By David Maxwell, Head of Private Client
A Will and a Lasting Power of Attorney (LPA) may be some of the most important documents that any of us will create in our lifetime – even if we don’t realise it at the time.
These important documents determine how our estate is distributed once we die, in the case of a Will, while LPAs dictate how our health and our finances will be looked after if we become incapacitated.
How a Will is drafted could substantially affect who benefits from your estate and whether any tax is due on the assets left to them.
Similarly, an LPA will be used by your attorneys to make key decisions about your care, including the treatment you receive or determining how your money and property are managed.
A poorly worded Will or LPA can easily lead to a dispute between your family that could be costly and stressful during a time of difficulty or grief.
However, despite the importance of these documents, more and more people are choosing to prepare Wills and LPAs without any legal assistance.
While there are companies and organisations out there that offer templates for free or even a small fee, they may not capture the complexities of your requirements.
This trend in DIY Wills and LPAs is thought to relate to a growing number of disputes. The latest data from the Ministry of Justice highlights that the number of challenged Will cases made to the High Court in 2019 was 47 per cent higher than the previous year.
Similar data isn’t available for LPAs, but disputes are just as likely given how emotionally charged decisions around an incapacitated person’s finance and health can be.
The creation of a Will is far more than just writing down your wishes on a piece of paper. To be valid in the first place it must meet the requirements of section 9 of the Wills Act 1837.
This states that the Will won’t be valid unless it is in writing, and signed by the testator, or by some other person in their presence and by their direction.
The testators’ intentions are made clear by their signature which gives effect to the will. The signature must be made or acknowledged by the testator in the presence of two or more witnesses present at the same time and each witness either:
This must be done in the presence of the testator, but not necessarily in the presence of any other witness.
If even these basic steps aren’t taken with a DIY Will, then it stumbles at the first hurdle and it won’t be enforceable under the current rules.
Given the specifics of these requirements and the lack of experience of an individual creating a Will, it is all too easy for a DIY Will to be invalidated.
However, just because a Will is valid, it doesn’t mean that it won’t be subject to challenge and lead to disputes. A Will can be challenged in the courts where:
Again, without proper process and legal consideration, it is far too easy for one or many of these points to be levelled at a DIY Will.
Creating a Will with the guidance of solicitors and in their presence will help to minimise the possibility of your Will being challenged.
Disputes may still arise, especially if some beneficiaries feel aggrieved, but if the proper procedures and checks are followed by your solicitor, including basic checks for capability and competency, it should reduce the potential for challenges.
What are the common errors made in DIY wills?
Beyond the issues of validity and the potential for challenges, there are some common errors that testators using DIY Wills fall victim to. These include:
Creating a DIY Will can also disadvantage your beneficiaries’ inheritance by creating unnecessary tax obligations.
Failing to carefully plan out how your estate is distributed could mean a large bill for your beneficiaries that is often avoidable with the proper advice.
Inheritance Tax planning alongside the preparation of a Will is now even more important given the recent freeze on tax thresholds.
This will expose many estates to the effect of fiscal drag as inflation drives up the value of assets and property, but the point at which you start paying tax remains unchanged.
The effect of this freeze, which has already been in force now for a couple of years, is already evident in the fact that the Treasury has received £4.1 billion in inheritance tax receipts between April and October 2022 – £500 million more than the same period last year.
Many steps can be taken during the preparation of a Will, with advice from a solicitor, which can help to reduce the impact of Inheritance Tax.
They will likely cover everything from how your estate is distributed to the creation of trusts that may help to manage and protect wealth for future generations.
Without seeking the advice of a professional at this stage, it is all too easy to miss the necessary steps to arrange your estate in a tax-efficient manner.
Similar to Wills, there are an increasing number of people creating health and financial LPAs without the support of a solicitor.
The same challenges tend to exist with these DIY documents as well, with fraud, mistakes in the application and questions raised about applicants’ capacity and the potential for abuse, often being raised by other parties.
A valid LPA must also include a certificate from an independent third party confirming that the person signing it understands the purpose of the LPA and the powers conferred via it, including verification that they weren’t under undue influence or manipulation during the creation of the LPA.
This can easily be provided via a solicitor as they are professionals regulated by the Solicitors Regulation Authority. This provides an additional safeguard and when combined with a practice’s professional indemnity insurance, gives you additional recourse should something go wrong.
While many may avoid solicitors due to cost and the feeling that a Will or LPA can be drafted quite simply, the role of a lawyer is not just to create the documents but also to provide counsel.
A solicitor will ensure that attorneys, in the case of an LPA, know their duties and are similar to a will and executors. They can explain the limits of an attorney’s powers and the role of executors to help clients make better-informed decisions.
Without this advice, it would be quite simple for someone to sign something without fully realising the repercussions or even be easily misled by another party.
Don’t want to take the risk with a DIY Will or LPA, speak to David Maxwell today by calling +44 (0) 20 7240 0521 or emailing email@example.com.