K3 Insights

Your will controls what happens to your money and belongings after you die. It is essential to get it right so everything goes to the people you want smoothly, without unnecessary delays, expense or harmful side effects.

An increasing number of people use online will builders or AI generated wills. For a minimal cost you can get a will which will do what you want, if you are lucky. However, there is a lot that can go wrong, to the point that we believe that a paid adviser recommending you to use online will builder tools is likely negligent.

What can go Wrong?

Wills can go wrong for three main reasons:

1. They get the law wrong – their wording produces unintended legal effects;

2. They get the facts wrong – their wording produces an outcome you did not intend;

3. They are open to challenge – their wording opens the door to easy legal challenges.

Imagine these common scenarios described in the paragraphs below to illustrate what can go wrong when a will is not carefully drafted to reflect the law and your particular circumstances. There are many potential problems that will builders are simply unequipped to spot or deal with.

Scenario 1: Relationship Property

Death is treated as a separation from your partner under the Property (Relationships) Act 1976 (PRA). This includes people who are married or have been in a de facto relationship for 3 years. Typically, a separation such as death would mean that relationship property is divided 50-50 between the partners unless there is a contracting out agreement. There are 2 main motives to challenge wills under the PRA:

1. Your partner is unhappy with the provisions you made for them in your will so after you die they use the PRA to sue for more money. 

2. Your partner dies soon after you. The beneficiaries from their will (typically their children) sue to challenge under PRA grounds so your partner gets substantially more money which they would then inherit under your partner’s will. 

Scenario 2: Legal Capacity

Legal capacity is the idea that you are capable of signing a will. If you have legal capacity, your will takes effect. If you do not have capacity, your will is irrelevant and we look to your previous will. If there is none, you are treated as if you die without a will. A common example:

You have adult children in their 40’s with different levels of wealth. You draft a will that provides them with an uneven level of inheritance to reflect this. Two days after you drafted your will, you die. One of your children is disgruntled and sues, alleging you had no legal capacity to sign your will, potentially as a result of dementia or some other illness, so it should be discarded. 

A lack of capacity scenario is easy to mitigate by using a lawyer to draft your will. Your lawyer will be well versed in legal capacity so will flag any potential issues ahead of time. You will need to discuss with your lawyer what you want in your will and give feedback on the draft. This is very useful evidence that you had capacity to understand what you wanted.  This makes it much harder for a disgruntled beneficiary to sue. In theory, your witnesses will give helpful evidence that you had capacity, but given their interaction with you is limited to signing the will, this evidence of capacity is likely weak.

Family Protection Act 1955 (FPA)

A will maker can usually leave their property to whoever they want. However, the FPA limits this, allowing spouses, children, and parents to make a claim for their maintenance or support. The idea is that there is a moral duty to provide for particular people and the court will not lightly allow you to cut them out of your will. Careful language is required when constructing your will to avoid potential issues and minimise the chance of disgruntled people who wanted a bigger cut from making a successful claim. 

Typically what happens is you will cut someone like an adult child or spouse out of your will. This opens you up to claims by them under the FPA. However, if you document why you chose to do this and your intent, this helps provide useful evidence if there are any issues with that person challenging the will in future. It is always important to understand your specific family dynamics and who you might owe moral duties to in order to understand the consequences of who you distribute money to and how much. Consulting with a lawyer will give you an idea as to how likely different dispositions would be to stand up in court. 

Interaction With Family Trusts

If cutting someone out of your will would open you up to a FPA claim, a lawyer can identify alternatives that can work. For example, setting up a family trust to put assets into is often a method to control who gets what from the majority of your property. There are tax consequences for setting up a trust however, so again, it pays to consult with a lawyer first. 

Life Insurance

Be very careful regarding who owns your life insurance policy and who the will assigns it to (if you own it) upon your death. If someone else directly owns your life insurance policy, they can easily claim it upon your death directly from the life insurance company. However, given people often forget to change who owns their life insurance policy following separation, we typically recommend having your life insurance policy in your own name.

Administration Errors

We find online will builders typically lack substantial detail needed to make your will properly legally effective in the way you intend. For example,

most online will builders do not properly consider who you want to be the backup for beneficiaries getting a share of the will or for positions such as executors. Failing to name backups can create significant unintended effects if the person designated dies before you do. For example, a beneficiary who dies before you do cannot be gifted what you intended to gift so the share passes to the other beneficiaries. You might have intended that gift to pass to someone else if they died. Consider a family heirloom like jewellery – you likely have very specific people who you would want to receive it.

Often, wills will hold assets on trust for people such as children until they reach a certain age where they are responsible enough to handle the money themselves. This means that the will can create a trust, so the effects of the Trusts Act 2019 kick in.  This is a very significant point which you can guarantee online will makers do not consider. 

If you have assets in multiple countries, it can be very important under which jurisdiction you create the will. Again, this is a point overlooked by online will builders.

Testamentary Promises

Your will can be challenged under the Law Reform (Testamentary Promises) Act 1949 where you promise someone that they will be rewarded for work that they have done after you die and you do not keep that promise. Typically, this will apply to something like caring for you in your old age. Typically a lawyer will ask you if you have made any of these promises and if so, ensure the will reflects them. If not, they will identify the consequences if you choose to make these promises in future. Naturally, online will builders do not consider this.

Conclusion

There is a lot that can go wrong using an online will builder or AI generated wills, to the point that we believe an adviser recommending you use one would be negligent. In many scenarios a will builder does not properly cover the legal bases for your particular circumstances, risking invalidating your will or opening it to challenge. 

Yes, the costs are substantially smaller to use an online will builder, but it pays to invest into getting it right to avoid the potential family conflict mess that problems with a will can create.

K3 Private Wealth Team

Protect your current and future wealth with K3. Our team will help you create robust legal structures to safeguard your current and future wealth.  Setting up robust legal structures now helps ensure they produce the effects that you intended, simplifies management and safeguards you from potential liability in future. We are experts in the interlocking areas of law required to make these structures effective such as trusts, wills, relationship property, powers of attorney, immigration, and overseas investment. This is our private wealth team’s sole focus.

We can assist you creating, resolving disputes with, or managing structures like trusts, wills, and contracting out agreements. We are well versed create family trusts and charities that are fit for purpose, help you manage them effectively, and deal with any potential disputes. We work extensively with accountants, tax experts, financial advisers, insurers and other experts to protect your current and future wealth.