The dangers of a DIY will
Richard Neave is a partner specialising in commercial, property and trust law, at Duncan Cotterill.
DIY wills are becoming increasingly popular as a quick, cheap option to put a will in place, but care is required. The legal and financial risks to your executors and your loved ones could be major.
A homemade will, or an online will (both examples of DIY wills), may look like the faster, cheaper, option when compared with finding the time to go and meet with your lawyer, but there are numerous risks.
For example, your will may not comply with the legal formalities required for a will, or it may contain drafting errors or omissions which result in unintended consequences. All of these could end up costing your executors thousands of dollars to rectify.
If your estate is modest, this will further diminish the value of your estate, which means less for the beneficiaries under your will.
The courts are seeing an increased number of wills that have been generated from online websites. Many of these are deficient in a number of respects and cost significantly more to fix than to get right in the first place.
For example, in completing the will, the DIYer may omit to input the names of their intended beneficiaries into the correct part of the will.
Some DIY wills follow a 'fill in the gaps' format, but they are not so easy to follow. Sometimes the person completing the will omits this information by accident or innocently believes that if they have already referred to the person in another part of their will, for example named them as the executor in their will, then that also covers reference to them as the beneficiary of their will.
Sadly, it does not, and in this scenario, a partial intestacy will result. If you have not named a beneficiary in relation to a gift in your will, the beneficiary you intended to leave that gift to will miss out in favour of those entitled under the Administration Act 1969 which deals with those who receive under intestate estates.
It is possible that if you have left written instructions as to how you intended to dispose of your estate or you have told a family member or close friend who you have benefited under your DIY will, then the written instructions may be used as evidence or the person you told may be able to give evidence after your death.
Your executors could also look at applying to the High Court to correct the will. They would of course need to have sufficient evidence to establish what you intended.
Again, this will be an expensive and time-consuming process, especially if other affected parties choose to challenge your application and obtain their own legal advice, resulting in a full court hearing.
It will also delay the administration of your estate and may cause unnecessary stress to your family and loved ones who may end up financially worse off, or with nothing at all. It is very easy for this to happen.
Before you sign your DIY will, you must read each clause carefully. If you are in any doubt, ask for assistance.
It's certainly important to have a will and we encourage people to make wills. However, there is peace of mind in knowing that your will is legally valid, that the original is held in safe custody, and that the people you intend to benefit will actually benefit
A will should also be reviewed every five years, or earlier, on the happening of major life events such as getting married, buying a home, having children or the death of a loved one. There are numerous benefits in consulting with a lawyer.
A good lawyer will take the time to talk to you about your family and your relationships, to understand your estate planning goals, your assets and liabilities and also talk to you about any risks such as claims that could be made against your estate and how you can best minimise or deal with these in your lifetime.
Have you ever considered a DIY Will?
Written by Richard Neave. First appeared on Stuff.co.nz.
Any advice contained in this communication is general advice only. None of the information provided is, or should be considered to be, personal financial advice.