include:

• Getting married or entering a de facto relationship (including a change of name or moving interstate).
• Separation or divorce.
• Having children (including adopted children) or grandchildren.
• If their children remarry or divorce or have extended families. The client may wish to ensure the only persons who can inherit from the estate are those to whom they are directly related.
• If their spouse or a beneficiary of the Will dies.
• If the named executor falls ill or dies, or is no longer mentally fit to carry out their duties.
• If there is a major change in the client’s financial position, such as the receipt of a large inheritance or the acquisition of a significant asset.
• If a valuable asset is disposed of. For example, if the Will specifies that the asset was left to a particular person, the Will should be amended.
• If they become or cease to be, a member of a superannuation scheme.
• Where the value of specific monetary legacies may have eroded over time, and the client may wish to revise the amounts of these bequests.
•  There are changes in the law governing Wills and estate planning.

Reviewing a Will also provides the opportunity to reconsider the Binding Death Benefits Nominations on superannuation and insurance policies. In reviewing the estate plan, the benefits of any insurance policies can be revisited as to whether they still correspond to the client’s wishes.

Life-changing events, such as those outlined, are times to consider creating a revised Will and other key documents to ensure that the client’s estate planning reflects their current objectives and wishes.

Legal support for client estate planning during their lifetime

A Will protects a client’s wishes for their estate after death. Expert financial planning aims to enhance the value and security of their estate. However, what happens if the client suffers a serious accident or loses mental capacity to make decisions, financial or otherwise?                                    

Two legal documents can play an important protective role in respect of a client’s estate planning during their lifetime:  the appointment of an Enduring Guardian and the completion of an Enduring Power of Attorney.

Enduring Guardian

An Enduring Guardian is a person appointed by the client to make lifestyle decisions for them, such as medical treatment or where they will live, should they become incapable of making decisions for themselves. The appointment can only be made while they have the capacity to understand what they are doing. The appointee should be someone they trust, but the named individual can be changed if that situation changes, as long as the client remains legally capable.

The Guardianship starts if and when the client becomes incapable of making their own decisions any longer.

An important and relevant limitation to an Enduring Guardian’s role is that they cannot manage the client’s finances or deal with their property.

Enduring Power of Attorney

An Attorney is someone the client appoints to control their assets and finances should they become incapable of doing so themselves. This is documented in a Power of Attorney. It is referred to as enduring because it continues even if the person granting it becomes unsound of mind.

If the client loses capacity and they do not have an Enduring Power of Attorney, they will be unable to manage their financial affairs. If there is someone who could undertake the role of their financial manager, that individual will need to make an application to the NSW Civil and Administrative Tribunal. In the meantime, everything will be on hold. If the Tribunal considers the applicant unfit, the Tribunal may appoint the NSW Trustee and Guardian to make decisions on behalf of the client.

The client should consider both an Enduring Power of Attorney and appointing an Enduring Guardian to protect them should they become incapacitated. The documents complement each other in managing the client’s personal and lifestyle affairs, in tandem with their financial and property matters.

Loss of mental capacity can happen to anyone and accidents can happen at any time. Putting off having these legal protections in place can mean it will be too late for the client and considerably more difficult for their advisors to play their part.

Contact our Wills and Estate Planning Lawyers for Financial Planners and their Clients in Sydney, NSW

The best estate plans are the result of teamwork. Financial planners are often in the best position to be aware of some of these key changes to a client’s status, advise them that they need to consider the impact on their plans and question whether their existing Will still reflects their testamentary wishes.

Szabo & Associates Solicitors are experts in preparing Wills, estate planning, and working collaboratively with financial planners and accountants on estate matters to identify synergies in our practices and improve the holistic offering available to clients. Please contact us on 02 9158 6026 or complete the online enquiry form.