Property investing is a great vehicle for wealth creation in Australia, but you want to make sure that vehicle is driven the way you intend, even when you’re not around to drive it.
That’s why it’s imperative to get the right will in place, even when you are young and still expanding your portfolio.
Your will is a legally binding document that outlines how your assets and estate should be managed, distributed and inherited once you’ve passed. It should also provide peace of mind, knowing that your hard investing work won’t be undone by legal battles or poor financial decisions.
For those of us that follow the investing philosophy of B.Invested founder Nathan Birch, the right strategy can lead to the creation of an unencumbered wealth vehicle that provides never ending future growth and positive returns tied to inflation.
That might be a portfolio with multiple paid-off properties that pay you a return in perpetuity.
If you are able to achieve such a portfolio, you can leave an amazing gift for your children, their children and as many future generations as you like.
That’s why it’s essential that your will ensures that gift goes where you want it to go and is managed accordingly.
Within your will, you can provide a roadmap for your loved ones and legal representatives, detailing who will inherit properties, bank accounts, shares and other valuable possessions.
A will doesn’t just determine who gets what out of your beneficiaries… it also provides a safeguard against legal disputes.
Supreme Court data has revealed that estate disputes have risen by more than 50% over the past decade, with rising property values meaning a lot more million-dollar estates than there used to be.
By appointing an executor in your will, you empower a trusted person to handle the administrative tasks of winding up your estate, paying off debts and distributing assets according to your wishes.
Think about who you know that would be capable of handling that. It may not be someone in your family, or even a particularly close friend, but an acquaintance who is intelligent, trustworthy and level-headed.
Without a will, what’s the way?
If you don’t have a will in place, your estate will be distributed according to intestacy laws, which may not be to your liking. Your property portfolio might be divided up to cater for distant relatives who you may not have wanted to leave anything to.
It will also be open to costly legal disputes and could cause pain and financial loss to your loved ones.
Think about your assets being subjected to mismanagement, forced sales or disputes. If that thought made you shudder, it’s time to take action.
Don’t wait until you’re old
It’s tempting to wait until later in life to get your will in place, because the upfront cost can be prohibitive for some people (usually several thousand dollars) and you might think, ‘I’m in good health’, why waste money I could use to grow my wealth now on something I won’t need until I’m older?’
However, life is unpredictable and waiting too late is risky as it leaves your assets vulnerable if something should happen to you out of the blue.
First, make a comprehensive list of your assets, including properties, financial accounts, investments and personal belongings. Then, consider who you want to name as your beneficiaries and how your assets should be divided among them.
Then, engage a legal professional. There’s a reason they spend so much time at university. The law is complex and needs to be navigated with professional help, otherwise you risk costly errors or oversights.
They can walk you through the rest of the process, including how to decide on the right executor. And once it’s all done and out of the way, you can go back to focusing on creating that wealth. Speak to our Investor Relations team to discuss how they can help you.