DIY wills probably won't give your loved ones the best possible outcome should the worst happen. Here's why.

Seven Sharp ran a piece on the 20th of May ran a piece about the importance of having a will, especially for people who own homes and have young children. 

In the piece, it was suggested that three quarters of people under the age of 35 don't have a will.

The Seven Sharp Facebook page, refers to two online DIY will services: willtolive.co.nz and www.ewills.co.nz. I haven't used them personally or looked into them in detail. But my preliminary view is that they look pretty good.

Broadly speaking, I'm an advocate of DIY wills. Certainly, in the event of an early death, having a properly-executed DIY will is likely to result in an outcome more in line with the deceased's intentions than the default rules set out by law. 

But I'm a lawyer and of course I need to qualify that statement!

A properly-executed DIY will is likely to lead to a better outcome than dying without a will. But it's not likely to lead to the best outcome. To get the best outcome, you need to work with a lawyer who has knowledge and experience in this area.

There are also a number of potential issues with using a DIY will service:

There is greater scope for human error when you DIY

No doubt, these services provide clear instructions for what you need to do to execute the will. No doubt, they also give you clear guidance about how you should complete the fields relating to what you want to achieve.

However, many lawyers LOVE DIY wills.

Why? Because it's not uncommon for them to have major issues. For example, the will might not be executed correctly because the execution instructions weren't followed to the letter. Or something in the will is ambiguous. Or it doesn't cover a particular scenario, such as what happens if one of the people nominated as a beneficiary does not survive the will maker. And what happens with a will that has issues like these? From a lawyer's perspective, it means more work, and more income for them. 

In many cases, DIYers would have ultimately saved their loved ones time and money (not to mention stress and added heartache) if they'd just gone to a lawyer in the first place.

Of course, preparing a will via a lawyer also involves the human factor. But I'd suggest that human error is less likely to occur. And in the worst case, at least your loved ones will have recourse against someone. In the case of a DIY will, all they can generally do is blame you!

It's not always easy to know if a DIY will is suitable for you

As the Seven Sharp piece made clear, there are many situations where a DIY will is not right for you. If your family relationships or financial affairs are complicated, then you should see a lawyer. 

There are many cases where this is clear. For example, if you and/or your current partner have children from other relationships. Or if you are worth a significant amount of money, run a business, and are the trustee of one or more family trusts. 

But there can be a lot of grey in between. And how do you know whether your situation is suited for a DIY will? 

Again, the DIY will service might be able to guide you on this point, but I suspect there will be many people who end up preparing DIY wills for whom going to a lawyer would have been the prudent thing to do. 

You're unlikely to get a full understanding of how your assets will be distributed in the the event of your death, and what your options might be

For most people, what is in a will is only part of the story in terms of how the assets you own will be distributed upon their death.  

Typically, if you engage a lawyer they will discuss with you how relevant legislation (specifically the Property (Relationships) Act, the Family Provision Act, and the Law Reform (Testamentary) Promises Act) might impact how your estate will be distributed. 

Knowing this might influence the distributions you make in your will, or might prompt you to make changes to your affairs in the meantime. Which brings me to the following important point.

A will on its own is not a succession plan

For many people, a will is only one piece in the puzzle when it comes to making sure that everything happens as they might wish if they were to pass away (or lose capacity). 

For example, if you are a trustee of a family trust, you're only the owner of trust assets in a narrow sense. How the assets in this trust are treated probably won't be covered by your DIY will.

Also, if you're in business with another person, what will happen to your share of the business? Do you have something like a buy-sell arrangement with that person (and perhaps insurance arrangements in place) so that your spouse doesn't end up with a significant interest in a business that they have no interest in running but from which which they can't extricate themselves? 

Also, while you are preparing your DIY will, have you given any thought to whether you'll have enough assets to ensure your loved ones are supported? Or do you need to consider your personal insurance needs?

It can be valuable to have someone who has discussed these issues with a number of people to identify potential issues and act as a sounding board.

Also, a will comes into the effect on the event of your death. But what about if you are incapacitated?

If you're preparing a DIY will, you're not preparing enduring power of attorney documents

In most cases, when a lawyer prepares a will for a client, they will also prepare enduring power of attorney documents for that client. It doesn't cause the client a lot of extra inconvenience, but in many cases is just as important than having a will.

A will comes into effect when you die. But what happens if you become incapacitated? A will does not address this. To address this scenario with any degree of certainty, you need to have enduring power of attorney documents in place. 

For many people, DIY = doesn't ever get done

I know this from experience. Before I started practicing law, I had a vague idea that I should have a will in place. I purchased a DIY will kit from my local post office. And it sat on my desk for months. Possibly years. I never completed it. 

If you go to a lawyer, it might cost more. But at the end of the process, you'll almost certainly have a properly-executed, suitably-drafted will. And possibly enduring power of attorney documents. And possibly one or two other sets of documents, depending on your circumstances and what you're wanting to achieve.

 

If you decide to prepare a DIY will, good on you. Should the worst happen, I hope that your will produces the outcome that you were aiming for. Or an outcome better than the default rules would have provided. 

I like the idea of DIY wills. But as with most low-cost approaches, there are trade-offs involved. Caveat emptor - buyer beware!

Sonnie Bailey

Sonnie is the founder and principal of Fairhaven Wealth.

Before founding Fairhaven Wealth, Sonnie worked in the legal and financial services industries for over a decade.

Sonnie first became involved with financial advice as a specialist financial services lawyer. For many years, he was an “adviser of advisers”, reviewing thousands of advice files prepared by hundreds of financial advisers, and providing feedback in relation to the quality and appropriateness of advice; industry best practice; risk management; and regulatory compliance. He has published work in industry publications and spoken at various financial advice conferences.

Sonnie has also worked with banks, investment management firms, insurers, and derivatives providers.

Sonnie has worked as a private client lawyer, focusing on succession, estate planning and trusts. He ran his own legal firm in Australia before relocating to New Zealand. He has also acted in independent trustee and company director positions.

Sonnie is passionate about helping people achieve their goals and manage the risks to which they are exposed.

He has written extensively on his blog, New Zealand Wealth and Risk, which can be found at www.wealthandrisk.nz.

Sonnie is married to his wonderful wife Chrissy, and has two young children, Ben and Anna.