Private client focus | Dodging a will-writing bullet

Within an increasingly litigious society professional negligence claims against legal services providers are on the rise and will writers have proved no exception to this.

To avoid potential claims and ensure a quality service for clients, will writers must take a considered and systematic approach when preparing a client's will.

Matters including undue influence, testamentary capacity, domicile, foreign assets, and potential statutory claims must all be taken into account. Will writers must also be fully apprised of those assets and financial interests that pass outside the terms of a will to ensure their clients benefit their intended beneficiaries in the most effective manner.

Firstly, it is important to consider the arrangements for taking a client's instructions. It is preferable to see clients alone to minimise potential undue influence from others.

Where an elderly client wants a member of their family to accompany them at the meeting they must be advised it is not only in their best interests that they are seen alone, but it is also in the best interests of their intended beneficiaries.

A will writer should not continue to act where undue influence is suspected. If a client insists that someone else be present the will writer should document and keep a record of their advice against this.

Where a client has an imperfect knowledge of English the services of an interpreter should be engaged to ensure instructions are provided independently of someone interested in the estate. Where individuals provide joint instructions they must be asked if they are willing to do so in the presence of each other and they must be advised solicitors cannot take future substantial new instructions from one of them without the presence of the other.

The will writer is obliged to assess the client's testamentary capacity, particularly in the case of elderly clients. The client must understand the nature and effect of making a will, understand the extent of their own assets, comprehend and appreciate the claims to which they ought to give effect and they should not suffer from any disorder that prevents rational consideration of these points and produces a disposition which would not otherwise have been made.

The conclusions of this assessment should be documented. Where there '¨is doubt as to testamentary capacity a medical opinion should be sought. '¨If the client refuses to agree to this they should be advised this might aid a future claim against the estate and the client should confirm they approve of '¨proceeding on that basis.

Again, that conversation should be recorded on file. To further guard '¨against any such claim it may be prudent for a medical practitioner to be witness '¨to the signing of the will and for them to document their assessment of the client '¨at that time.

Domicile

Having considered the testamentary capacity of a client, the will writer should establish their domicile. The English laws of domicile have implications with regard to the payment of UK inheritance tax and the jurisdiction of the will. Broadly, where a client is English domiciled their worldwide assets will be subject to UK inheritance tax on death, subject to any tax treaties in place with overseas jurisdictions in which assets are held.

An English domiciled client's will can deal with their worldwide assets, but it is best practice to liaise with a lawyer in any foreign jurisdiction in which assets are held (particularly in relation to realty) to ensure an English will is acceptable in that jurisdiction and that there are no conflicts of succession law. Where a client is domiciled overseas, only their UK assets will be subject to UK inheritance tax. Their English will might only be able to deal with their English assets.

Again, to avoid conflicts of law in cases with a foreign element the advice of a relevant overseas lawyer should be obtained. In addition, where there are foreign assets the extent of the revocation clause should be carefully considered to avoid inadvertently compromising overseas succession planning.

Potential beneficiaries

The will writer must establish the extent of the persons who could potentially benefit under the will of their client. Existing wills should be reviewed in order to establish whether any beneficiaries are to be excluded, to document the '¨reasons why and to advice on the '¨potential repercussions.

A client should be made aware of any potential statutory claims that could arise under the Inheritance (Provision for Family and Dependants) Act 1975 and be advised as to how to mitigate these.

For instance, a client might be '¨unaware that potential claimants include their partner with whom they have cohabited for a period of two years up to the date of death or a family member or friend who has become financially dependent upon them.

The implications of inheritance tax should also be considered. The extent of the client's current assets and liabilities and where the tax liability will fall unless expressly provided for under the terms of the will should be established. Where a client wishes to include specific gifts they should consider whether those gifts are to be "free of" or "subject to" inheritance tax.

If there is the potential of a surviving spouse or civil partner and the client wants a valuable asset to pass to a child, it may be worth considering utilising trust provisions in the will where the spouse is given an interest to ensure that the specific asset benefits from that exemption, but can then pass out of the trust direct to the child.

If the spouse survives seven years from the date the asset leaves the trust and passes to the child, the value of that '¨asset will have passed to a non inheritance tax exempt beneficiary without incurring a charge.

Such trust mechanisms are particularly useful where couples have different sets of children from previous relationships and wish to ensure their respective children are ultimately benefited. The incorporation of trusts can also assist in effectively utilising any business property or agricultural property reliefs that might be available to assets in the estate with a considerable inheritance tax saving.

Independent assets

A will writer should also consider those assets passing independently of the will. This can include pension and employment death benefits, life assurance policies and interests in an existing trust. The manner in which those assets will pass may impact the dispositions made under a will.

In particular, where a client holds realty jointly with others they should be informed of the implications of survivorship and advised that they may wish to hold the property as tenants in common so their interest in the property can pass under the will. Where a client does wish to alter a joint tenancy to tenants in common the will writer should ensure any severance is properly executed and recorded to enable the provisions of the will to succeed.

The recent case of Lorraine Studholm Feltham v Freer Bouskell [2013] EWHC 1952 (Ch) serves to remind will writers that the will preparation process must be dealt with in a timely fashion.

The claimant's step-grandmother instructed a solicitor to prepare a new will and the solicitor delayed due to their inaccurate understanding of the client's circumstances. The delay caused their client to arrange for the claimant to prepare a will for the client leaving their estate largely to the claimant. Two beneficiaries omitted from the new will consequently challenged it and the claimant had to settle in their favour. The claimant then made a successful negligence claim against the solicitors who had failed to act in a timely manner on the basis that a claim against a will prepared by a solicitor would be less likely to succeed. The firm was held liable to reimburse the claimant for the inheritance lost to the two beneficiaries who had claimed against the claimant and for legal costs incurred in that settlement.

While the above points are not comprehensive they do underline the '¨need for a timely in depth approach to '¨will writing. Without sufficient fact finding and tailored advice the will writer may be left exposed to potential claims and the client's friends and family may suffer avoidable inconvenience.

Taking a thorough approach to will writing also assists in underlining the value of the service and helpfully challenges any potential preconception that a will is a straight forward document.