And 2/3rds of existing wills are likely to be out of date
- More onerous revenue claims against wills/estates have led to the increasing desire to protect estates from future claims
- ‘Blended families creates potential for unhappy spouses and step children contesting the will
Anecdotal evidence suggests 2/3rds of Australians do not have a will: Townsend lawyers.
The current available survey evidence is that many adults in America do not have a will[1]. Anecdotal evidence suggests the same in Australia. Combine this statistic with the estimated two thirds of existing wills likely to be out-of-date owing to an individual’s changed circumstances, this leaves around 85% of adults without any means of adequately allocating assets in the event of death.
This is a tragedy. Many of these people will let their families down by not having in place the proper arrangements to protect family members and minimise tax on both the estate and the family member.
There have been a number of significant social and regulatory changes which have led to the situation that even if one does have a current will in place, it may no longer suffice to cover all future eventualities.
What has changed?
Previously, the will was used to ensure certainty in the transfer of assets on a person’s death to their family, and to avoid any disputes arising from this process.
Now a number of factors have complicated the process:
- There has been a massive growth in the uptake of financial products such as discretionary and superannuation trusts and funds, that fall outside the parameters of a will. One of the drivers of this growth has been changes in superannuation law making this vehicle so much more attractive from a tax point of view and as a safe haven from bankruptcy trustees. A will cannot regulate how these trust assets will be distributed
- There has been substantial growth in litigation disputing the allocation of assets upon death by beneficiaries. Lawyers are even now specializing in estate challenges. Courts have ruled that solicitors owe a duty of care to the deceased’s beneficiaries so that if the will has not been properly drawn those beneficiaries can sue the solicitor who prepared it
- The growth in the incidence of divorce and partnership breakdowns, leading to what is now called the ‘blended family’, has created the potential for unhappy spouses and step children to contest the will
- More onerous revenue claims against wills and estates have led to the increasing desire to protect estates from future claims
- Growing levels of wealth in baby-boomers sometimes held across different countries, in different structures, and even subject to claims by disparate beneficiaries from different families!
The result is that a significant proportion of ordinary people now need a comprehensive range of documents in an estate planning package to cover all eventualities after their death. A will has become only one of the documents a person needs to have in their portfolio to protect their assets for future generations.
An effectively drawn will and the other estate planning documents need not cost a fortune and will repay the set up costs many times over.
[1] http://west.thomson.com/about/news/2008/06/30/findlaw-survey.aspx