5 estate planning myths that might cost your family thousands
Estate planning doesn’t just apply to older or wealthy people —it’s something that everyone needs. “In this world nothing can be said to be certain, except death and taxes” right? Thanks Benjamin Franklin, you’ve nailed it. Many families make pricey mistakes due to common myths and misunderstandings about what happens when they eventually pass away. These errors can create stress and financial struggles when their loved ones are least prepared to handle it.
Let’s looks at 5 estate planning myths and how knowing the truth can help your family avoid legal trouble, save money in the long run, and have peace of mind.
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“I don’t need a will because my family will inherit everything”
A lot of people think that if they die without a will, their belongings will automatically go to their spouse or kids. That’s not true in every situation. Dying without a will means the law decides what happens to your estate, not you.
Real-life story:
Mark didn’t expect to pass away so soon, and he hadn’t made a will. His wife believed she would inherit all that he owned. But under intestacy rules, the estate was divided between her and Mark’s grown children from an earlier relationship. This sparked a costly legal fight that dragged on for years.
How to prevent this problem
Write a will to say who should get your assets. It’s the only way to make sure your family is taken care of and your wishes are respected.
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“A DIY will can match a lawyer’s work, right?”
With the ease of online templates and DIY will platforms many people think they can cut costs by creating their own will. But saving cash here can backfire since a bad will might be no better than having none at all.
Issues with DIY wills:
- Mistakes in signing or witnessing might void the will – and you might be horrified to find out how often this occurs!
- Confusing language can spark family conflicts and arguments.
- These wills often miss key details like joint assets, back-up beneficiaries and executors, superannuation and online accounts.
A real-world scenario
Emma tried using an online will kit but made a big error by not getting it witnessed. After her death, her family had to go through the courts to prove her intentions. This process ended up costing thousands in legal fees.
How you can avoid this mistake
Work with an experienced estate planning lawyer to make sure your will is signed legally and validly, and the will itself id customised to fit your situation.
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“Estate planning deals with who gets my belongings”
A lot of people think estate planning just involves deciding who gets their assets after they pass away. But it’s also about making sure you are protected during your lifetime.
Important legal documents besides a will:
- Power of attorney – Gives someone the authority to control your legal and financial matters if you’re unable to.
- Enduring guardianship – Lets another person handle medical and personal life choices if you lose the ability to.
- Advance care directive – States what kind of medical care you’d want if you can’t communicate your wishes.
Real-life example
James had a stroke and couldn’t make decisions anymore. Since his family didn’t arrange a power of attorney, they had to deal with a slow and stressful Tribunal process to take care of his house, his bank accounts and payment of his bills.
How to avoid this problem
A proper estate plan involves much more than writing a will. You need to arrange documents such as a power of attorney and enduring guardianship to safeguard yourself and your family if you become sick or unable to make decisions.
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“My will takes care of my superannuation”
A lot of people don’t know that superannuation may not actually get included in your estate. Even if you mention in your will who should get your super, it does not guarantee it will happen.
How super gets distributed
- Super is handed out based on the rules of the super fund.
- To make sure your super goes to your chosen person, you need to fill out a binding death benefit nomination.
- To safeguard against death benefit nomination not having been signed correctly and being found not to be valid, make sure your will includes provisions to give your executor the power to deal with the super fund as needed.
Real-life story
Lisa wanted her superannuation to go to her kids, but she never made a binding death benefit nomination. When she died, the super fund gave all the money to her ex-spouse.
How can you prevent this?
Ask your super fund about making a binding death benefit nomination to ensure the money ends up with the people you choose.
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“Once my will is done, I never need to change it”
Life keeps moving—marriage, separation, having kids, changes in money situations. An outdated will might not reflect your wishes, cover all your assets, may even be revoked by your circumstances.
When should you update your will?
- Getting married or divorced – A new marriage can revoke an old will, while a divorce might not take an ex-spouse completely out of your will.
- Having new kids or grandkids – If they aren’t listed in your will, they might not get what you intended to leave them.
- Big financial changes – When you gain new assets, make sure your will reflects these updates.
Real-life scenario
Tom created a will two decades ago naming his first wife as his primary beneficiary. After getting remarried, he didn’t make any changes to that will. When he passed away, his estate was a mess and his current wife had to spend thousands in court leaving very little behind for her and their kids.
Ways to prevent this
Look over your will every two years or when big life changes happen.
Common questions about estate planning myths
Do I need a lawyer to make my will?
You can create your own will, but having an experienced estate planning lawyer ensures it meets legal standards and avoids costly legal work after you pass away.
How often should I update my estate plan?
Check your estate plan every two years or after any major changes in your life.
What happens if I don’t write a will?
Your assets will be divided under intestacy rules, which might not match what you want.
Can I give my superannuation to anyone I choose?
Specific people such as your spouse or children who depend on you, can get your super . Others might need to access it through your estate.
Closing thoughts
Estate planning is not just something rich people need. It matters to everyone who wants to save their family from unnecessary headaches or significant legal costs after the fact, not to mention stress. By learning these common myths and acting on them, you can easily avoid unnecessary legal costs for your loved ones.
Not sure how to start or update your estate plan? Copeland Estates Legal can assist you. Contact us today to protect your family’s future. Send us an email at [email protected], give us a call on 📞 1300 034 487 or book in a free 10 minute chat here.
We’ll look after you.
