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Will kits – risk it if you make it

22 October 2011

This month the Supreme Court had to interpret a clause in a will which was self-made.  The particular clause was poorly drafted.  The will maker died owning seven properties and money in the bank.  Specific properties were gifted to various beneficiaries, with the final clause (clause 8), of the self-made will reading:

‘I give to [NAMED PARTY]’ all MONIES held by me in BANK or INVESTMENT ACCOUNTS and ALL OTHER ASSETS both REAL or PERSONAL held by me at the time of my death’. 

The outcome would be different to the beneficiaries under the will, depending on the interpretation.  The issue arose because of a shortfall on liabilities of the estate, of which a large amount were legal fees.  The shortfall in funds meant that the ‘residuary estate’ would be used to partly extinguish the liabilities, with the shortfall coming from each of the named beneficiaries in other specific clauses.

If clause 8 was interpreted to have two components, specifically the money in accounts and generally ‘all other assets’, then the money in accounts would be gifted to the named party, with ‘all other assets’ being used for the shortfall in liabilities.  The alternate interpretation was that the money and all other assets formed the residuary estate, meaning the named party received no gift under the will, as the money and other assets would be applied to the liabilities of the estate.

Although it was a self-made will, the court concluded that a lay person may have assisted in drafting the will because of its style and layout.

Fortunately for the particular beneficiary in clause 8, the court determined that the clause was a combination of a specific gift and a residuary gift.  Consequently, the named party was gifted the money, while they, together with the other specific beneficiaries, proportionately contributed to the shortfall in estate liabilities.

A more careful approach to drafting the will should have seen a similar outcome, but without having a court ‘interpret’ the true meaning of the words used by the will maker.

Regardless of the size of your asset base now, or in the future, sound estate planning should prevent to the extent foreseeable, difficulties for the executor and beneficiaries in carrying out the wishes of the will maker.  Professional advice should be sought, rather than rely on a ‘will kit’ or a ‘lay person’ to assist with the drafting.

Download the decision HERE.