Estate planning - making sure a will gets signed
The time frame in which a will is prepared may also affect the implementation of the advice provided by the planner, writes Melissa Krajacic.
As I put the phone down I remember thinking, ‘I can’t believe Mark’s dead. He hasn’t signed his will. What a nightmare! What will happen now?’
Any professional involved in estate planning really has to ask themselves, ‘were they part of the delay, might they be professionally negligent and if so, who does this extend to?’
Estate planning is a critical part of modern wealth planning, and is one of the three pillars of planning; wealth creation, wealth preservation and wealth (or estate) distribution.
But we professionals involved in estate planning often hear the client say: “time is precious, there is so little of it available, I can’t afford the time”.
When providing your clients with financial or taxation advice, it is important to address whether the client has prepared a will or needs to update an existing will.
In these circumstances, the time frame in which the will is prepared may also affect the implementation of your advice.
Fischer v Howe
Recently, the NSW Supreme Court in Fischer v Howe found the lawyer who was preparing the will in question to be negligent.
The case was brought before the Court by the deceased’s son (“the plaintiff”) and a grandchild of the deceased, but her case was resolved before the hearing.
The defendant lawyer was instructed to prepare a will for the deceased but unfortunately she died before signing the will.
Under the new will the plaintiff was due to receive 50 per cent of the deceased’s residuary estate as opposed to 25 per cent under the deceased’s earlier will. The plaintiff claimed the difference between these amounts and was successful in his claim.
The defendant lawyer argued that he was retained to prepare a formal will, and the fact that the deceased consented to the time frame that he proposed meant that he was not in breach of his retainer.
However, the Court did not agree and found that the defendant’s retainer extended to giving effect to the deceased’s testamentary intentions.
It found that the defendant lawyer had an avenue available through Section 8 of the Succession Act 2006 to prepare an informal will for the deceased when he attended upon the deceased in her home, and on the facts of the case he was negligent in not doing so.
Interestingly, the defendant lawyer was aware of the avenue of an informal will and accepted that there was no practical reason why he could not have prepared such a will.
The defendant lawyer was aware that the deceased wanted to change her executors but did not believe this to be a substantive change.
Whilst he did not have a copy of the earlier will, the deceased had knowledge of her will and the defendant lawyer did not inquire with her as to the extent of the change to the dispositions.
The plaintiff was also successful in arguing that the defendant lawyer owed him a duty of care as an intended beneficiary, and breached that duty of care by not completing an informal will.
The Court found that the deceased had made a final decision on the provisions of her will, and that the change of executor was an important consideration.
The deceased also stated to the plaintiff after the conference with the defendant lawyer that “the dispositions are done,” which indicated the finality of the deceased’s instructions.
How is this relevant to advisers?
Whilst the law varies across Australia, the NSW Court addressed a number of factors that may be considered in determining the urgency of finalising a will. These same principles could apply to any professional involved in estate planning.
In light of the decision, the following factors may be relevant to addressing the urgency of finalising your advice and or documentation:
The age of the client
It makes sense that the older the client, the more at risk they are to illness, loss of capacity or death;
The health of the client
Both the current health of the client and their previous health are important to consider. If the client is frail, immobile or has suffered from a previous illness, this may suggest that they are more susceptible to ill health;
The nature of the change
Does the client have any existing arrangements or documents in place? If there is a change, what is the extent of the change?
In relation to wills, the change of an executor and the change to dispositions (particularly if the change is to reduce the risk of a claim) need to be attended to promptly;
Finality of instructions
Has the client provided you with all the information you need to complete your advice and or documents? Is their decision final? If so, do not delay!
Delay
If there is a delay in finalising advice and or documents, what is the reason for the delay? It is more acceptable for the delay to be on the part of the client than on the part of the adviser.
Conclusions
The lesson to be learned is simple: tailor your actions and your advice to the apparent needs and urgency of the client situation.
You have a duty to do this, not only for the benefit of your client but also for others who may be affected by your delay.
So what happened to Mark’s unsigned Will?
As it turned out, due to the minimal change to Mark’s existing will, the beneficiaries agreed to the draft will I prepared, and his wishes were carried out. I still would have preferred that he signed his will.
Melissa Krajacic is a senior associate at Rockwell Olivier.
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