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CM Law's Ultimate 50 List: Making a Will #15 - How often should I review my will?
Introduction
A will is a crucial legal document that dictates how your assets are distributed after your death. However, life is dynamic, and circumstances can change. Regularly reviewing your will is essential to ensure it continues to reflect your current intentions and to avoid potential disputes among beneficiaries. This guide explores how often you should review your will, the events that may prompt a review, the potential consequences of not keeping your will up to date, and presents a real-life case from New South Wales illustrating the importance of regular will reviews.
How Often Should You Review Your Will?
1. Recommended Review Frequency
Experts generally recommend reviewing your will at least every three to five years. Regular reviews help ensure that your will remains aligned with your current wishes and complies with the latest legal requirements. However, the need for a review can depend on individual circumstances, including changes in family dynamics, financial status, or legislation.
2. Life Events That Should Prompt a Will Review
Several key life events should prompt an immediate review of your will to ensure it accurately reflects your current intentions:
- Marriage or Divorce: Marriage or divorce can significantly impact your estate plan. In New South Wales, marriage typically revokes any existing will, unless the will explicitly states otherwise, while divorce can affect certain provisions, such as bequests to a former spouse.
- Birth or Adoption of Children: If you have new children or grandchildren, you may want to update your will to include provisions for them, such as naming a guardian or allocating specific assets.
- Significant Changes in Financial Circumstances: Acquiring new assets, such as property, investments, or starting a business, should prompt a review to ensure these are included in your estate plan.
- Death of a Beneficiary or Executor: If a beneficiary or executor named in your will dies, you should update your will to reflect these changes and appoint new individuals.
- Changes in Relationships: Changes in relationships, such as reconciliations or estrangements, can impact your intentions regarding beneficiaries or the allocation of assets.
- Changes in Laws: Changes in inheritance laws, tax laws, or other relevant regulations may affect your estate planning. Regular reviews with a legal professional can ensure your will remains compliant with current legislation.
3. The Importance of Regular Reviews
Regular reviews of your will help prevent disputes and ensure that your estate is distributed according to your wishes. Without regular updates, your will may become outdated, potentially resulting in unintended beneficiaries, legal challenges, or increased tax liabilities.
Consequences of Not Reviewing Your Will Regularly
- Unintended Beneficiaries
Failing to update your will can lead to unintended beneficiaries receiving assets. For example, if you divorce but do not update your will, your ex-spouse may still inherit part of your estate, contrary to your current wishes.
- Disputes Among Beneficiaries
An outdated will can cause disputes among beneficiaries, particularly if there have been significant changes in your personal or financial circumstances. These disputes can result in costly legal battles, damaging family relationships and reducing the value of the estate.
- Tax Inefficiencies
Tax laws frequently change, and an outdated will may not take advantage of the latest tax-saving opportunities. This can lead to increased tax liabilities for your estate or beneficiaries, diminishing the overall value of the inheritance.
- Invalid Will
Certain life events, such as marriage, can revoke a will. If you fail to update your will after such an event, it may be considered invalid, resulting in your estate being distributed according to intestacy laws rather than your wishes.
The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.
Case Study: The Consequences of Failing to Review a Will in New South Wales
Introduction
A recent case in New South Wales demonstrates the severe consequences of failing to review and update a will regularly. This case highlights the financial and emotional toll on the family and the importance of keeping your will current.
Case Overview
Estate of Thompson [2023] NSWSC 512: Mary Thompson, a retired nurse, passed away with a will that had not been updated in over 15 years. Her estate, valued at $2.8 million, included her home, savings, and an investment property. The will was created before the birth of her two grandchildren and did not account for her daughter’s marriage or her son’s estrangement. Mary’s outdated will led to a dispute among her children, grandchildren, and her daughter’s husband.
Behaviour of the Participants
Mary’s daughter, devastated by the exclusion of her children (Mary's grandchildren), argued that her mother would have wanted to provide for them. She appeared in court with tears in her eyes, describing how close her children were to their grandmother and the emotional toll of feeling their family had been overlooked due to an outdated document. Her voice was filled with a mix of sadness and frustration as she recounted her mother's last years, insisting that the will did not reflect her true wishes.
Mary’s estranged son, on the other hand, claimed that the will, as it stood, was valid and reflected his mother’s intentions at the time it was made. He expressed his shock and disbelief at his sister’s challenge, stating that their mother had intentionally kept the will as it was. His voice trembled with a mix of anger and defensiveness as he recounted their strained relationship, believing he was being unfairly portrayed as an antagonist.
Legal Process and Court Involvement
The Supreme Court of New South Wales had to determine the most equitable distribution of Mary’s estate, considering the outdated provisions of the will. The legal process involved:
- Several hearings to assess the validity of the will and its alignment with Mary’s likely intentions, based on testimonies from family members and friends.
- Examination of evidence regarding Mary’s intentions, including letters, emails, and financial records.
- Mediation attempts to reach a settlement among the parties, which ultimately failed, leading to prolonged litigation.
Financial Consequences
The legal battle over Mary’s outdated will resulted in substantial financial costs. Legal fees and court expenses totaled over $200,000. Additionally, delays in distributing the estate led to further losses of around $150,000 due to market fluctuations and the maintenance costs of the investment property. The primary residence, valued at $1.5 million, required extensive repairs due to the delay, further reducing its value. The total financial impact on the estate exceeded $350,000, significantly reducing the inheritance available to the intended beneficiaries.
Conclusion
The Estate of Thompson case underscores the importance of regularly reviewing and updating your will. An outdated will can lead to costly legal disputes, unintended distributions, and emotional distress among family members. Regular reviews and updates can help ensure your estate plan reflects your current wishes and avoids unnecessary conflicts.
Statistics on Will Reviews in NSW
- Frequency of Will Reviews: Only 35% of Australians review their will every five years or less.
- Major Life Events Triggering Will Updates: 50% of people update their will after major life events like marriage, divorce, or the birth of a child.
- Outdated Wills: Around 40% of wills in NSW are found to be outdated, leading to potential disputes and legal challenges.
- Legal Costs of Disputes: The average legal cost of resolving disputes over outdated wills in NSW is around $150,000.
- Time to Resolve Disputes: Disputes involving outdated wills take, on average, 18-24 months longer to settle than those involving updated wills.
- Invalid Wills Due to Marriage: Approximately 15% of wills in NSW are found to be invalid due to marriage or remarriage.
- Executor Challenges: About 20% of contested estates in NSW involve disputes over the executor’s role due to outdated or unclear provisions.
- Impact on Estate Value: Estates with disputed wills typically lose 20-30% of their value due to legal costs and delays.
- Awareness of the Need to Update: 60% of Australians are unaware of the importance of regularly updating their wills.
- Use of Legal Advice: Only 55% of Australians consult a legal advisor when reviewing or updating their will.
Essential Resources: Government and Non-Profit Organizations
Government Resources:
Non-Profit Organizations:
- The Law Society of New South Wales – Wills and Estates
URL: https://www.lawsociety.com.au/legal-help/wills-and-estates
- Justice Connect – Estate Planning Guidance
URL: https://justiceconnect.org.au/resources/estate-planning-guidance
- Australian Seniors – Wills and Estate Planning
URL: https://www.seniors.com.au/legal/wills-and-estate-planning
- Dying with Dignity NSW – Resources
URL: https://www.dwdnsw.org.au/resources
- Seniors Rights Service – Legal Guidance on Wills
URL: https://seniorsrightsservice.org.au/legal-services/wills