Richard Murray: Out-of-date will could be worse than no will

PROTECT your loved ones by checking it out writes Richard Murray

The 30 per cent who do have a will shouldnt start congratulating themselves. Picture: TSPL
The 30 per cent who do have a will shouldnt start congratulating themselves. Picture: TSPL

It’s often quoted that seven in ten people in Scotland don’t have a will. You know what they say about statistics, but to someone who has advised individuals for many years, it sounds about right.

Whether this is down to people tempting fate or believing they have little or no estate to pass on, the simple fact is that everybody should have a will. They allow a person’s affairs to be tidily dealt with after they pass away and hopefully will avoid a potential falling out between family members – much more common than you might think!

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However, the 30 per cent who do have a will shouldn’t start congratulating themselves. How confident are they that their will is up to date in terms of distributions to the family and also in consideration of inheritance tax? The following real-life case, with names changed, perhaps puts things into context.

Joe and Jane married in 2005 and put in place “mirror” wills in favour of each other which also provided for the estate on the second of them to die, or in a common calamity situation, to pass half to Joe’s brother and half to Jane’s sister.

In 2012, Joe and Jane separated without having had children. They put in place a separation agreement in relatively standard terms. By doing so, they agreed to relinquish any right to benefit from the other’s estate in the event of their death.

Joe passed away in 2015, before his divorce from Jane was finalised. Among his personal papers was a handwritten “note” that appeared to provide for a different distribution of his estate than provided for in the 2005 will. The “note”, unsigned and undated, was believed to have been written sometime close to his death.

On Joe’s death, by virtue of the terms of the separation agreement, Jane was not entitled to benefit from the estate of her husband. The default provision of Joe’s will provided instead for half to pass to his brother and half to Jane’s sister. The “note” indicated Jane’s sister was not to benefit but because it was unsigned and undated, no recognition could be given to this in terms of Scots law. In recognition that she had received an inheritance she probably shouldn’t have been given, Jane’s sister varied her entitlement in part through a deed of variation.

Even had the “note” been signed and dated, it probably wouldn’t have been effective on the basis that the style was more akin to a letter of instruction rather than a testamentary writing in proper terms.

What can be learned? Hindsight is wonderful, but post-separation, Joe should immediately have changed the terms of his will as almost certainly Jane would have done so.

Simply put, it is good practice to review a will every three to five years. This is a sufficient period for family circumstances to change. Appropriate changes could be in relation to the appointment of Executors/Trustees, the provision of charitable and non-charitable legacies and the distribution of the residue (remaining estate). There are inheritance tax benefits in terms of legacy and residue bequests to charity. Just as important is how you might wish remains to be dealt with on death and the type of funeral service you would prefer.

Everyone should have a will to ensure their nearest and dearest benefit in the way you want them to – thinking that you already have can be almost as problematic as not having one at all.

• Richard Murray is a partner in the private client team at Harper Macleod LLP