Many clients consider that wills are the be-all and end-all. Certainly, making a will is the responsible means of dealing with your clients’ affairs. However, incorrectly written wils can put clients at risk of not only running into disputes, but also risks their wishes not being adhered to.

When advising clients on wills, there are several key issues that private client practitioners should consider:

Pensions

Pension benefits are often held by trustees under a scheme of trust, so are not covered by a will. Often a person will have completed a nomination form indicating what he or she wants to happen to the fund on death. This could have been many years ago and people often forget about having nominated a beneficiary or that they have a pension at all. This can result in the pension later being paid out to somebody that the deceased may not want to benefit.

When drafting a will it is a good opportunity to trace pension pots with the help of the government’s Pension Tracing Service and to update the nominated beneficiary on each scheme.

Jointly owned properties

Jointly owned properties are held as “joint tenants” or “tenants in common”. With properties held as joint tenants both parties own the “whole” of the property. On the death of the one joint owner the property will pass automatically to the surviving joint owner, regardless of the terms of the deceased’s will.

Enquiries and searches at the Land Registry will reveal whether the property is held as joint tenant or tenants in common. Both owners should then review their intentions in respect of the property. Where the owners are tenants in common, a Declaration of Trust will help to avoid disputes later.

Joint bank accounts

Similar issues can arise in relation to joint bank accounts which will pass according to the terms of the bank mandate.

HMRC will usually regard holders of joint accounts as liable for Inheritance Tax in the proportions in which they contributed funds to the account.

Joint account holders should discuss matters and keep a written record of their intentions in relation to how any funds in joint accounts are to be dealt with after death.

Their wills should reflect their intentions, particularly if Inheritance Tax on a share of jointly held monies is to be paid from the estate.

Assets abroad 

Various issues can arise where a person dies leaving assets abroad, which may take years and significant costs to resolve.  That is because inheritance laws are different in different countries and because the law (other than in relation to land) depends upon a person’s domicile.

The solution is to prepare separate wills, one dealing only with English assets and the other(s) dealing only with foreign assets. The validity of the wills must be checked by lawyers in the relevant countries and care taken to ensure that one will does not inadvertently revoke the other(s).

Personal possessions

When items are inherited jointly, each of the then joint owners has a legal right to enjoy possession simultaneously with the other. Careful thought is required when preparing a will that deals with personal possessions to reduce the chances of unpleasant disputes later.

Questions to consider include - what will be the practical effect of leaving items “to the children equally”? How will “equal” be perceived by the recipients of particular items of special monetary or sentimental value? What if items are more valuable as a collection than individually? Do your clients want items to remain in the family or would it be sensible for them to be sold and the proceeds divided between beneficiaries? If particular items are valuable, and inheritance tax is payable, then how will it be paid?

Rule against double portions 

The law presumes that a parent would not intend to give a gift twice to their child. This can lead to costly disputes between a deceased’s children as to whether a substantial gift to a particular child during a parent’s lifetime is to be on account of a child’s share of the estate or in addition to a gift under a will.

Parents need to think carefully about whether their will ought to take account of future or past gifts to children.

It is important that private client practitioners stay alive to these issues during the will drafting process.