To the person in the street, “making a will” is a simple exercise. Historically, one has expected to pay only a nominal fee to their solicitor when making a will and has expected the will to be a very simple document. When confronted with the term “estate planning”, one may well think that this is really just “making a will” dressed up with sophisticated language and over-complication, so that the solicitor can charge extra fees.
A Tasmanian Supreme Court case late last year highlighted that there really is a significant difference between a solicitor who is simply “preparing a will” and a solicitor who “undertakes estate planning”. The Tasmanian Supreme Court in its judgment said that a solicitor who is only asked to make a will has a more limited obligation to see the client’s wishes achieved, than a solicitor who is asked to undertake estate planning.
Essentially, an estate planning solicitor must understand fully the client’s situation and intentions, and must raise with the client anything which might prevent those intentions from being achieved. The solicitor should advise the client about potential strategies to overcome those problems and ask the client whether he or she wishes to take steps to put those strategies in place.
A solicitor who is simply asked to prepare a will, according to the trial judge in the Tasmanian case, did have a duty to understand the client’s situation and wishes, but in some respects had a lesser duty to advise the client about ways to ensure that those intentions are not defeated. In particular, the trial judge said that the solicitor did not have a duty to advise the client about ways to remove assets from his estate, to defeat a potential claim against his estate after his death.
On appeal, the Full Court overturned these views of the trial judge and held that all solicitors have the full estate planning duty mentioned above. But the very fact that a Supreme Court judgment differentiated between instructing a solicitor to make a will and instructing a solicitor to undertake estate planning highlights the very real difference between the two.
In that case, the practical effect was that interests in real estate were exposed to a claim against the estate by the client’s daughter after his death; whereas under Tasmanian law, had simple steps been taken at the time he made his will, the properties would have been protected from that claim.
Other common circumstances where making a will is not the same as estate planning and is likely to fail to achieve the client’s wishes include:
- Failing to deal with superannuation: there are an increasing number of cases in which superannuation is paid contrary to what appear to be the wishes of the person who has died, because inadequate actions have been taken to achieve the desired result. Essentially, you should assume that your superannuation will not be governed by your will, unless steps are taken to bring it within the will.
- As demonstrated by the Tasmanian case, property can be co owned in two different ways, one of which brings the client’s share in the property under the control of his will; and the other of which places it outside the control of his will and automatically passes it to the co owners.
- Life insurance, like superannuation, may well be paid automatically to a beneficiary without falling under the control of the will. It is necessary to investigate as part of the estate planning what arrangements have been made in this respect.
- Assets which are held in a family trust are not part of the estate and cannot be directly given by the terms of a will. Generally the most that can happen is that control of the family trust can be passed by the terms of the will, but only if the family trust deed is carefully analysed and the will is correctly drafted.
Increasingly, “making a will” is inadequate to achieve many people’s intentions. Making a will is pointless except to achieve your overall intention about who benefits from your financial resources after your death.
It is that intention which should be the focus of both the solicitor and the client, not just “making a will”. A properly crafted will is part of achieving that intention, but not the whole story.
Next time you or a friend or relative are tempted to “make a simple will”, ask “how can I be sure that it will achieve the overall intention?” Our estate planning team have decades of experience in identifying our clients’ intentions, their personal and financial circumstances which impact on how intentions may be achieved, and in preparing strategies and documents which can best do so.
Please contact a member of our Estate Planning Team to explore how we may assist you in achieving your intentions.