Drafting a will is an essential aspect of financial planning, ensuring your hard-earned assets will be distributed according to your wishes after your passing. While there may be avenues for creating a will yourself, doing so carries a number of severe risks that can lead to costly and time-consuming mistakes, particularly for those with high-value estates.

Here, we explore why you should use a solicitor when creating a will.

The Risks of DIY Wills

DIY wills, often sourced from online templates or off-the-shelf kits, offer an appealing simplicity. However, the risks often outweigh the benefits. Common pitfalls include:

• Lack of legal knowledge: a will is a complex legal document that dictates how your life's savings, property and assets will be distributed. Most people are unaware of legal provisions that can invalidate a will.
• Ambiguous wording: a poorly worded will can result in unintended outcomes, leading to family disputes or even court cases.
• No professional advice: DIY options offer no customised advice for your unique circumstances, such as complex family structures or tax considerations.

Legal Language and Technicalities

Wills require exact language in order to stand up in a court of law. A single error or ambiguous phrase can render your will open to interpretation or dispute, leading to potential legal complications. Terms like 'estate,' 'beneficiaries,' 'executor,' and even seemingly simple terms like 'property,' have specific legal meanings. Misusing these terms can result in a will that either doesn't reflect your actual wishes or is open to challenges.

For example, what does it mean to leave your 'savings' to someone? Does that include investments, joint accounts, or overseas holdings? A solicitor can remove these ambiguities, making sure your intentions are clear.

Addressing Contingencies

Life is unpredictable, and so is the future of your assets and beneficiaries. What happens if a beneficiary dies before you? What if a specific asset you mention is sold or destroyed before your passing? Experienced solicitors draft wills that anticipate and address various contingencies, ensuring that your will remains effective even as circumstances change.

Standard Clauses and Legal Formalities

Standard clauses, such as those dealing with the residue of the estate or with executors' powers, are critical to a will's functionality but may be left out or incorrectly phrased if you are not intimately experienced with them. Additionally, wills must adhere to certain formalities to be legally valid - like being witnessed correctly - which a solicitor will be well-versed in.

Avoiding Unintended Consequences

Certain statements in a will can have legal consequences you might not have intended. For instance, disinheriting a spouse or child can be subject to specific laws and requirements, which, if not followed correctly, could render your will ineffective in this regard.

Periodic Reviews and Updates

Laws change, and the legal language that was sufficient a few years ago may no longer meet new statutory requirements. Solicitors stay up-to-date on legal developments and can revise your will accordingly, ensuring it remains valid and up-to-date.

Handling Complex Financial Portfolios

High-net-worth individuals often have intricate financial portfolios involving:

• Multiple properties, sometimes in various jurisdictions
• Business interests and shareholdings
• Investments and overseas assets

A solicitor’s expertise is invaluable in navigating the laws surrounding these assets and the various taxes that they may be subject to, ensuring that they are properly addressed in your will and that you get the most out of your estate.

A solicitor can offer bespoke advice tailored to your family’s needs, ensuring that no one is overlooked and that your assets are distributed in the fairest possible manner, covering issues such as:

• Blended families with step-children
• Multiple marriages
• Dependents with special needs or conditions

Inheritance Tax Mitigation

Inheritance tax (IHT) is a significant concern for many, particularly for high-net-worth individuals with substantial estates. The UK has a basic IHT rate of 40% on estates over the £325,000 threshold. Failure to properly plan for this tax can leave your beneficiaries with a hefty bill.

There are several allowances and reliefs available that can reduce your IHT liability, such as spousal exemption, business relief or agricultural relief. A solicitor can provide detailed advice on how to make full use of these opportunities based on your specific circumstances.

Another common method of reducing the size of your taxable estate is to give away assets as gifts whilst you are still alive. However, such gifts are subject to complex rules, like the seven-year rule for potentially exempt transfers. An informed gifting strategy can help you pass on more of your estate to your loved ones, tax-free.

Setting up trusts can be an effective way to mitigate inheritance tax while ensuring that your assets are used in a way that aligns with your wishes. For example, a discretionary trust can provide for minor children or grandchildren until they reach an age where they can manage their inheritance responsibly.

Another strategy often overlooked is taking out a life insurance policy designed to cover the IHT bill. Such a policy doesn't reduce the amount of tax due, but it ensures that your beneficiaries have the liquidity to pay the tax without having to sell assets from the estate.

Overseas Assets

If you hold assets abroad, the IHT situation can become particularly complex due to differing tax laws and the potential for double taxation. A solicitor can guide you through international tax treaties and help you structure your overseas assets in a tax-efficient manner.

Real Estate Considerations

For those with multiple properties, a solicitor can advise on strategies such as downsizing or equity release, which may offer a means to reduce an estate's overall value and thus its exposure to IHT.

Tax laws and regulations are subject to change, and what may be a valid strategy today could be less effective tomorrow. Solicitors not only offer advice based on the current legal landscape but can also adapt your estate plan as laws change, ensuring that your approach to inheritance tax mitigation is both current and flexible.

The Long-Term Costs of Getting It Wrong

Failure to draft an effective will can result in:

• Severe financial losses owing to errors or oversights
• Emotional distress for family members left to sort out the complexities
• Legal disputes that can drag on for years and consume a significant portion of the estate
• IHT penalties
• Loss of asset value
• Emotional strain

These long-term costs often far outweigh the initial savings of a DIY will, making the solicitor’s fee a wise investment.

Why a Solicitor is a Wise Investment

While using a solicitor may seem like an upfront expense, the value they offer in ensuring that your will is both legally sound and optimally structured is priceless. Given the complexities associated with high-value estates and the potential for costly errors, the cost of hiring a solicitor is often a drop in the ocean.