Estate Planning: Do You Need to Draw Up a Will in Your 20s and 30s?

Estate planning is a fundamental aspect of preparing for the future and ensuring financial security. One important document in this process is the last will and testament, which allows individuals to outline their wishes regarding the distribution of their assets after their passing.

So, how old should you draw up a last will?

In this article, we will explore:

• At What Age Can you Draft a Last Will?
• The Need for Early Estate Planning
• Super in a Young Person’s Estate Plan
  
  

At What Age Can you Draft a Last Will?

Legally, the age at which a person can draft a last will varies across different jurisdictions. In Australia, for instance, the legal age for making a will is generally 18 years old. However, some states may allow individuals as young as 16 to create a valid will under specific circumstances. 

While the legal age may set a minimum requirement, there is no maximum age limit for creating a last will. Regardless of your age or the size of your estate, having a last will can provide peace of mind and ensure that your wishes are carried out in the event of your passing.

Make sure to consult the laws of your specific state or territory to determine the exact age requirements for drafting a last will in Australia.

The Need for Early Estate Planning

Estate planning is not solely reserved for the elderly or those with significant assets. Many people assume that estate planning is only necessary later in life or when they have accumulated substantial wealth. However, accidents and unforeseen circumstances can occur at any age, making it significant to prepare for the future early on.

Benefits of Early Estate Planning

Even if you are young and have minimal assets, it is advisable to consider drafting a last will. A will allows you to specify how your assets should be distributed, name guardians for your minor children, and designate an executor to manage your affairs.

Creating a last will at a young age provides peace of mind, knowing that your loved ones will be taken care of in the event of your untimely passing. It eliminates the uncertainty and potential disputes that can arise when a person dies intestate without a will.

Even if you have limited assets at present, early estate planning allows you to protect any future assets you may acquire. By clearly outlining your wishes regarding asset distribution, you can prevent potential conflicts among family members and ensure your assets are distributed as per your desires.

For those with minor children, a last will allows you a guardian designation for taking care of your children if you are no longer able to do so. This decision is necessary for the well-being and future of your children, and it should be made with careful consideration.

Drafting a last will allows you to designate an executor who will manage your estate and ensure your wishes are carried out. Choosing a trusted individual for this role can help streamline the distribution of your assets and minimise potential legal complication.

Super in a Young Person’s Estate Plan

In addition to a last will and testament, another significant aspect of estate planning in Australia is considering the role of superannuation. It is important to understand how superannuation can be factored into your estate planning to ensure that your assets are distributed according to your wishes.

Nomination of Beneficiaries

Superannuation funds allow you to nominate beneficiaries who will receive your superannuation balance upon your death. There are two types of nominations: binding and non-binding.

A binding nomination ensures that your superannuation balance is distributed according to your instructions, whereas a non-binding nomination provides guidance to the fund trustee but allows them some discretion.

Review and update your beneficiary nominations regularly to ensure they align with your current wishes.

Tax Considerations

Superannuation can have unique tax implications when it comes to estate planning. Depending on the circumstances, your superannuation benefits may be subject to tax upon your death. 

Understand the tax consequences and seek professional advice to minimise tax liabilities for your beneficiaries.

Testamentary Trusts

A testamentary trust is a trust established through your last will and testament and comes into effect upon your death. It can be an effective way to manage and distribute your superannuation benefits, especially if you have complex family arrangements, young or vulnerable beneficiaries, or significant balances.

Testamentary trusts provide greater control over the distribution of your assets, protect beneficiaries from potential creditors, and offer potential tax advantages. Consulting an estate planning lawyer or financial advisor can help determine if a testamentary trust is appropriate for your circumstances.

Life Insurance

Life insurance can provide an additional financial safety net for your loved ones and complement your superannuation benefits in estate planning. Many superannuation funds offer life insurance coverage as part of their services.

Review your life insurance policies and ensure that the nominated beneficiaries align with your wishes.

BDBN

A binding death benefit nomination (BDBN) is a legal document that instructs your superannuation fund on how to distribute your superannuation benefits upon your death. A BDBN can override any discretion the fund trustee may have and ensure that your superannuation benefits are distributed as per your instructions.

Learn the requirements and restrictions of BDBNs, as they must be valid and up to date to be enforceable.

While the legal age for drafting a last will varies across jurisdictions, it is important to consider the need for estate planning early on. Regardless of your age or the size of your estate, having a last will provides peace of mind and ensures that your assets are distributed according to your wishes.

Understanding the laws of your jurisdiction and seeking professional advice can help you create a comprehensive last will and testament that reflects your intentions and secures the financial well-being of your loved ones.

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DISCLAIMER:  This article is for informational purposes only and does not constitute official financial or estate advice. UBOMI has no relations with any estate planning solicitor or practice. Please consult your estate planner.