We summarise proposed changes to the law on Wills (designed to encourage more people to make Wills) and the implications for lawyers and clients.
The Law Commission published a public consultation on 13 July 2017 concerning proposed reforms of the law concerning Wills in England and Wales.
It is said that approximately 40% of the adult population do not have a Will. This is a significant issue because, in the absence of a Will, the Intestacy Rules specify what happens to a person's property. Those rules may result in a distribution very much contrary to what the deceased individual would have wanted. For example, an unmarried partner can receive nothing under the Intestacy Rules.
The Law Commission considers that the current law could do more to encourage people to make Wills. The Law Commission's overall objective is to produce recommendations for a modern, improved law which:
1. Supports testamentary freedom (the ability to make a Will in whatever terms a testator wishes); 2. Protects testators; and 3. Increases clarity and legal certainty.
The public consultation runs to 284 pages. The edited highlights can be grouped into the following three subject areas:
1. Testamentary Freedom
- "Dispensing powers"
It is proposed that the Courts in England and Wales will be granted "dispensing powers" which will enable them to recognise a Will as valid, even in circumstances where it may not comply with one or more of the stringent formality requirements set out under the Wills Act 1837, which can render an entire Will invalid for seemingly innocuous oversights.
- Electronic Wills
The Law Commission argues that the electronic execution of Wills (in an agreed format) may result in significant benefits in terms of convenience, security and cost saving.
It is also suggested that the wide dispensing powers referred to above may enable Wills prepared on computers and mobile phones to be deemed valid in exceptional circumstances (such as where the testator was suffering from a serious illness or committed suicide). The Law Commission highlights that Courts in Quebec, South Africa and Australia have already made allowances of this kind.
It is proposed that the Lord Chancellor will be given the power to create legislation to recognise the validity of electronic Wills, when the issues of security and cyber fraud have been further explored.
Only individuals aged 18 or over can make valid Wills at present.
The Law Commission proposes that the opportunity should be extended to individuals aged 16 or over. This is principally in circumstances where a child aged 16-18 may have significant assets and not wish the Intestacy Rules to apply, should they die before reaching the age of 18.
- Ademption (lost legacies)
Ademption occurs where a Will purports to make a gift of a particular asset which cannot ultimately be fulfilled. This can be because that item either did not belong to the deceased at the date of death (for example having been sold, given away or destroyed) or had fundamentally changed in some way (a shareholding in a business, for example). The disappointed beneficiary is not entitled to anything in compensation for such a "lost" legacy at present.
The Law Commission has suggested there are a number of circumstances in which ademption seems particularly unfair and has asked for input from practitioners.
2. Protection of Testators
- "Undue influence"
The Law Commission has expressed concern that vulnerable testators may be inadequately protected by the current law.
It is proposed that a new doctrine of undue influence will be created which will presume (subject to evidence to the contrary) undue influence in respect of gifts made via Wills to individuals in special positions of trust (the testator's doctor, solicitor or carer, for example).
- "Knowledge and approval"
The current law requires that a testator must "know and approve" the contents of his/her Will. This concept can, however, easily overlap with the idea of acting free from undue influence.
The Law Commission therefore proposes that the scope of knowledge and approval should be restricted and to make it clear that there are really two key issues; whether the testator knew and approved the contents of his or her Will and whether the Will was freely executed.
- Execution by someone other than the testator
At present, it is permissible for a testator to direct somebody else to sign a Will on his/her behalf. This is particularly useful for testators who are not physically able to sign a Will. There are currently, however, no restrictions on who can sign that Will on behalf of the testator.
The Law Commission takes the view that the absence of such a restriction may put testators at the risk of fraud, because a beneficiary under a Will can also sign it on behalf of the testator (so an opportunity for foul play is perceived). It is proposed that this type of situation will be prohibited.
The current law provides that the beneficiary (or his or her spouse/civil partner) cannot be the witness to a Will under which he or she is a beneficiary. An unmarried partner of a beneficiary can be a witness, however, which seems inconsistent and potentially dangerous. With the protection of vulnerable testators in mind, this "loophole" will be closed.
3. Clarity and Certainty
- Mental capacity
The Law Commission proposes that the current test of testamentary capacity, which dates from 1870, should be replaced by the clearer (and more widely-understood) test under the Mental Capacity Act 2005.
- Revocation on marriage
The current law provides that, unless special provision is included, marriage will automatically revoke a Will.
The Law Commission believes that there are circumstances where this would be inequitable and has asked for comment from practitioners.
The Law Commission takes the view that the interpretive provisions in the key statute, the Wills Act 1837, are archaic and need to be replaced in order to aid understanding and application.
The public consultation sets out proposals for wide-ranging reforms and poses 65 questions for practitioners to respond to by 10 November 2017.
It is not anticipated that clients need to take any immediate action other than to review their current Wills to ensure that what they have in place still represents their wishes and deals with all of the issues that are likely to arise on their deaths.
Further guidance material will be published once the findings of the public consultation are published, expected in early 2018.