When making your will and planning your estate it pays to get it right. For most people, the thought of their family not being provided for in the event of their death is uncomfortable to contemplate. The reality is however, that if you fail to properly plan your estate or create a valid will, this can have very serious implications for the way in which your estate is dealt with on your death, including how your loved ones are taken care of.
There are a number of issues that we see as a result of people obtaining poor or incorrect legal advice in relation to their estate planning and will needs. Whilst these issues are broad ranging in nature, they often share the common trait of creating significant problems for those that survive them. Being aware of some common issues may assist you to ensure that your estate planning activities, including your will, are in order or otherwise need to be addressed.
5 common problems that we see in the areas of will making and estate planning which you should try to avoid are:
1. Failing to name an executor or choosing the wrong one
The role of an executor is to administer your estate on your death. This means that they will need to complete certain activities such as identify and collect your assets, determine your liabilities, ensure our debts are satisfied and then take steps to distribute your estate amongst nominated beneficiaries. In completing these tasks, your executor is required to act in good faith and fulfil their legal obligations, including abiding by the terms of your will and complying with the law. As such, it is extremely important that you clearly state whom you wish to act as the executor/s of your estate within your will and specify how you wish for them to go about their role.
Failure to properly specify an executor in your will can create problems in the sense that, in most cases an administrator will need to be appointed by the Court. This can result in significant time delays and financial costs being incurred. Furthermore, if you select an executor who is unsuitable or fails to fulfil their role properly, this can have very negative impacts upon the manner in which your estate is administered. In certain circumstances, this can result in a prolonged administration process and the value of estate assets being diminished. Given the significance of this role, your choice of executor/s is very important. Ideally, you should have complete confidence in your executor and the way in which they administer your estate.
Given the significance of being named an Executor, it is prudent to receive legal advice concerning the role played by your executor in administering your estate and to ensure that the terms of your will reflect how you wish for your executor/s to act.
2. Not knowing which assets make up your estate
An essential component of making your will and planning your estate is understanding what property will comprise your estate on your death. In addition, in order to dispose of particular property by your will you will first need to ensure that you have a suitable interest in that property. If you do not hold suitable interest in a particular asset, you are not entitled to dispose of it under your will.
Considering these issues, it is important to understand that:
- Property held by you as a joint tenant cannot be disposed of by you under your will unless you become the sole surviving joint tenant before your death. This is because joint tenancy property interests operate so that on the death of one joint tenant their share in that property passes to the remaining joint tenant/s automatically; and
- Where you hold a tenancy in common interest in property you are able dispose of your share of that piece of property via your will. This is because you hold a specific interest in the property that does not automatically pass to remaining tenants in common on your death.
Unfortunately, we find that people do not seek professional advice and/or properly understand the true nature of their interest in an asset. Often, this can mean that they have a false perception as to the size and value of assets that will ultimately form their estate. Failure to properly understand or consider such ownership issues may undermine your testamentary intentions. This may have serious consequences for the way in which your estate is administered, and in certain circumstances, who receives provision under your will.
Taking practical steps such as having title searches completed to confirm ownership in real property and receiving legal advice in relation to relevant ownership issues can assist to ensure that your intentions can be honoured upon your death.
3. Not including a residue clause in your will
Another common issue we encounter when managing deceased estates is the properly worded ‘residue of estate’ clause within a person’s final will. This type of clause includes how any portion of your estate that is not specifically mentioned or named in your will is distributed in accordance with your wishes.
It is a general recommendation that a residue clause is in included in a will to ensure that all estate property is dealt with rather than just the specific items mentioned. Failing to include this clause may result in property that is not specifically mentioned in your will needing to be divided in accordance with relevant intestacy law. This may be very problematic in the sense that the administration of your estate can become drawn out and costly. Ultimately it may result in certain cherished items not specifically mentioned in your will being dispersed against your actual intentions or wishes.
Again, getting proper legal advice from an experienced legal team regarding the wording of suitable residue of estate clauses can help overcome many of these issues.
4. Failing to make a valid will
It goes without saying that the best way to ensure that your estate is distributed in the manner you wish is to have a legally valid will. There are many legal requirements that have to be complied with in order for a will to be valid. If these formalities are not met with this may result in a will being invalid and not worth the paper it is printed on. When this situation occurs, and unfortunately it does, it means that you die ‘intestate’.
This means that instead of your estate being distributed in accordance with your intentions, it is distributed in accordance with the rules of intestacy. This may ultimately mean that your estate is not distributed to whom you intended. In this day and age especially, it is all to common to see close family bonds severed in lieu of getting a larger inheritance. We have seen first hand people actively seeking to make a will invalid causing family and loved ones have to go through protracted legal processes and incurring significant financial and time costs in order to resolve or settle these issues.
To help avoid this situation, it is prudent to ensure that you have a will prepared by a suitably qualified legal professional who is able to ensure that the formal legal requirements of a valid will are met.
5. Not reviewing your will regularly
Another common issue we see is when people make a will and then fail to review it regularly or otherwise update it to accommodate changes in their personal circumstances. Whilst there are no ‘hard and fast’ rules for when you should review the terms of your existing will it is generally advisable that you consider doing so every couple of years, or when life circumstances change. Examples of some events that may prompt or even require a new will to be written are:
- Birth of child or grandchildren,
- Entering into or ending of a de facto relationship.
- Death of an executor, or beneficiary; and
- Change in your financial situation.
If you don’t review your will regularly or fail to make a new will to accommodate relevant life events then you may expose yourself to a range of legal dilemmas and risks.
For example, some uncommon knowledge is that if you have an existing will before you get married, a number of terms of that will are cancelled upon your marriage unless the will has been made to accommodate marriage. More specifically the terms that relate to gifts made to your spouse or the appointment of your spouse as executor of your will are cancelled. Similarly, if you divorce your spouse or end a de facto relationship, that event will cancel any gift to or appointment of your spouse/ partner as executor pursuant to your will, unless there are specific clauses stated in the will.
Unfortunately, these types of situations serve as useful examples of how certain life events can impact upon the terms of your will, and ultimately effect your loved ones. In over 25 years of running estate matters at Queensland Law Practice, there is no worse a feeling then having to tell a family in mourning that their loved ones will is not legally valid.
To avoid these types of issues, we cannot stress enough the importance of obtaining proper legal advice about changes in your personal circumstances, and the suitability of your existing will to ensure that your needs are being met.
Points to take away
There are a number of problems that can arise in the course of making a will and planning your estate. Failure to address such relevant issues and risk factors properly may result in significant time and cost problems for those left behind after you pass.
It is always advisable that you receive legal advice to assist you to navigate these issues. If at any time you are unsure about ‘legal fineprint’ or wish to clarify specific items, call for a free 10 minute consultation. Our professional staff at Queensland Law Practice are able to help. For the cost of a local call, consider it worthwhile and cost effective insurance for your final wishes. By doing so, you maximise the likelihood that your testamentary intentions are dispersed as you see fit.