As the Law Commission unveils landmark proposals to bring Victorian-era Wills law into the 21st century, Tamasin Perkins (pictured), Partner at international law firm, Charles Russell Speechlys, explains in this analysis for IFA Magazine what these reforms could mean for financial advisers and their clients.
From electronic wills and revised capacity tests to the end of automatic revocation on marriage, Tamasin highlights how and why the changes signal a fundamental shift in estate planning – and one that advisers must be ready to navigate.
Last week, the Law Commission released its long-awaited report on the reform of Wills law in England and Wales – proposing significant changes to a law which was enacted in Victorian times and remains largely unchanged since then. The recommendations, which include enabling electronic wills, abolishing the automatic revocation of wills upon marriage, and updating the test for testamentary capacity, aim to ‘clarify the law and to ensure it is fit for purpose in the modern age.’
The report rightly acknowledges that the current legal framework is outdated. With longer life expectancies, rising asset values, and the impending Great Wealth Transfer, reform of wills and estate planning is not only timely but essential.
So, what will this all mean for Wills going forward? There are several different ways in which these reforms could impact the current landscape.
Wills are no longer revoked by marriage
Following a review of the laws on marriage by the Law Commission and heightened public awareness regarding “predatory marriage” it has been proposed that the current rule, whereby a will is automatically revoked on marriage, be abolished. Under the current law, the impact of marriage revoking a will, results in the intestacy rules coming into play if a new will is not made (or one has not been made in contemplation of the marriage), which automatically results in provision being made for the new spouse. While this proposed change addresses concerns about predatory marriages, we anticipate an increase in spousal 1975 Act claims if individuals fail to update their wills. Financial advisers should routinely remind clients to review their estate plans when such key life events occur, and this will be all the more important if this change comes into effect.
Changes to testamentary capacity
In addition to lowering the age that people can make wills to 16, it has been recommended that the test for testamentary capacity shift to be in line with that contained in the Mental Capacity Act 2005. This includes additional requirements than are currently set out in the “Banks v Goodfellow test” which derived from the case of that name in 1870. It has been recommended that a code of practice be issued for anyone preparing wills, and this would set out specific guidance on capacity tests.
If financial advisors are managing funds for minors, who have, for example, received a clinical negligence award, they may wish to consider advising that a will be made at 16, or pursuing this process in the Court of Protection if they lack capacity – as it is being recommended that the age shift in that jurisdiction as well. There is also potential for children under this age being authorized to make a will under the proposals.
An Uptick in Undue Influence Claims
Challenging the validity of a testamentary document on the grounds of undue influence remains notoriously difficult, often due to the lack of contemporaneous evidence. However, the Law Commission’s proposals may make such claims easier, allowing the court to infer a testator has been unduly influenced, when considering there to be reasonable grounds which justify this – essentially taking a “big picture” approach. Financial advisers should be mindful of vulnerable clients who may be isolated or under pressure when making testamentary decisions, as well as lifetime transfers. Keeping comprehensive file notes, ensuring clients are the ones providing the instructions (rather than third parties seeking to benefit) and recommending legal advice where appropriate will become even more important.
Increased Applications to “Rescue” Invalid Wills
The rigidity of the Wills Act 1837 has led to many wills failing on technical grounds – a frustrating outcome when the deceased’s intentions are clear. The proposed reforms would give courts greater discretion to uphold wills that fail to meet strict formalities, but also recommends new limitations on who may act as witnesses. Extra care should be taken around execution formalities, and we anticipate a period of adjustment (and potential litigation) as the new rules bed in.
Disputes over Electronic Wills Are Inevitable
Permitting electronic wills is arguably one of the most headline-grabbing reforms – and one that reflects the way many of us now live and work. During the pandemic, we saw first-hand how digital solutions could assist in will-making, particularly for clients who were shielding or overseas. But while electronic wills will undoubtedly improve access, they will also present new evidential challenges – especially where questions arise about who was present (virtually or otherwise) during execution, or who may have been influencing the testator. The new proposals intend to put electronic wills on the same footing as paper wills.
Next steps
The Government will now consider the Law Commission’s recommendations, with an interim response due within six months and a full response expected within a year. In the meantime, financial advisers would be well advised to stay closely engaged with these developments – and to work hand-in-hand with legal professionals to ensure clients’ testamentary intentions are properly protected.
