Report on Cowboy Will writing

The Society of Trust and Estate Practitioners have just published a report on Cowboy Will Writing . It really is a fascinating read.

The difficulty of course is that anybody has a right to prepare their own Will, and therefore by law, anybody has a right to prepare anybody else’s Will. However, nobody can practise law without a license so nobody can give legal advice unless they are qualified to do so. As a result, according to this report, there are five serious issues;

Invalid wills: Unqualified will writers are producing invalid wills due to basic drafting errors. These errors range from basic typing errors and the use of inappropriate standard clauses through to errors in designing trusts.
Will writers making untrue claims: Will writers are making untrue claims to consumers. These claims include will writers representing themselves as regulated and insured, some even representing themselves as solicitors. Many are also making untrue claims about changes in the law rendering consumers’ current wills invalid, frightening them into unnecessarily having new wills written.
Disappearing wills and will-writing companies: Our survey respondents report high incidences of willwriting companies going out of business and their clients’ wills subsequently disappearing. This is despite many of the clients paying substantial sums for the safe storage of their wills.
Hidden fees: Our report highlights the widespread use of hidden fees by will writers. Many consumers are being duped by wills being advertised at a low-cost only to find additional costs for ‘extras’ such as additional clauses, review charges and storage fees, in some cases causing the price to rise more than tenfold from the advertised price.
Fraud in estate administration: Despite the significant costs and stress caused by sub-standard will drafting, it is during the process of estate administration where much of the large-scale fraud and theft from estates occurs. This area is as much in need of regulation as is will writing.

The report goes on to give examples of each issue.

The section on untrue claims would be familiar to many people. Unscrupulous Will writers claim things like “without a Will, your estate all goes to the government” (complete nonsense unless you have no family whatsoever including distant relatives).  Other practitioners have claimed that they [the will writing practitioners] had to be named as executor and that the client had to store their will with them and be subjected to ongoing storage costs (outrageous), and this one is perhaps the most reprehensible “I recently encountered a non-solicitor willwriting company with a stand in a Milton Keynes shopping centre telling mums with pushchairs that their children will be taken into care if they don’t make a will.”

So it pays to be informed, and circumspect when hiring somebody to prepare your Will. We spend a great deal of effort explaining why it is important to have a Will, but there is no place for misleading sales pitches.

It is also important to draw the distinction between unscrupulous Will writers and using software or an online service to prepare one’s own Will. At LegalWills our services were created by lawyers; we worked with highly respectable law firms from Guildford in the UK, to San Fransisco in the US, to Toronto in Canada. These lawyers and solicitors worked using existing Will precedents (e.g. Parker’s Modern Will Precedents in the UK, and Histrop’s Estate Planning Precedents in Canada) to create a state of the art service taking advantage of the technology available today. The clauses appearing in our final documents are the exact same used by estate planning lawyers and solicitors.

All of our claims are written clearly in our FAQ for public scrutiny; our prices are clearly posted and we charge $34.95 in the US and Canada and £24.95 in the UK. There are no hidden charges as we do not store Will documents, only online versions for ease of maintenance. We would never, ever include ourselves in a Will as an Executor or Beneficiary!! the idea of this is preposterous to us (the trick of a Will writing practitioner naming themself as Executor and then claiming outrageous fees is a systemic problem in the area of estate planning today).

When looking for a service to assist you in preparing your own Will, look for longevity (LegalWills has been offering our services for over 10 years), and professional accreditation (LegalWills has currently, and has always had, an A+ rating from the Better Business Bureau).

At LegalWills we welcome the report. There is no place for scare tactics, misleading pitches, unscrupulous business practices and poorly drafted Wills. If your situation is straightforward, consider preparing your own Will using a well established service like LegalWills.

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The holographic Will revisited

Yesterday I saw a post on Moneyville.ca with the promising title “Why every 30-year-old needs a Will” . Moneyville.ca is a part of the Toronto Star. The example given in the article to back up the assertion was actually very poor and this was picked up quickly in the reader comments below the article. But by far the most alarming piece of the article was this;

Jeanette Brox, a Certified Financial Planner,  “recommends either writing a holographic will or approaching a professional for help. While it is generally recommended to have a lawyer prepare your will, a holographic will may be worth considering if funds are tight….A holographic will is a handwritten letter, created and signed by the person who wrote it – the  testator — and has no costs. To make a holographic will, write out by hand how you want your possessions to be handled after your death. You should consider documenting who receives specific items, and who receives any remaining, unmentioned items. You must then sign and date the document.”

This is the first time I have seen a holographic Will recommended for anybody in any situation. In fact a holographic Will should only ever be recommended to somebody who is either pinned beneath a rock, or for somebody who lived and died in the 19th century. It is an extremely bad idea.

To start with, holographic Wills are not even recognised in many jurisdictions. In the US, 19 out of 50 states  regard them as valid. Scotland does, England and Wales do not. In Canada seven Provinces recognise them as valid – but not the remaining Provinces. In fairness to the article, it was targeted for Ontario, which does technically allow holographic Wills.

So let’s put aside the validity, and let’s assume that the handwriting is perfectly legible. What are the practicalities of  handwriting a Will? The advice in the article includes “Try to be as specific as possible will (sic) and avoid using any blanket statements. This will help prevent confusion and arguments down the road.”

The example given by Adam Goodman in the article to illustrate the need explains “For example, I own a condo with my girlfriend. Legally, she is not considered my spouse, so if I die without having prepared a will, my share of the property will be awarded to my parents and not my girlfriend.” As many people in the comments noted, this is actually not the case if the property is owned as joint tenants, but let’s move beyond that.

So how would Mr Goodman start? Something like;

“This is the Last Will and Testament of me, Adam Goodman of Toronto. I leave my share of my condo to my girlfriend, and everything else to my parents. Signed, Adam Goodman.”

The first thing to note, is that there’s no revocation clause; you should cancel all previous Wills, codicils and other “testamentary dispositions”.  You should then of course, name an Executor. You have to be clear on who you are appointing to have the authority to administer your estate. You may want more than one Executor, but you must of course name an alternate as we saw in our post earlier in the week that highlighted the difficulties with Bernie Madoff’s son’s Will. If you don’t name an Executor, the courts will do it for you and you’ve almost negated the benefits of having a Will because you are thrown into the court system.

Now we come to the alternate plan; what would happen if Mr Goodman was in an accident with his girlfriend? well, possibly his half of the condo would go to his parents, although this isn’t explicit in the Will because he talks about “everything else” and not the “residue of the estate”. What would happen if his parents weren’t able to receive their inheritance for whatever reason but his girlfriend was alive and well? As he didn’t name an Executor and with his main beneficiaries predeceasing him, with no alternate, he may just as well have not bothered to write anything down. With no parents, spouse or children, his estate would be shared between any siblings (his girlfriend would of course be cut out of his holographic Will as she is not named as an alternate beneficiary of “everything else”). If his siblings are minors, the inheritance will be held in trust, not administered by a family member, because he didn’t cover that in the Will, but by a court appointed trustee.

I could go on, but a standard Will created at LegalWills has about 15-20 clauses and runs about 5-8 pages. This would be the minimum that any Last Will and Testament should contain to be effective. All “what if” scenarios are covered and all Executor and Trust powers are included. There would even be a section for Guardians for children if required.

We talk at length on our site on the dangers of writing one’s own Will. We strongly advise against it giving the example of a statement like “divide my estate equally between my cousins and my friend Bill” which can have at least five different interpretations.

This is why I was very surprised to see Moneyville, the Toronto Star and even a Certified Financial Planner recommend a handwritten Will. It is not better that nothing, it is worse. By far the best middle ground for somebody who doesn’t want to pay the $300-$500 for a lawyer is an interactive service like LegalWills.

Oh, and yes, every 30-year-old does need a Will.

Why every 30-year-old needs a will

Keeping your Last Will and Testament updated

After an extended break we’re back and we thought we’d pick up on a story that broke over the holiday that highlights the importance of keeping your documents updated.

In a previous blog entry we listed situations and events that should prompt you to take another look at your estate planning documents. Just before Christmas we described the example of Stieg Larsson who hadn’t updated his Will in over 30 years and left an acrimonious family battle as his legacy to his loved ones. In the case of Mr Larsson, 30 years without a Will update is a little negligent, but sometimes it’s just not convenient or practical to update your Will as soon as a life changing event occurs. We previously highlighted the situation with Anna Nicole-Smith who was not able to update her Will after the birth of her second child and before she died; a time span of about 5 months. Consequently, no guardian was named for the care of her daughter which has resulted in a long, bitter custody battle. I think any parent can sympathize as very few people manage to make an appointment with a lawyer within the first 5 months of a child’s life – there’s just too many higher priority issues to deal with.

Over the holidays another high-profile case hit the news, and again it highlighted the importance of updating one’s Will, but with different circumstance. Mark Madoff, the son of the infamous “investor” Bernie Madoff, committed suicide but left a Will that was woefully outdated. Most importantly it had no mention or provision for his 2-year-old son Nicholas, so although trusts were set up for his two other children, there was nothing set up for Nicholas. The Executor of the Will was named as his father, Bernie, who is not legally allowed to fulfil this role as he is serving time in prison. This particular circumstance was not one of the examples given in our list of “reasons to update your Will”, but it serves as an example for two other important lessons.

Selecting the right person as Executor is critical and we explained in the previous blog entry what an Executor has to do, and how to choose your Executor wisely. Obviously, a convicted felon is a poor choice of Executor, but Mr Madoff Jr didn’t know this when he wrote his Will. Notwithstanding the felony, choosing a 72-year-old man was probably not the most appropriate candidate for the position anyway. It is important that your Executor is alive and mentally competent when your Will comes into effect. So usually parents are not the best choice.

It also illustrates how important it is to cover all of the “what if” scenarios. Mark Madoff did this by naming an alternate Executor so at least his outdated wishes could be administered by a family member. But when writing your Will, it is critical that every scenario is considered; there should be alternate Executors, alternate Guardians for children, alternate plans for the distribution of the assets and even secondary alternate plans. One very common scenario is for a person to name their spouse as the main beneficiary, with an alternate plan distributing the entire estate to the children. There really needs to be a second alternate plan in a circumstance like this if the family often all travel together.

So, another lesson from the news. Keep your Will updated all the time, and always have alternate plans. Updating your documents at LegalWills is as simple as logging into your account, making the change, printing the new document and then having it signed in the presence of two witnesses. If you made your Will through a lawyer, make sure that you make regular appointments to review your documents.