The Layman as an Estate Planner: The curse of the home-made Will

It is the author’s experience that most clients do not understand the nature of their own asset structures. Commonly, they do not understand the separation of legal and beneficial ownership, trust relationships, superannuation and the rights assigned to those relationships. It is also the author’s experience that many lawyers do not understand these relationships or understand them on a superficial level. The lack of understanding is evident when asking the client if they understand the distinction between tenancies in common and joint tenancies. This lack of understanding is commonplace with elderly clients. Particularly where one spouse has little insight into the extent of the matrimonial assets. In the authors experience most members of the community are apathetic when it comes to estate planning. Many have no estate plan or have created their own estate plan (which in many cases is worse than no estate plan at all). This observation is not merely true for people living in lower social and economic circumstances; it can be seen in a variety of affluent families.

It is common for people who draft their own wills to unintentionally leave dependants disappointed. In Re Maria Elizabeth Rudd; ex parte Prince [2015] WASC 107, an ex-parte decision of Registrar C Boyle, it was said The fact is that unqualified people who intermeddle in the preparation of documents that have legal operation cause great harm.’ There are extensive reported decisions on the failure of gifts, equitable ademption, unintended double portioning and construction. There are many examples where laypersons have not considered the taxation consequences of a specific devise or the priority rules regarding the payment of estate debts. Beneficiaries may receive substantially more or less than the intended provision as a result of this lack of understanding. A common mistake made by clients is their failure to identify exempt and non-exempt assets for capital gains tax purposes under division 104 and sub division 118-B of the Income Tax Assessment Act 1997 (Cth).

 

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