If you’ve been thinking about making a will please know that it is critical to obtain accurate and correct professional advice. The thought of not being able to provide for your family when you’re no longer here can be difficult for most people to contemplate; if your Will is not made properly , it could have some serious implications for the way your estate is dealt with.
So what do you need to be aware of? Here are just some of the common problems we see in wills and estate planning, and how you can avoid them:
1. Not being aware of the assets which make up your estate
One of the first steps in making your will is knowing what assets are included in your estate, and what assets are excluded. Here are some important points to remember, when it comes to property ownership and your Will:
- Joint Tenancy: If you hold any assets they cannot be disposed of by your will. Instead, the surviving joint owner automatically receives the asset, regardless of what it might say otherwise in your Will;
- Tenancy in Common: This arrangement is a co-ownership structure that allows two or more individuals to own a part interest in assets, separately. If you own assets as tenants in common, your share can be dealt with by your Will;
- Superannuation does not necessarily form part of your estate, and therefore might not be dealt with by your Will. Depending on your super fund’s particular rules, you can direct your super balance to be paid directly to certain beneficiaries rather than via your estate;
- Assets held in a trust are typically excluded from your estate and must be dealt with according to the rules set out in the trust’s deed rather than by your Will;
- If you have a private company to run your business or act as trustee of a family trust, then assets held by the company may be excluded from your estate and therefore your Will. Company assets might instead be dealt with by shareholders’ agreements or the rules of the company constitution, for instance.
At Greenhalgh Pickard we have seen many instances where people did not seek appropriate legal advice and therefore did not understand the legal implications of the way they hold or control assets. This often has unfortunate consequences for the way an estate is administered when the assets are ultimately distributed in a way the deceased person never intended. There are also situations where it is critical to ensure assets do not form part of your estate. Quarantining assets from the estate can reduce or eliminate tax payable on certain transactions, and can protect against a claim on the estate or a challenge to the Will, just to name a couple of examples.
How to Avoid:
- Perform a title search to confirm ownership in real property (real estate)
- Investigate and confirm how your assets are actually held
- Seek legal and accounting advice
2. Failing to make a valid will
For your will to be valid it must be in the proper format and you need to have testamentary capacity.
Homemade Wills or Kit Wills are usually made in good faith and with the best intentions. However these often contain unforeseen and significant errors. Too many times we have seen the significant problems such errors cause, resulting in the Will either being declared invalid or an expensive and lengthy court application being required to validate it.
In many circumstances it is necessary to prove, retrospectively, that the person who made the Will had capacity at the time it was made. This is easily done if a formal capacity assessment is performed and recorded by a solicitor at the time. If not, it can be a time consuming and expensive exercise for the executor to obtain historical medical records or other evidence to try to prove capacity. This leads to delays and additional expense for the estate. If there is no evidence to show the will-maker had capacity then there is a chance the Will is declared invalid and has no effect.
If your will is not valid, it means that your estate could be distributed in accordance with the rules of intestacy, and your estate will not be distributed as you intended.
How to Avoid:
- Ensure your will has been prepared by a suitably qualified legal professional who can ensure that the formal requirements are met.
3. Failing to regularly review your Will
Our lives are constantly changing and one of the most common issues we see at Greenhalgh Pickard is people failing to regularly review their will. We recommend you review your will every couple of years, or when you experience significant changes in circumstances. For example, a new relationship, separation or a change in family dynamics can dramatically change how your Will is executed under the law. Proper advice is essential to understand and amend your estate plan to ensure your Will still does what you intend it to.
If you fail to regularly review your will, you might be exposing your estate and your family to unintended consequences. Certain life events can significantly impact upon the true effect of your will.
How to Avoid:
- Seek professional legal advice when you experience significant changes to your personal or financial
At Greenhalgh Pickard, our professional legal and accounting teams can help you with making or changing a will or starting your estate planning. Ensuring your estate plan is correctly set up will help to ease the stress on family members when you pass away and you can rest assured your final wishes are carried out.