Bad will drafting

Today’s post is off-topic. Perhaps for that very reason it may be the most useful one you ever read on this blog. It is about will writing.

Many wills leave certain specific legacies of fixed amounts of money to individuals or organisations (eg £1,000 to a grandchild or £500 to a charity). The residue (ie whatever is left over) is then given to an individual or individuals (usually close family) in specific proportions/percentages.

Making specific legacies of fixed sums is a terrible idea and, in my view, solicitors drafting wills in this manner (at least without giving very clear warnings to their clients) are acting negligently.

Making specific legacies of fixed sums runs a very significant risk that the amount will either be too large or too small by the time the person dies.

I had a step-grandmother who had originally intended her nephew to inherit everything. At the time, she had assets of perhaps £100,000. At some stage she updated her will to leave £10,000 each to a step-daughter and her husband. That would still have left the majority of her estate to the nephew as intended. A few years later she developed dementia and needed to go into a nursing home.  Under the rules relating to state assistance with the cost of nursing care, if your capital is above £23,250 you will usually have to pay your care fees in full.  Only once the capital drops below £23,250 might you start to get state assistance towards the care costs. By the time she died, her savings were little more than £20,000. The specific legacies were paid out of the estate first and the nephew was left with virtually nothing. This was clearly not what my step-grandmother had intended but this was the consequence of the way the will had been written.

Earlier last year, an elderly aunt became unwell and it was clear she would need to go into a nursing home. Her financial assets were such that she would initially have had to pay entirely for her nursing care.  In the event, she died shortly afterwards and before going into a nursing home. When we subsequently looked at her will, it had been drafted in a similar way to the above example whereby there were several generous legacies to various friends and charities with the residue to be distributed amongst various of her relatives which, at the time the will was drafted, would have been the bulk of her estate. Again, if she had lived several years after going into a nursing home, the relatives would probably have received nothing.

Equally, a specific request for a fixed sum may end up being far too little. For example, how many wills were written in the 1970s leaving £100 to a young grandchild, which may have seemed relatively generous at the time, but where the will was never updated and by the time the grandparent dies 30-40 years later the amount was little short of an insult due to the impact of inflation? A combination of inflation, rising house prices significantly increasing the value of an estate and the possibility that the deceased themselves may have inherited significant sums since they last wrote their will, means that a fixed sum may be far lower than the deceased would have intended as a proportion of their overall wealth at the point of death.

The solution to this is very simple. Any specific monetary legacies should always be expressed as a percentage of the value of the estate.

To illustrate, at the point of drafting a will, a person has total assets worth £100,000. A badly drafted will might look like this:

£1,000 to my friend Bob

£2,000 to each of my three grandchildren

£2,000 to Cancer Research

£1,000 to Help the Aged

The residue to be divided equally between my three children

Instead, the same will should be drafted:

The reside to be divided as follows:

1% to my friend Bob

2% to each of my three grandchildren

2% to Cancer Research

1% to Help the Aged

30% to each of my three children

If at the time of death, the value of the estate has increased or decreased, each of the beneficiaries receive the same proportion of the estate as before but in greater or lesser amounts in money terms.  Any increase or decrease will not cause any of the beneficiaries to suffer disproportionately or lose out entirely (unless there is nothing in the estate to distribute).

It is, of course, always sensible to review and update your will on a regular basis. However, many potential problems could be avoided if wills were drafted properly in the first instance.