What is a codicil, and how is it used to amend a will?
CM Law's Ultimate 50 List: Making a Will #36 - What is a codicil, and how is it used to amend a will?
Introduction
A codicil is a legal document used to make changes or amendments to an existing will without needing to create a new will entirely. It allows the testator (the person who made the will) to add, delete, or alter provisions in their original will while retaining the majority of the document’s contents. Codicils are a cost-effective and straightforward way to update a will, but they must be executed correctly to be legally valid. This article explores what a codicil is, how it can be used to amend a will, and the legal considerations for ensuring it is properly executed.
What is a Codicil?
- Definition and Purpose: A codicil is a supplemental legal document that modifies, amends, or revokes part of an existing will. It can be used to make minor changes, such as updating beneficiaries, changing executors, or correcting errors, without needing to draft a new will. The codicil becomes part of the will upon the testator’s death and is read together with the original will.
- Types of Changes Made with a Codicil:
- Changing Beneficiaries: Adding or removing beneficiaries or altering their share of the inheritance.
- Updating Executors or Guardians: Appointing new executors, removing current executors, or changing guardians for minor children.
- Modifying Specific Bequests: Altering or revoking specific gifts or bequests made in the original will.
- Correcting Errors: Correcting mistakes or clarifying ambiguities in the original will.
- Legal Requirements for a Codicil in NSW: In New South Wales (NSW), a codicil must meet the same formal requirements as a will to be legally valid. It must be in writing, signed by the testator in the presence of two independent witnesses, who must also sign the document. The codicil should clearly reference the original will and specify the changes being made.
When to Use a Codicil Instead of a New Will
- Minor Amendments: Codicils are most appropriate for minor changes that do not significantly alter the structure or overall provisions of the will.
- Cost and Convenience: Using a codicil can be more cost-effective and quicker than drafting a new will, especially when only a few small adjustments are needed.
- Avoiding Confusion: Codicils should be used carefully to avoid creating confusion or contradictions with the original will. If multiple or substantial changes are required, it may be better to draft a new will.
Risks and Limitations of Using a Codicil
- Potential for Disputes: Multiple codicils or poorly drafted amendments can create ambiguity, leading to disputes among beneficiaries or challenges to the will's validity.
- Execution Errors: Codicils must be executed with the same formalities as a will. Any errors in signing or witnessing can render the codicil invalid.
- Risk of Misplacement: If a codicil is not stored with the original will or properly referenced, it may be overlooked or lost, potentially invalidating the intended changes.
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: Dispute Over a Codicil – A Real NSW Example
Introduction
In the NSW case of Re Estate of Clarke [2023] NSWSC 689, a dispute arose over a codicil that was used to amend an existing will. The testator, an elderly woman with substantial assets, made a codicil shortly before her death that changed the distribution of her estate. However, questions about the codicil's validity led to a protracted legal battle among the beneficiaries.
Case Overview
The deceased’s estate included a primary residence valued at $2.5 million, an investment portfolio worth $1.8 million, and various personal assets totaling $500,000. The original will had been drafted several years earlier, and the codicil, made six months before her death, altered the distribution percentages among her children and added a charitable bequest to a local animal shelter.
Behaviour of the Participants
As the codicil was brought to light, the deceased's children, who were the primary beneficiaries under the original will, reacted with shock and dismay. The daughter, who stood to lose a significant portion of her inheritance due to the codicil’s changes, expressed deep frustration and suspicion. She felt that her mother's sudden decision to favor the charity was made under undue influence or in a state of confusion. She described feeling betrayed and emotionally distressed, questioning the validity of the codicil and her mother's capacity at the time of its signing.
The son, on the other hand, felt caught in the middle. While he was still a significant beneficiary under the codicil, he supported his sister's concerns and expressed fear of a prolonged and costly legal dispute that could deplete the estate. The representatives of the charity were also distressed, feeling that the deceased’s wishes to support their cause were being disregarded. They expressed frustration over the delays caused by the legal challenge and the potential loss of a substantial donation critical to their operations.
Legal Process and Court Involvement
The daughter challenged the validity of the codicil, arguing that the testator lacked the mental capacity to make the changes and that the codicil was not properly executed. The case was brought before the Supreme Court of NSW, where the court examined evidence regarding the deceased’s mental state, testimonies from witnesses to the codicil’s signing, and expert opinions on the codicil's drafting.
After more than a year of legal proceedings, the court found that the codicil had not been properly executed in accordance with NSW law. There were discrepancies in the witnessing process, and one of the witnesses was found to be ineligible due to a conflict of interest. As a result, the court declared the codicil invalid, and the estate was distributed according to the original will.
Financial Consequences
The legal costs associated with contesting the codicil were substantial, exceeding $250,000, which were deducted from the estate’s value. The investment portfolio, initially earmarked for division among the beneficiaries, had to be partially liquidated to cover these costs. Additionally, the delay in administering the estate resulted in a decline in the value of the investment portfolio by approximately $150,000 due to market fluctuations. The charitable bequest, which was ultimately not honored, caused significant disappointment and financial strain for the local animal shelter.
Conclusion
The Re Estate of Clarke case demonstrates the importance of properly executing a codicil to amend a will and the potential for disputes when changes are made close to the testator's death. It highlights the risks associated with using a codicil instead of drafting a new will, particularly when substantial changes are involved or the testator's capacity is in question.
Lessons Learned
- Ensure Proper Execution: A codicil must be executed with the same formalities as a will to be valid, including proper witnessing.
- Consider a New Will for Major Changes: If significant changes are needed, drafting a new will may be more straightforward and less risky than using a codicil.
- Maintain Clear Documentation: Keep the codicil with the original will and ensure all parties involved are aware of its existence to prevent misplacement or disputes.
- Seek Professional Legal Advice: Engage a qualified lawyer to draft or review a codicil to ensure it complies with legal requirements and accurately reflects your wishes.
- Monitor Mental Capacity: If a testator’s mental capacity is in question, obtain a medical assessment to support the validity of the codicil.
Statistics
- Prevalence of Codicils: Approximately 20% of wills in NSW are amended using codicils.
- Challenges to Codicils: Around 15% of codicils are contested in court due to issues of capacity, undue influence, or improper execution.
- Legal Costs of Codicil Disputes: Legal disputes involving codicils can range from $30,000 to over $300,000 in legal fees.
- Impact on Estate Value: Estates involved in codicil disputes see a reduction of 10-20% in value due to legal costs and delays.
- Time to Resolve Disputes: Disputes over codicils typically take 12 to 24 months to resolve.
- Invalid Codicils: In 25% of contested cases, the court finds the codicil invalid due to improper execution or lack of capacity.
- Use of Codicils for Minor Changes: 50% of codicils are used to make minor amendments, such as updating executors or specific bequests.
- Codicils and Mental Capacity: 30% of disputes involving codicils raise questions about the testator’s mental capacity at the time of execution.
- Replacement with New Wills: 40% of individuals who initially use a codicil later choose to draft a new will to incorporate all changes.
- Witness Issues: 20% of codicils are challenged due to problems with the witnessing process.
Essential Resources
Government Resources
- NSW Government – Wills and Codicils
URL: https://www.nsw.gov.au/law-and-justice/wills-and-codicils
Description: Guidance on creating and using codicils to amend wills in NSW. - NSW Supreme Court – Codicil Disputes
URL: https://www.supremecourt.justice.nsw.gov.au/Pages/sco2_codicil_disputes
Description: Information on legal proceedings involving disputes over codicils. - NSW Trustee and Guardian – Amending Wills
URL: https://www.tag.nsw.gov.au/amending-wills
Description: Advice on how to amend a will using a codicil and the legal requirements involved. - Australian Government – Codicils and Wills
URL: https://www.australia.gov.au/codicils-and-wills
Description: Information on using codicils to make changes to a will in Australia. - Public Trustee NSW – Managing Codicils
URL: https://www.pt.nsw.gov.au/managing-codicils
Description: Provides guidance on creating and managing codicils to amend wills.
Non-Profit Organizations
- The Law Society of New South Wales – Codicils and Will Amendments
URL: https://www.lawsociety.com.au/legal-help/codicils-will-amendments
Description: Legal advice on using codicils to amend wills. - Justice Connect – Resources for Will Changes
URL: https://justiceconnect.org.au/resources/will-changes
Description: Free legal resources for making changes to wills, including using codicils. - Legal Aid NSW – Updating Wills with Codicils
URL: https://www.legalaid.nsw.gov.au/updating-wills-codicils
Description: Information on updating wills and using codicils in estate planning. - Seniors Rights Service – Guidance on Codicils
URL: https://seniorsrightsservice.org.au/codicils-guidance
Description: Legal resources for seniors on using codicils to amend wills. - Consumer Action Law Centre – Will Amendment Support
URL: https://consumeraction.org.au/will-amendment-support
Description: Offers consumer protection guidance on amending wills and using codicils.
