11/09/2019
What a Will Kit doesn’t do
There are various ‘Will Kits’ available on-line – most are cheap or ‘free’ and all you need to do is download them and fill in the blanks. Many websites boast that you can prepare your Will ‘without spending hundreds of dollars on legal fees’.
Simple, right? Alas - rarely.
Generating an on-line Will may seem easy, but the ‘hundreds of dollars’ that you might save will never make up for some of the possible pitfalls in preparing a Will without sound legal advice.
When you generate your own on-line Will, you don’t meet personally with the writer of the Will. This is the most significant issue with self-generated legal documents. You don’t have the opportunity to discuss your family and your circumstances, and a lawyer does not have the opportunity to identify issues unique to you, that could otherwise be addressed with careful planning.
A lawyer with an understanding of succession law will guide you through this process and create not just a Will, but an effective estate plan.
The following are some of the important considerations that an experienced lawyer will address, that a Will Kit may not.
Your lawyer will prepare an estate plan, not just a Will
A lawyer will take a holistic approach and consider all aspects relevant to your estate plan. Not only is it important to plan how your assets are distributed when you die, but you need to provide for contingencies such as appointing guardians and attorneys if you become incapacitated and are unable to manage your financial and personal affairs.
A lawyer will also consider how your assets are held - whether that is jointly or individually - as this can determine how and to whom those assets may be left. For example, when assets are held jointly with another person, the surviving person will automatically inherit the deceased person’s share when he or she dies. A contrary direction in a Will to leave that share to somebody other than the joint tenant will not override this legal principle. A lawyer will advise whether it is in your interests to sever the tenancy which will then enable you to leave your share to whomever you wish.
Your lawyer will also discuss your superannuation and death benefits - which do not automatically form part of your estate. In many cases, your benefits will be paid directly to a superannuation dependant either at the discretion of the trustee or in accordance with a death benefit nomination.
Different categories of beneficiaries are taxed differently under taxation law and your lawyer can advise on these tax implications so you can make an informed decision.
Preventing a gift from failing
A common problem with do-it-yourself Wills is the risk that a gift to a beneficiary may fail. ‘Ademption’ occurs when specifically named property in a Will no longer exists at the time the will-maker dies. Consequently, the intended beneficiary of that gift may lose out altogether. The ademption of a gift can have a significant impact on the value of assets received by a beneficiary, particularly where the asset is significant, such as real estate or a prestige motor vehicle.
Fortunately, the law has developed certain exceptions to the rules of ademption and a beneficiary may be saved from missing out on his or her inheritance. Having said that, a properly drafted Will can prevent the issue arising in the first place and is likely to avoid the potential for unwanted and unnecessary estate disputes.
Protecting your assets and tax planning
Your lawyer will advise on how to best structure your Will to protect your assets against distribution to an unintended beneficiary (such as a child’s estranged partner or the creditors of a bankrupt beneficiary).
A testamentary discretionary trust may be recommended. This is a trust created in your Will that comes into effect after you die. The trust is administered by a pre-appointed trustee who determines how and when estate assets are managed and distributed.
If properly managed, the flexibility of a discretionary trust allows beneficiaries to access favourable taxation treatment with respect to their inheritance and provides protection for vulnerable beneficiaries. With careful planning, the timing of transferring estate assets may also postpone or minimise capital gains tax liabilities.
An on-line Will Kit is unlikely to consider these matters and, in any event, cannot provide the legal advice necessary to decide whether this type of Will is appropriate in your circumstances.
Guarding against family provision claims
A successful family provision claim may result in the terms of your Will (despite your intentions) being amended to provide for an ‘eligible person’.
Family provision rules vary between jurisdictions however an eligible person generally includes a current or former spouse or de facto partner, a biological, adopted or step-child of any age, and certain dependent members of the deceased’s household.
An eligible person may make a claim against the estate of a deceased person if he or she believes they have been unfairly treated under the Will or the proposed distribution is unfair. Whilst warranted in some circumstances, such claims are usually an unwelcome interruption and will result in additional time, delay and cost in finalising the estate.
Your lawyer can identify potential claimants under the family provision rules relevant in your jurisdiction and, if necessary, advise on how to reduce the likelihood of such a claim.
Conclusion
Planning your estate and having your Will prepared by a lawyer is a smart move. Your lawyer will ensure your Will is valid, correctly signed and protects your assets and your beneficiaries. He or she will discuss ‘what if’s’ and advise on how future changes may affect your estate plan and will usually provide a friendly reminder to review your Will when your circumstances change.
Yes, you can prepare a valid Will on-line however, there is considerable risk that it will not be tailored to your unique circumstances, may not achieve exactly what you want, and may not take advantage of structures to protect assets and save tax.
Meeting with a lawyer to discuss your estate plans and finalise a well-considered Will that caters to your circumstances is money well spent.
Courtesy of Garland Waddington Solicitors Newsletter - September 2019
