If you’re in your 20s, don’t have kids and are only just getting started with investing, you might think you don’t need a will.
You might be living at home, building up your savings and putting a few hundred dollars a month into ETFs. If something happened to you, wouldn’t your parents just get everything?
Not necessarily. And there’s more to think about than who gets your money.
Even if you don’t own a house or have a large investment portfolio, you could have superannuation, savings, insurance, shares and personal belongings. You might also have digital assets, online accounts and photos stored in the cloud.
Someone may need the legal authority to deal with these things if you die. Without a valid will, you’re considered to have died intestate, which means your estate is distributed according to the relevant state or territory laws. The NSW Government explains one example of how intestacy works.
The rules vary, so you shouldn’t assume your money will automatically go to the person you have in mind.
Three things to get organised
You don’t need to have a complicated financial situation to benefit from getting your affairs in order. Here are three areas worth checking.
1. Get your will sorted
A will sets out what you want to happen to your estate and appoints the person responsible for carrying out your wishes.
That person, commonly called your executor, may need to identify your assets, deal with outstanding bills and arrange for your estate to be distributed.
Without a will, the process can become more complicated. The law determines who inherits your estate, and the people dealing with it may have extra steps to work through.
It’s not just about who gets your money, either. It’s also about making things easier for the people who have to manage everything after you’ve gone.
A will should be prepared with appropriate legal advice, particularly if your circumstances are more complicated or you have specific wishes about who should receive your assets.
2. Check your superannuation beneficiary nomination
This is one people can easily overlook.
Here’s something that surprises people: your super doesn’t automatically form part of your estate or get distributed under your will. Different rules apply to super death benefits, so it’s worth checking what you’ve nominated with your super fund.
There are two common types of beneficiary nomination:
- Non-binding nomination: This tells the super fund trustee who you’d like to receive your super, but the trustee generally has discretion when deciding how to distribute it.
- Binding nomination: If it’s valid and meets the fund’s requirements, it directs the trustee to pay your super death benefit to the eligible beneficiaries you’ve nominated, which may include your legal personal representative.
A binding nomination can help make your wishes clearer and reduce the potential for disputes. But there are rules around who you can nominate, and some binding nominations expire unless they’re renewed.
Check the rules that apply to your fund and make sure your nomination is still valid. Don’t assume that because you filled in a form years ago, it’s all taken care of.
Your super nomination and your will should also be considered together. They deal with different things, and you want to understand how they work alongside each other.
3. Make a list of your financial and digital assets
A will can set out who should receive your assets, but it won’t necessarily tell your executor where everything is.
Think about what someone would need to find if they had to sort out your finances tomorrow.
Start with things like:
- Bank accounts and savings.
- Superannuation accounts and any insurance held through super.
- Shares, ETFs and other investments.
- Loans, credit cards and outstanding bills.
- Cryptocurrency and other digital assets.
- Online accounts, subscriptions and cloud storage.
- Important documents and personal belongings.
You don’t need to put every account detail or password in your will. But you do want to make sure the important information is stored safely and that someone knows where to find it.
A secure password manager, an up-to-date list of accounts and clear instructions about where to find important records can make a big difference.
This is the practical side of estate planning that people often forget. You might have a will that says who should receive your shares, but if nobody knows where those shares are held, someone still has to work it out.
Getting organised can also make your own life easier while you’re alive.
What about your super if you don’t have a will?
Your super fund has its own rules for paying death benefits. If you haven’t made a valid nomination, the trustee may need to determine who should receive the money under the fund rules and relevant law.
A will alone doesn’t necessarily settle this.
It’s worth checking three things:
- Who have you nominated to receive your super?
- Is the nomination binding, and is it still valid?
- Does your nomination reflect what you want to happen now?
Your circumstances can change. You might get married, have children, separate from a partner or change your mind about who you’d like to benefit.
Review your nominations when those changes happen, rather than leaving them untouched for years.
Don’t leave the admin until someone else has to do it
I know, estate planning isn’t the most exciting part of managing your finances. It’s easy to put it off, especially when you’re young or feel like you don’t have much to leave behind.
But it’s not just about the value of your assets. It’s about making sure the right people can deal with them and understand your wishes — and making those people’s lives much easier.
Start by sitting down and thinking about what you actually want to happen. Then work through your will, superannuation nominations and the practical information someone would need to manage your affairs.
You don’t have to sort everything out in one afternoon. The important thing is to understand why it’s important, get started and review it as your life changes.
For more on wills, superannuation, estate planning and the financial admin that often gets overlooked, you can hear more from me, Chamil Peiris, on The Australian Finance Podcast.
If you’d like help understanding how your super and broader financial situation fit together, find out more about Rask Advice.
This article contains general financial information only and does not take into account your objectives, financial situation or needs. Consider your own circumstances and seek personal advice before acting on anything discussed.
