What is a Will and Why it Matters
A will is an important legal document which outlines the distribution of an individual’s property and possession upon their death. While drafting a will is one of the most crucial steps in estate planning, most individuals overlook the importance of keeping their will up to date. This article will discuss the risks associated with outdated estate planning, specifically outdated wills, which require regular updates and how to avoid family disputes and prolonged litigation resulting from outdated wills.
When should you update your Will?
As circumstances constantly change, it is imperative to ensure that these new circumstances are accurately reflected in your will. Instances requiring amendments to your will include:
1. Marriage:
A former will is usually revoked after marriage unless it was made in contemplation of the marriage.
2. Birth of a Child:
When a new member is added to the family, it is essential to adjust the will to include them.
3. Divorce:
Gifts or appointments made in favour of a former spouse, are usually revoked after separation. Despite this, it is essential that the rest of the will is updated after separation in order to avoid messy litigation.
4. Death:
If an executor or beneficiary has passed away, you will be required to appoint a new individual as the executor or beneficiary.
5. Mental Incapacity:
Changes in an individual’s mental capacity will require alternative requirements in order for the inheritance to be dealt with properly.
6. Change in Circumstances:
If there are substantial changes in your financial circumstances or assets such as debt, reviewing your will to reflect your circumstances is essential.
7. Changes in Law:
As the law constantly changes, laws surrounding inheritance regulations can affect your estate planning. It is important to make sure that your will complies with current laws to minimise costs and administration.
Situations Where Outdated Wills Cause Problems
While many may view an outdated will to be a private family matter filled with conflicts, it can quickly escalate into legal disputes, with costly litigation. An outdated will can cause significant ambiguities and uncertainties, increasing the likelihood of legal challenges. Some of the most common circumstances which can result in litigation include:
1. Missing Beneficiaries:
For instance, if an individual has recently had children or grandchildren since their will was last updated, dispute may arise over whether their omission was an oversight or intentional. This can result in complicated litigation, such as family provision claims under the Succession Act 2006 (NSW), where an individual can contest a will if they believe that they have not been adequately provided for.
2. Family Disputes:
Family relationships are constantly evolving and an outdated will with ambiguity around its validity and interpretation can often escalate to litigation, resulting in high legal fees and emotional distress. If litigation arises, courts will therefore be involved to interpret the true intent of the missing terms.
3. Overlooked Assets:
Modern estates now commonly include digital assets such as digital accounts, shares, and sometimes even overseas properties. As digital assets can be bought frequently, it is crucial to update the will constantly to avoid overlooking these assets. If not updated, confusion surrounding modern estates can result in court intervention for redistribution of assets amongst heirs.
4. Issues Surrounding Executor or Guardianship:
An outdated will can include executors and guardians who are no longer fit for their roles, fail to act as required or are deceased. Under special circumstances, the Supreme Court then has the power to remove an executor and also appoint guardians if their actions are detrimental to the individual’s welfare.
Updating Your Will:
To avoid litigation surrounding outdated wills, the following steps to update your will should be taken:
1. Reviewing:
It is recommended to review and update a will every 1-2 years. Even if no significant life event has occurred, regular reviews will ensure that your will continues to reflect your preferences and intentions.
2. Codicil:
Having a codicil enables amendments, modifications and can revoke parts of an existing will without having to create a new will. This is a separate document which can aid in minor changes and updates as your circumstances change. To be legally valid, it requires to be signed and witnessed as the original will.
3. Seeking Legal Advice:
To make valid amendments and avoid contradiction, seeking professional guidance for complex estates such as overseas properties and digital assets will assist in maintaining the validity of your will.
4. Drafting a New Will:
For major changes, drafting a completely new will is the best option. This ensures that there is no confusion regarding any provisions you would like to amend or add.
It is important to note that to clearly amend a will or a codicil, it is important to state that it revokes all previous documents.
Case Study: Chandler v Coulson [2015] NSWSC 172
This case involved a de facto relationship between the deceased, Ms Coulson, and Mr Chandler, where their de facto relationship was not reflected in the deceased’s will. Her estate was left to various charities and individuals who were no longer in her life, leaving Mr Chandler entirely out of the will despite their relationship. Mr Chandler filed for a family provision claim under the Succession Act 2006 (NSW) as the will did not account for Mr Chandler. The court ultimately awarded Mr Chandler $400,000 out of $837,000, highlighting how litigation commonly arises when wills do not reflect the most current situation. Therefore, it is crucial to keep your will updated to avoid any exclusions or ambiguities.
Key Takeaways: Avoiding Outdated Wills
When estate planning, creating a will which is constantly updated is the most important step in order for your family to avoid litigation. Outdated wills can result in ambiguity and uncertainty between family members and to avoid expensive litigation, your will should be updated during major life changes to include or remove family members or when there is a change in your financial circumstances. Seeking professional legal advice is the key to avoid time consuming litigation and to minimise the burden the on your heirs.
Contact OpenLegal today at enquiries@openlegal.com.au or 1300 982 068 for a confidential consultation to discuss your situation and explore the best path forward.
Nicole Joseph, Intern at OpenLegal
