The cost of making a will can vary dramatically, with online “do it yourself” versions in high street stores costing as little as £9.99, going up to hundreds of pounds if you decide to see a solicitor, but is doing your will on the cheap a good idea?
Private client solicitor Ian Lane of London law firm Hodge Jones & Allen, explains:
“DIY wills are great for a simple transfer of assets between family members, providing they have been completed correctly. However, experience shows that those that go it alone often make unintended errors which can invalidate a will, and lead to disappointment and additional cost for the intended beneficiaries. Often the mistake is not revealed until it’s too late to correct.”
Ian advises that DIY wills are most suitable for those:
- Only leaving assets between husband and wife, children or grandchildren.
- With total assets below the inheritance tax threshold of £325,000 (£425,000 including property).
He says you should avoid using a DIY will if:
- You run a business, own private company shares or are a partner in a business, because DIY wills may not allow you to take advantage of additional tax relief you could be entitled to.
- You own assets abroad: The laws of other countries in relation to wills differ greatly. In many countries, the concept of a will simply does not exist and as a matter of private international law, a will made in one country will not generally work to transfer real property outside that country. You cannot therefore safely assume that an English will is adequate to transfer property outside of England and Wales without obtaining specialist legal advice.
- The total of your estate exceeds £425,000: Anyone with assets over £425,000 (including the family home) needs to ensure their will is tax efficient and DIY wills are not designed to do this. Failure to organise the disposal of your estate without specialist tax advice could mean a windfall for the tax man at the expense of your beneficiaries.
- You need to provide for vulnerable family members: If you are leaving assets to a vulnerable family member, you need to ensure that any windfall does not impact upon benefits they receive. A Disabled Trust (with a Vulnerable Beneficiary election) is the best way to do this, ensuring that your family member benefits from your gift as intended. The rules around these trusts are complex and you should consult a solicitor with experience of gifting vulnerable adults to draft the right wording, otherwise you relative may receive no real benefit from your will.
- You wish to leave a substantial portion of your estate to charity: The recent case of Blue Cross v - Illot, where the Supreme Court overturned a decision to increase the sum of money awarded by the lower court out of the estate of her estranged mother, who had left her entire £500,000 estate to three animal charities, has again highlighted this issue. If, as in Illot, you exclude or reduce the amount your beneficiaries might expect to achieve, you should consider giving your reasons for this in your will and also explain why you are providing for the alternative beneficiaries, such as charities, so that this can be presented to the court if a claim is made against your estate.
The most common mistakes made by people using DIY wills are:
- Using a beneficiary as a witness. A beneficiary cannot benefit from a will they have witnessed.
- Failing to sign the will in the presence of both witnesses which renders it invalid.
- Failing to date the will which may also render it invalid.
- Altering the will without properly initialing all changes. The person making the will and both witnesses must also initial to validate any manuscript changes.
- Failing to register the will or telling anyone where it is and so, even if it was completed correctly, it becomes a wasted exercise as no one knows its whereabouts.
- Failing to understand the effect of the wording of the gifts being left in their will, such as gifting the proceeds of a particular bank account which is subsequently closed but never updated in a will. In such cases, Ian says it is better to be general i.e. I leave the proceeds of all my bank accounts to…or leave a specific cash gift instead.
Ian says: “I have had to go to great lengths to prove a number of DIY wills, in one particular case there were eight separate legal issues, which led to most of the beneficiaries not receiving what had been left to them. The deceased had intended to gift the proceeds of one specific bank account but closed that bank account without changing it in their will. Another error was forgetting to deal with all of their estate unintentionally creating a partial intestacy.
“The DIY will in that case cost £9.99 but the cost to the beneficiaries of dealing with the errors was almost £3,000. This was the worst case I have seen but I have rarely dealt with a DIY will that did not have technical issues leading to unintended consequences. DIY wills are great for a simple transfer of assets below £425,000 between family members but for anything else they probably aren’t worth the risk.”