29/06/2007:
Diy Wills lead to Cheaper Legal service but have you completed yours?
A new breed of DIY will kits have made
it easier to plan for our mortality. But beware of the pitfalls.
Just months after their launch on
Tesco's website, Lawpack's "Last Will & Testament" packages - consisting of
forms and advice manuals - have achieved "bestseller" status.
And Lawpack, which sells 250,000 of its
packs each year through Tesco Online and at stationers and retailers such as WH
Smith, now says it is negotiating with rival supermarkets for a similar
service.
Pitching a DIY will into such popular
domains - a move supported by a government drive to encourage us to consider
cheaper legal services - will help people overcome their natural distaste for
planning for their own death. This instinct, reports the Halifax, prevents half
of us from ever drawing up a will.
At the other end of the wealth scale,
that a will can now be bought for around £10 will appeal to many put off by the
cost of professional advice. This might start at £75 for a simple estate but,
depending on its size and any tax planning, could rise to £600 or more.
The focus on wills has been sharpened
by the property price boom, pushing more people over the £300,000 inheritance
tax (IHT) threshold, and leaving them open to a 40 per cent liability on any
amount above this. Halifax calculates that some 2.4 million homeowners could
now be caught in the IHT trap and estimates that the Treasury will make £2.9bn
from IHT this tax year.
Yet while the emergence of DIY wills
may encourage us to address these issues, it's vital to be thorough - for a
badly drawn-up will can be worse than no will at all and it can lead to endless
confusion and wrangling - which requires a great deal of professional time and
fees to resolve.
Those planning to go it alone need to
be aware of the pitfalls, the most common of which turn on a lack of legal
understanding. For example, many people wrongly try to make a gift of property
- half of a house to a child, say - when it is jointly owned, usually with a
spouse. A home has to be legally held as "tenants in common" before it can be
divided.
"If you intend to give your share away
to anyone else by will, [you cannot do so] without an additional document to
change the co-ownership to a tenancy in common,"
Lack of clarity is another problem: too
many people mark money out for a charity without specifying its proper name, so
the intended beneficiary may miss out. Imprecision can lead to bitterly
contested claims, and possibly even legal actions.
Other disasters include people
miscalculating their finances and promising money or assets that they simply
haven't got.
Wills also need constant review as
personal circumstances change - for example, because of the birth of children
or divorce and remarriage. "A large amount of legal work is caused by wills
that were perfectly good when [first] executed but are wholly unsuitable by the
time of death.
In the absence of a will, intestacy
rules apply to put an individual's estate into trust for division; according to
your "personal family" status, money then passes to your spouse, children or
other kin in that order.
The danger is that, by putting off
making a will, you could die intestate and your legacy pass to an estranged
family member to whom you had planned to leave nothing. And if you have no
relatives, the Treasury could end up with all your cash.
Writing a will is the only way to
ensure your money goes to the right family, friends or charity.
If you are confident enough to divide
up your assets, there is no reason why you shouldn't at least consider a DIY
will. "It will be right for you if you have a house, some savings and a couple
of heirlooms and the Wills are signed correctly but in my opinion a lot of
these DIY KIT get bought but never used" says Peter Hoare of WillPlan.
If this is the case then these people
probably need help and are far better advised to use an online system that
offers some help. www.diy-will.co.uk
However, those with a large or
complicated estate should think twice.
Opting for the DIY route could mean you
miss out on a solicitor's or Will writers expertise with, for example, trusts,
charitable gifts, tax and business assets although providing you have done your
research first then you can now complete inheritance tax saving Wills online at
www.diy-will.co.uk
Peter Hoare
WillPlan Ltd
Bringing Cheaper Legal Services to you.
01276 482031
