Will Kits: A cheap solution or expensive problem?
As like any normal business from time to time I like to offer special offers for legal services, and as seems to go with legal advertising, occasionally people take it upon themselves to make comments (both good and bad) about the advertised special.
I received a shock when I read the many comments responding to the most recent Ad, being a Ad for the preparation of Wills. I always thought that people would always want to ensure that their Wills were prepared by qualified and trained lawyers to ensure that their family would not be left to clean up the mess after their death. Obviously I was wrong as the most common comments were similar to these “lawyers are just trying to rip you off…just do your own kit”,”why would I pay for a lawyer to do it when I can do it myself”, or “just buy a Will kit and do it yourself for $20”.
Will Kits may not be the best option
As you can imagine I turned over in my not yet utilised grave at the thought that society could have so little regard for a document which could single-handledly set up a person for life or destroy another person’s future by the creation of one little document. In a society where we study for many years, save pay cheque after pay cheque and forgo those glamorous Prada shoes in order to create a financial nest egg, it seems ironic to me that all our hard work would be thrown away in the eleventh hour by relying upon some cheap knock off document that may or may not have been created correctly.
Obviously, as I am a lawyer, I am slightly biased towards people having their Wills drafted properly, by lawyers as I receive an immediate financial gain by doing so. However there are other reasons why and I have listed only 10 of them (because, well frankly, we have to stop somewhere).
Why a Will Kit should never be preferred over a lawyer created Will
1. You have to actually know the law in relation to Estates before you can decide how to divide up your assets.
Yes, I know, it comes as a shock, but how are you able to know that what you are writing in the Will Kit is in fact capable of being given away to someone else. It will come as a great surprise to many people that the assets that they think they are giving away in their Will, do not actually form part of their estate.
2. You can’t just simply ‘write someone out of your Will’.
To exclude someone from your will is extremely complicated to achieve. Many lawyers would suggest that it is almost impossible to do so. There are many different considerations to take into account in order to have your will set up in such a manner to make it less likely to be contested. It may require you to prepare an Affidavit to be placed with your Will, or you putting aside evidence to support your reasons why you want to exclude someone from your Will. Which ever strategy you take, to write someone out of your Will, it is clear that a Will kit does not have the ability to deal with this situation.
3. Superannuation may or may not form part of your Estate
Superannuation is an extremely complex area. Whether your Superannuation is included in your estate or not will depend on how you have set up your Superannuation or whether you have completed a Binding Death nomination. If you haven’t completed a Binding death nomination then the rules about how your Superannuation is divided are dramatically different to the rules in relation to dividing up your estate. Your Superannuation will be divided between your family in a manner to be determined by your Superannuation trustee. This could have unintended consequences as you may end up with a family member receiving a large sum of your Superannuation in circumstances where this is contrary to your wishes in your Will. As such it is important that your the correct forms and arrangements are organised for your Superannuation at the same time that you prepare your Will.
4. Family Trusts are not part of your estate
Normally people decide that they will create a business doing something they love. They go off to an accountant and the accountant determines that for tax purposes, the business should be set up in a Family Trust. The trust is set up and apart from minor conversations had with the accountant at Tax time, very little conversation is ever had about the Family trust going into the future.
But what most people don’t realise is that once a business or any asset is created within or placed into a Trust it is no longer considered to be an asset owned by you. In turn this means that you cannot gift anyone any asset owned by the Family trust. Further if you have gone through a separation and your ex-partner is a beneficiary in that trust then it may have unforeseen consequences by transferring an asset to your ex-partner.
The only way to fix this issue is to revisit your trust deed and ensuring that the trust deed divides the assets in the manner that you would hope to achieve and make any amendments to the deed if necessary. Again this is an issue that cannot be addressed in a Will Kit.
5. How you buy your house will determine whether it is in your estate
One of the least known issues that I have come across in my career, is the laws surrounding Joint Tenancy and Tenancy in Common. When I question a client as to whether the property that is owned with their partner is as Tenants in Common or Joint Tenancy, the most common response is “oh we bought it jointly”. When I delve a little further it becomes quite apparent that client’s usually do not know how they own property.
Why is this important? Because this tiny little issue will determine how the property will be dealt with upon your death.
If you own your property as Joint Tenants then the property will transfer to the surviving partner (listed on the title deed) immediately upon your death. The property will not form part of your estate.
If you own your property as Tenants in Common then your property will be divided pursuant to your Will as part of your estate.
Again Will Kits don’t tell you about these issues. You might go to all the trouble to do up the Will only to find that the assets you really wish to leave to someone are no longer part of your estate.
6. Testamentary Trust (Trusts for Children)
One of the biggest motivations behind people creating Wills is the need to protect their young children financially in the event of their death. Obviously if children are underage, then arrangements will need to be made for the children and this can be done by setting up a trust. The most common way to create a trust is to do so within your Will but can also be created outside of your Will as well. However it is set up, the trust needs to cater for such things as the children’s education, living expenses and responsibilities of the trustee.
As a trust can have serious consequences after your death by specifying exactly what I trustee can or cannot purchase on behalf of the children, it is something that needs to be carefully written and considered. A will kit fails to take into account your personal circumstances and unfortunately there is no “one size fits all” arrangement when it comes to preparing trust deeds.
7. Succession Planning
You may take the view that ‘who cares’ what happens after your death and you would not be alone in taking this view, however if you knew that your failure to address some basic issues before your death would create some very large financial and possible taxation ramifications would you still be so flippant about your Will.
Leaving different assets to different people may have unforeseen taxation consequences when combined with the recipient’s own finances. A property may create Capital Gains, a business may have GST components involved. There are ways to set your Will up in a manner that leaves your beneficiaries in the best financial position possible. This requires an in depth discussion with your accountant and your lawyer.
8. Adequately Identifying Beneficiaries and Belongings
A Will kit is enticing for many reasons but the main one being its simple nature. Everyone would enjoy a form where we could simply state who was to have your belongings and that would be the end of it and this is what a Will kit promotes.
Unfortunately though, even the most basic of directions can be complicated when looked at under scrutiny and this tends to be an area where Will kits get regularly overturned.
When completing a Will kit, people tend to forget that other people are reading the document and those other people may not know a person or asset by the same name. This in turn leads to confusion and the Will gets overturned. For example, “I leave my house to my husband”. If you have been married twice and now separate from both men then it is open for interpretation as to which husband was intended. The word “house” could mean multiple different properties if the maker of the Will has more than 1 property.
Wills need to identify beneficiaries and belongings specifically. Further in the event that the person who you intended to leave your assets to has dies before you then you need to have a fall back position. That means you need to identify who else should be given your estate in the event that your first choice has died. You also need to allow for changes to your estate to occur. What I mean by this is that if you specifically refer to a house at 1 Smith Street, Eagleby Queensland then what happens if you sell that house and move.
Lawyers are trained to draft up your Will in a manner that takes into account the ongoing changes to your estate and to take into account contingencies. A will kit doesn’t allow for any change in your circumstances or your estate.
9. Blended Families
Where you have children from a previous relationship preparing a Will can become extremely complicated. The basic rule of “everything goes to my husband and in the event of his death then it goes to my children” can be completely fraught with problems. The reason for this is that if everything is left to the new partner, then the likelihood is that the children from a previous relationship will not take anything from the estate. This then opens the Will up to being contested by the children.
If you leave everything to the children and nothing to the new partner then the new partner will receive nothing from your estate. This again leaves the Will open to being challenged.
Wills related to delicate blended families need to be carefully worded in order to address all relevant persons who have a potential claim against the estate.
10. Witnessing Requirements
The final and biggest concern with Will kits is the failure to witness or deal with the document correctly. People tend to ‘just get someone at home’ to witness the document. More times than not, the person at home is also a beneficiary in the Will or a partner of a beneficiary in the Will. By witnessing the Will incorrectly you can void that person’s interest in the Will.
Further the handling of the Will once signed is of great importance. A will cannot be unstapled, written on, corrected or amended. By making an alteration to the Will in any manner can result in the Will being voided.
DIY Will Kit QLD
Wills are serious documents which have serious consequences for your family and loved ones. While it might be appealing to have your will done quickly and cheaply the fact is that failure to give your Will the time it deserves could result in a disaster after your death. All it takes is one mistake for your entire Will to be invalid. The problem with this of course, is that the mistake will not arise until after your death and therefore cannot be cured.
Because your families’ future matters….Prepare your Will correctly.