InsightsInsight - Tax Planning, Wills and Probate - POSTED: May 5 2020
Why a homemade Will is not worth the risk
When considering a Will it may be tempting to wonder why you should pay a solicitor when you could just do it yourself.
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With so many DIY Will kits now available and people looking to save money where they can, a homemade Will remains a popular choice.
We have highlighted the eight most common errors people make and look at why a homemade Will is not worth the risk.
1. Incomplete names and addresses
It is not essential that a person’s full name and address is stated in the Will. However, in order to identify an individual and differentiate them from others, as much information about that person should be given. Omitting middle names or using nicknames may cause ambiguity once you have passed away.
It is also important to state your own full name in the Will. Commonly, people refer to themselves by a shortened version of their given name, or like to be known by their middle name. If either of these are stated in the Will, it could lead to issues with the encashment of assets after death, where such assets were held in the Testator’s full name.
Uncertainty as to who should inherit what. There may be a problem down the line with selling or transferring assets out of the deceased’s name and into that of the beneficiary.
2. Not appointing Executors or substitutes
Your spouse or children will not automatically be entitled to deal with your estate if they have not been validly appointed as Executors in your Will. You should also consider who will deal with things if your named Executor is unable or unwilling to act. Often substitution clauses are missing from homemade Wills, leaving family members unsure who is legally allowed to deal with the estate.
Delay in the administration of your estate due to confusion over who is legally allowed to act.
3. Forgetting about the residuary estate
It is usual to leave legacies of specific assets to named beneficiaries in your Will. However, a common oversight is to forget to make provision the rest of the estate. This is known as the residuary estate.
An example is where a residuary estate clause reads, “I leave my house and all my money to…” This is an insufficient description of your estate because although it deals with some of your assets, it does not provide for everything which you may own at your death, such as premium bonds, shares, chattels and other property, for example.
It is also important to note that a description of “my house” would specifically refer to the house you owned at the time you made your Will. If you were to sell that house and later buy another, the new house would not be caught by the “my house” description. This is because the house owned at your death was different to the house owned at the time of making your Will and the gift would fail by ademption.
If your Will does not deal with all of your assets, you risk the estate being partially intestate. That part of your estate would then be governed by the statutory rules of intestacy, rather than by the wishes expressed in your Will.
4. Omitting gift-over provisions of residue
Another common error in a homemade Will is not stating who should inherit a gift of the residuary estate in the event that your chosen beneficiary has died before you. There are limited statutory provisions in place in respect of gifts to children. However, in all other cases, if you do not make clear who should inherit, the gift will lapse and will be governed by the statutory rules of intestacy. This may not be what you would have wanted.
If the intestacy rules apply, a strict legal framework will govern who inherits your estate. For example, spouses or civil partners do not automatically inherit everything under the intestacy rules. This could result in an Inheritance Tax charge due to your estate being intestate.
5. Inheritance Tax planning
Inheritance Tax is currently charged at a rate of 40% of your chargeable estate when you die. A homemade Will is usually drafted without taking Inheritance Tax into account at all. However, by taking professional advice it is often possible to mitigate this tax. By making use of available allowances and reliefs, your estate may pay little or no Inheritance Tax.
A charge of 40% Inheritance Tax equates to £400 in every £1,000 paid to HMRC. This might not need to be paid at all, if the Will is adequately drafted. In an estate worth £500,000 with a nil rate band allowance of £325,000, this could equate to £70,000 in Inheritance Tax.
6. Asset protection
Standardised DIY, or ‘homemade’, Wills often have no provision for anything other than a basic Will structure. If you are concerned about protecting assets from external factors such as bankruptcy, divorce, care home fees, or if you have children from a previous relationship for whom you would like to provide, a basic Will structure is unlikely to suit your needs. Do not try to fit a square peg in a round hole. If any of these matters affect you, you should not simply write what you want to happen on the basic Will template. In all likelihood, a Will Trust would be the best route for your circumstances. We advise that you seek professional advice if you are considering this option.
Leaving assets outright to a beneficiary means that they will form part of the beneficiary’s own estate. They can then be open to attack from external factors such as bankruptcy, divorce and means testing for care fees. The assets would also increase the value of the beneficiary’s estate for Inheritance Tax purposes. Failing to include trust provisions in your Will (where needed) could result in the amount your beneficiaries ultimately receive being reduced.
7. Invalid execution
By far the biggest risk factor when making a homemade Will is ensuring its valid execution. This is even more so in the light of COVID-19 and self-isolation.
Section 9 Wills Act 1837 sets out strict rules which must be followed in order for your Will to be valid. Additionally, there is a myriad of case law regarding these formalities. Despite calls from some in the legal profession to relax these rules, they currently remain in force. If you are in any doubt whatsoever about how to validly execute a Will you should seek professional advice.
If your Will is invalidly executed, it does not take effect. If you have a previous Will (which had been validly executed) this will be considered to be your last Will. If you do not have a previous Will, your estate will be governed by the statutory rules of intestacy.
8. Where are they now?
If your beneficiaries have any questions or concerns after your death about the way you drafted your Will, where should they go? It can often be a shock for relatives to read a homemade Will and discover provisions they had not expected.
Even online Will writers might not be traceable over time. By appointing a firm of solicitors, not only can you personally correspond with the individual who will be drafting your Will but your beneficiaries will also have a point of contact if they have any questions about it after your death.
You make a homemade Will. After your death, your beneficiaries have questions about the wishes expressed in your Will but have no way of finding out more. There are no available notes and you did not speak to them about your wishes during your lifetime. Ambiguity in the wording of your homemade Will leads to frustration and confusion amongst your beneficiaries, causing bad feeling.
Brachers has been providing legal services for 125 years and will be here to help if your beneficiaries need some advice once you have passed away.
If you would like to make or amend your Will, please contact a member of our Private Client team.
We are currently offering pre-arranged appointments from 7.00am to 9.00pm Monday to Friday, and Saturday 8.00am to 12 noon if you with to make a Will or LPA. The extended opening hours are designed for people who are spending more time home-schooling, as well as key-workers’ shift patterns.
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