Ten mistakes to avoid when preparing a Will
This article aims to assist those preparing a Will for the first time or those who are considering whether a Will requires an update.
There are many factors to be considered when preparing a Will. It can sometimes feel like a minefield to ensure relevant factors in your life are taken into consideration and it is important to take legal advice to avoid preventable mistakes being made. We hope this article provides food for thought for those interested in preparing a Will for the first time or those considering whether their Will requires an update.
Here are ten common mistakes:
1. Failing to appreciate that you may need a Will
Many people feel that they do not need to prepare a Will. This can often stem from feeling that as their affairs are reasonably straightforward, they (possibly mistakenly) believe their spouse or partner will inherit all their assets anyway.
The Intestacy Rules that guide the distribution of an estate in the event someone dies without a Will are more complex than is generally known. If a person dies with a surviving spouse or civil partner as well as children, there is often a misunderstanding that the surviving spouse will inherit all their assets. This is not necessarily the case under the Intestacy Rules and depending on the size of the estate, the Rules can result in assets passing on death of the first spouse to a combination of the surviving spouse and children, which may not have been the deceased’s wishes and can in some instances result in an unexpected inheritance tax liability.
If a couple are unmarried, the deceased’s partner has no right to inherit under the Intestacy Rules, and so if there are no children, it may result in completely unintended circumstances such as a parent or sibling inheriting instead.
A simple Will can give peace of mind that the distribution of your estate is in accordance with your wishes.
2. The risk of preparing a homemade Will
The risks of what could go wrong with a ‘do-it-yourself’ Will kit are boundless and could be an article within itself. The outcome will often be the same for each issue; the Will could potentially be invalid.
If a Will is not valid, the estate will pass under the terms of any previous Will or under the Intestacy Rules. What may seem like an inexpensive solution could have costly ramifications later down the line and see an individual’s estate pass in a way that does not represent their wishes.
Common issues with homemade Wills include omitting the appointment of Executors, the estate not being distributed as intended and the Will not being signed correctly.
3. Your choice of Executors
An important choice to make when preparing a Will is who to appoint as your Executors. Unlike appointing an Attorney under a Lasting Power of Attorney, you do not need to confirm with your proposed Executors that they are happy to take on the role, although in our experience it is sensible to do so.
As such, a Testator/Testatrix can pick whoever they like and may not give a great deal of thought to who they appoint. For example, it could be that a Testator/Testatrix decides to appoint their adult children as their Executors, but what if these siblings have never got on? What if one of them relocates to Australia the month before the Testator/Testatrix dies? In these instances, the estate administration could be protracted by arguments and delays which could have been avoided by considering the practicalities of who is being appointed.
In some instances, family dynamics or complexities within an estate mean that the decision of who to appoint as an Executor is a burdensome one. A solution is for professional Executors, such as Partners at Weightmans, to be appointed to administer your estate. This gives impartiality and certainty that your estate will be administered following your death.
4. Not taking advice on providing for vulnerable beneficiaries
A simple Will providing for an absolute appointment to a child, or other family member, can sometimes result in a vulnerable beneficiary receiving a large inheritance which may affect their life negatively.
It is advisable for persons providing for a vulnerable individual to consult with that person or their representatives (if appropriate) in advance of preparing their Will and to consider whether a trust structure in their Will would be more suitable. For example, as a parent, might you want your child to inherit at a certain age, and appoint trustees to administer the trust funds whilst they are under that age?
A trust structure could provide security for a person who is vulnerable, and the trust may qualify as a Vulnerable Beneficiary Trust that would receive tax benefits.
5. Not providing for the ‘disaster provision’ in your Will
What can often be missed when drafting a Will is planning for the worst scenario, such as a family accident leaving no survivors or all the beneficiaries named in the Will have predeceased the Testator/Testatrix. Not including what is known as a ‘disaster provision’ could see your estate passing in a way that does not reflect your wishes. The common response we hear is ‘I didn’t think of that’. It is not something anyone wants to think about, but it is important to consider to try and ensure that different outcomes are covered in your Will.
6. Misunderstanding the effect of marriage on an existing Will
Marriage or Civil Partnership usually revokes a previously made Will, whether this is intended or not. There are exceptions, such as if the Will is drafted with a special clause in anticipation of Marriage or Civil Partnership to a particular person.
It is strongly recommended that professional legal advice is sought when marrying or entering into a Civil Partnership. Marriage is often a good milestone to review your finances generally, including drafting or reviewing your Will, to reflect what you wish to happen in the case of your death.
7. Misunderstanding the effect of divorce on an existing Will
Similarly, it may be a surprise that Divorce can automatically alter the effect of a previously drafted Will. Following the final divorce order (formerly decree absolute) the Will takes effect as if the former spouse or civil partner has died, unless contrary intention is expressed in the Will. This could result in your Will having no Executors if your former spouse was your sole Executor or in an intestacy or partial intestacy if your former spouse is named as a beneficiary in your Will and there are no suitable fallback provisions.
We recommend reviewing your Will with a suitably qualified solicitor to consider what changes may be needed post-divorce.
8. A missed opportunity for Business Relief planning
If a person has a spouse or civil partner, and children, and also holds qualifying Business Relief assets there could be an opportunity for some inheritance tax planning.
When the first spouse dies, if they have left all their estate to their surviving spouse then their estate will qualify for 100% spouse exemption from inheritance tax.
There is however an opportunity for a Will to provide that on the first spouse to die’s death, it will provide for any qualifying Business Relief assets to pass into a discretionary trust structure instead of directly to the surviving spouse. The spouse could still be a beneficiary of this trust, but the assets will not form part of the surviving spouse’s estate for inheritance tax. There will also be a trust operating that qualified for Business Relief on creation and depending on how it is administered could continue to hold trust assets which qualify for Business Relief or distribute funds to children or grandchildren with a more beneficial tax treatment then in the hands of the surviving spouse.
This Will structure will not be attractive to all persons, but to those interested in inheritance tax planning and who hold Business Relief qualifying assets, this is an opportunity to be considered when preparing their Will.
9. Not appreciating your Will may be out of date and require updating
It is essential that once your Will has been prepared it is regularly reviewed. We recommend reviewing your Will at least every five years.
It is easy to overlook new relationships, children, or relationship breakdowns within the immediate and extended family which may impact how you would like your assets to pass.
A Will made 10+ years ago is unlikely to reflect the position today and could have unintended consequences. It is not always necessary to draft a completely new Will, as if it is reviewed regularly, you may be able to simply add a codicil. You should always seek professional advice before modifying a Will.
10. Knowing where your Will is stored and providing this information to your executors
After your new Will has been put in place, these is the tendency to put any estate planning to the back of your mind and the Will itself to the back of a cupboard. Five years down the line however and after say a house move, and a couple of spring cleans you could discover that your original Will is not where you thought it was. There is even the possibility that you may not even make this discovery and it only comes to light that your Will is missing after your death.
Families hunting for missing Wills is unfortunately something we see all too often and is something that can easily be avoided.
If you would like expert guidance on any aspects around drafting a Will, please contact our expert wills solicitors.