The seven hidden dangers of Will drafting
Ben Oliver looks at seven “hidden dangers” in will drafting that, if ignored, undermine the intention and scope of your will and undermine the well-being and financial security of loved ones.
In 1925, Gandhi wrote his list of the seven ways of living that are bound to undermine your well-being and the well-being of those around you.
1. No Will at all
Otherwise known as “falling at the first hurdle”!
As a professional, it can be heart-breaking to sit in a meeting with a family after a death and explain the arbitrary rules of intestacy. Comments often made are, “but that isn’t what they wanted” or “that isn’t what they said would happen”.
A family dealing with the loss of a loved one does not need to be navigating the difficulties of an intestacy. It is avoidable. Please make a will.
2. Failure to execute
Otherwise known as “falling at the last hurdle”!
Having written your will, it is essential that it is executed correctly. The requirements are set out in the Wills Act 1837 together with nearly two hundred years’ worth of case law.
The consequences of failure to execute the will effectively are catastrophic and irreversible: an invalid will leads to an intestacy and the failure of the deceased’s testamentary wishes. Examples include only having one witness instead of the required two, your witnesses not seeing you sign the will, and asking a beneficiary to witness a will (which means they can then receive no benefit under the will).
The good news is that effective execution is entirely in your control and is a pitfall that can be avoided easily if you obtain good advice from a qualified professional.
3. Wrong executors or trustees
As the old saying goes, “wrong things happen when you trust the wrong people.”
The individuals you choose to administer your estate or will trust after your death are key to the success of the process. They must be willing, capable, effective, and able to work together.
Conflict in estate administration leads to delay, increased costs and the legacy of a family dispute. Not something you want as your own personal legacy.
Talk to your professional advisers about who you would like to appoint as executors and trustees, and then speak to those individuals. Ensure they are willing to undertake the task and able to approach the matter in accordance with your wishes.
Only appoint people you trust to fulfil these roles.
4. Claims against the estate
In England and Wales the person making the will (the “testator”) has testamentary freedom and is therefore able to leave their estate to whichever beneficiaries they choose. However, certain categories of people may apply to the court under the Inheritance (Provision for Family and Dependents) Act 1975 for “reasonable financial provision” to be made for them from the estate, irrespective of the terms of the will. This has been seen relatively recently in the high profile case of Ilott v Blue Cross, which was widely reported in the national press. The categories include for example spouses, ex spouses, children and co-habitees of the deceased.
In today’s increasingly litigious society, it is becoming more common for disappointed beneficiaries to make claims against an estate, where (in their opinion) reasonable financial provision has not been made for them.
When making a will it is vital to take advice on this possibility and for you to consider what steps could be taken before death to make such a claim less likely to be made or, if made, to succeed. You should also consider providing additional information to your executors to assist them in dealing with any such future claims.
Failure to do so puts your testamentary wishes at risk of floundering and your will being disregarded.
5. Protecting your Family
One of the main reasons for making a will is to look after your family. A well prepared will provides an opportunity to protect vulnerable beneficiaries through the use of trusts, including those for disabled beneficiaries. It is also possible to use your will to protect beneficiaries who may be facing divorce or bankruptcy in their own lives. This will ensure that the long term benefit of a family inheritance is preserved.
Failure to take advantage of this opportunity can lead to family money being passed to an ex-spouse, or passing to creditors. It can also mean that benefits and support for vulnerable or disabled beneficiaries cease, leaving them without a valuable support network at a difficult time.
This is not the time to be coy. Make sure that you provide full details of your family circumstances to the professional so they can give ensure that your will protects your family after your death.
6. The Capacity Question
In order to make a will you need to have sufficient mental capacity to do so. The relevant test is set out in the case of Banks v Goodfellow (In a nutshell, the person making the will (“the testator”) needs to understand that they are making a will, understand the extent of their property, and be able to comprehend and appreciate any claims they should give effect to). The starting point is that the testator has capacity unless it is proved that they do not.
The capacity question will be particularly relevant if you are making a will which removes a beneficiary, treats your beneficiaries unequally, or significantly changes your former testamentary wishes. It will also be relevant where there has been a diagnosis of dementia or other degenerative condition which can affect capacity.
In those circumstances, you should seek assistance from a professional who can apply the relevant legal tests and obtain contemporaneous evidence of your capacity when making your will. This will be essential for all testators, whether there is any concern about capacity or not, because failure to do this leaves your will open to challenge by disappointed beneficiaries or disaffected family members.
7. “Lack of Money is the Root of all Evil” (G. B. Shaw)
When drafting a will, thought must be given not only to the succession desired by the testator, but also to the funding of any inheritance tax. Being land rich and cash poor at death can give your executors a headache. Similarly, if your assets are all held within share portfolios, your executors may not be able to access these until after the Grant of Probate has been issued – no help at all if you need to pay inheritance tax first.
Executors sometimes need to take out personal loans as a result to fund the inheritance tax, sometimes putting them in a difficult position – something that the testator would not have intended.
The solution is to talk through such matters with your solicitor when preparing your will to ensure that practical steps can be taken if necessary (possibly in conjunction with your financial advisor) to ensure that your assets are owned in the most effective manner possible for your estate.
If you would like to speak with Ben Oliver or a colleague in our wills trusts and estates team about your will, please contact us on 0118 9516200.