DIY Wills - what are the pitfalls?
The use of DIY Will kits has increased, particularly now that they are also available online, and this has caused concern amongst estate planning advisers and experts at a time when the relatively wealthy baby boomer generation starts to pass on their assets (or what is left of them).
The NSW Trustee & Guardian (NSWTG) has seen a rise in the work required to unravel the issues with DIY Wills. The NSWTG stated that the Wills are ambiguous, can be misinterpreted and therefore challenged, or are not valid and able to be executed. The NSWTG also stated that they encourage all adults to make provision for their future and it is important to take professional advice in this area.
Consumer group Choice concluded in a study two years ago that Will kits could be a useful research tool but that legal advice should be obtained, particularly if small children are to be considered in the Will, if there are complex financial affairs, or a complicated family situation.
When you are considering making a Will it is very important to consider the appointment of the executor of that Will. Stephen Hardy, an estate planning specialist with Equity Trustees stated in the SMH article that one common mistake is to appoint a friend as an executor of a Will even though they may not have the financial competence required, and being a similar age, may die before the Will maker. Hardy also stated that you should try to avoid appointing anyone that may have a conflict of interest, such as a business partner, or a family member if there is any chance of family discord over the estate.
Another matter to consider is that if there is any debt over the assets being deemed in the Will, such as a mortgage over a property, it should be specifically recognised in the Will that all debt must be repaid before distributions are made. Also, not recognising the effects of tax, particularly capital gains tax, is another common mistake that can lead to unintended issues for the beneficiary(ies).
Another mistake is to leave assets that you don't actually own, and this can occur, for example, if you have assets that are jointly owned, perhaps in a family trust, business or super fund. Lastly it is always good to advise someone, particularly the executor of the Will, where the Will is located, and ideally talk through the contents with the executor so they know what you intend and why.
The Key Points to DIY Wills are:
- DIY Will kits should be used only in the simplest of circumstances
- Choose an executor carefully
- Consider the impact of debt and tax on fairness
- Don't bequeath assets you don't own
- Don't hide your Will
These are all valid points and we recommend that you always seek professional advice for your estate planning needs such as drafting a Will, setting up testamentary trusts, and appointing Powers of Attorney. Professional advice in these areas will cost you more than a DIY Will, but the final outcome is important and ensuring that your Will is drafted to meet your requests and minimise the impact on those you bequeath to may well be worth the extra expense now. We do not have any in house legal advisers at Taggart Nominees, however we can suggest duly qualified legal advisers in the area of Family Law and Estate Planning to you. Please contact us if you would like further information.
