Why Your Will Needs an Update When You Buy or Sell Property
Buying and selling property is a major life milestone. But here's something many people don't consider in all the excitement of property transactions: your will probably needs updating too.
Think of your will as a snapshot of your life at a particular moment. When that snapshot changes dramatically—like when you buy or sell property—it's time for a new picture. Let's explore why keeping your estate planning current with your property moves isn't just smart, it's essential.
When You Buy Property: More Than Just Keys to Your New Home
Your estate just got bigger. That new property represents a substantial increase in your net worth. Your old will might have been perfectly adequate when your biggest asset was your car, but now you're playing in a different league. You'll want to update your beneficiary designations and make sure your will clearly spells out how you want this valuable new asset distributed.
Location matters. You might want to be specific about who inherits the property and under what conditions. Perhaps you want your children to inherit it jointly, or maybe you'd prefer one child to have the option to buy out the others. Without clear instructions, you're leaving these important decisions to chance—or worse, to lengthy family discussions during an already emotional time.
Don't forget about the mortgage. If you've taken on debt to purchase the property, this affects your estate planning too. Your beneficiaries need to understand how that mortgage will be handled. Will there be enough liquid assets to pay it off, or will the property need to be sold? These are crucial details that should be addressed in your updated estate plan.
Tax implications are real. While Australia doesn't have estate taxes, your increased wealth opens up new tax planning opportunities through your will. You might now want to establish testamentary trusts, which can provide ongoing tax advantages for your beneficiaries that weren't worth considering before.
When You Sell Property: New Wealth, New Responsibilities
Selling property often means a substantial influx of cash—and with great wealth comes great responsibility (to paraphrase a famous superhero). Here's what you need to consider:
Your liquid assets have likely jumped significantly. That lump sum from your property sale needs to be accounted for in your estate planning. How do you want those funds distributed? Should they go into a trust? Be divided equally amongst your children? Used for specific purposes like education or healthcare?
Time to get sophisticated. The sale might have pushed your estate over certain tax thresholds, making more complex planning strategies not just beneficial, but necessary. You might want to restructure trusts or explore other estate planning vehicles to optimise the tax treatment of your newfound wealth.
New investments mean new considerations. If you've reinvested the proceeds from your property sale, those new investment accounts and assets need to be included in your estate documents.
What happens if you don't update your will?
Here's what can happen if you don't update your will after major property transactions:
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Confusion and conflict can arise when your will references property you no longer own or fails to mention valuable new assets. Your family will be left guessing about your true intentions, and those guesses might not match your wishes.
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The state might make decisions for you. If your outdated will becomes invalid or unclear, parts of your estate could be distributed according to intestacy laws rather than your wishes. Essentially, the courts get to decide who inherits what—and they don't know your family like you do
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Your loved ones could face unnecessary tax burdens. Without proper planning for your increased assets, your estate might pay far more in taxes than necessary, leaving less for the people you care about.
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Probate becomes a nightmare. Executors struggling with conflicting or outdated instructions often end up in lengthy, expensive court proceedings. Instead of grieving and healing, your family gets stuck in legal limbo.
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Family stress can escalate. When there's uncertainty about your intentions, family members may disagree about what you really wanted. Clear communication through an updated will helps prevent misunderstandings during an already emotional time.
Making it Right: Your Next Steps
Whenever you have significant property transactions, it's wise to review your entire estate planning portfolio. This includes your will, any trusts, beneficiary designations on accounts, and powers of attorney.
Think of it as routine maintenance for your financial life. Just as you wouldn't ignore regular maintenance on your new property, don't neglect the maintenance of your estate plan.
Ready to Update your Estate Plan?
When you've just completed a major property transaction, it's the perfect time to get your will in order. The details are fresh in your mind, and you're already thinking about your financial future. Taking this step now means one less thing to worry about later, and gives you confidence that your affairs truly reflect your current situation.
Contact us at Cozee Law - as your trusted conveyancers, we're ready to take the next step with you. We can guide you through your property transaction, and we can help ensure your will reflects your new circumstances. Get in touch with us today to ensure everything is properly secured for your loved one’s future.