Wills are important legal documents that help to secure your family’s financial future. Everyone should have one. But what happens if a person doesn’t get the chance to write or amend their will after a significant change in their personal or financial circumstances?
What happens if a sudden illness or injury robs them of their mental capacity – before they’ve had a chance to draft or change their will? What happens then?
This is where a statutory will can help…but only in the right circumstances, so expert legal advice is essential.
A statutory will is one that is made on behalf of a person who lacks the mental capacity to create a valid will themselves.
This legal instrument is governed by the Mental Capacity Act 2005. It can be authorised by the Court of Protection.
The Mental Capacity Act 2005 sets out the legal framework for decision-making on behalf of individuals who lack the mental capacity to take specific decisions for themselves.
Section 18 of the Act specifically addresses the making of statutory wills. It empowers the Court of Protection to approve and authorise a will on behalf of a person who is unable to make a will due to mental incapacity.
When considering an application for a statutory will, the Court of Protection will carefully evaluate the circumstances and evidence provided.
Its main consideration is to ensure that the proposed will reflects the best interests and wishes of the person lacking capacity, as far as they can be determined.
The court may take into account any previous expressions of wishes made by the individual, as well as the views of family members, friends or other relevant parties.
Find out more about the Court of Protection.
Society often assumes that it is more likely to be elderly people who are likely to need a statutory will due to dementia or Alzheimer’s Disease.
But in reality, people of any age can lose their mental capacity. Dementia can occur as early as the age of 40 or 50 – even as young as 30 in some cases.
Furthermore, individuals with lifelong learning disabilities may have limitations in their decision-making abilities. If they are unable to create a valid will themselves, a statutory will can be sought to ensure their estate is managed and distributed appropriately.
Acquired brain injury – individuals who have suffered a traumatic brain injury or other severe neurological conditions resulting in reduced mental capacity may require a statutory will to ensure their assets and affairs are handled in their best interests.
People who have suddenly suffered severe brain injuries may have substantial property and assets – but not the mental capacity to make a will to determine who will inherit them.
Some people requiring long-term care may have substantial assets because they are in no position to spend their money and because the NHS is looking after them.
So when they die, there is the risk of a large Inheritance Tax liability: significant amounts of money would go to the taxman instead of the person’s loved ones. A statutory will might mitigate this IHT liability, ensuring that more or all of the assets remain within the family.
Read more about how to reduce IHT liability.
Applying to the Court of Protection for a statutory will involves a long and complex process:
The process of applying for a statutory will can be long and complex. Even the simplest cases can take nine to 12 months.
Sometimes applications are contested by family members (or others) who face losing out on an inheritance if the statutory will were to be approved. Perhaps they seek to benefit through an earlier will, or – if there is no will – they would be in line for a payout under the laws of intestacy.
In these instances, applications can take much longer – and at greater expense for all concerned.
And remember…there is no guarantee that the Court of Protection will approve your application. All that time and expense could be in vain.
Opposition to statutory wills can arise due to:
It is worth noting that while some people may oppose statutory wills, others may view them as a necessary legal mechanism to protect the best interests of individuals lacking mental capacity.
Learn more about disputed wills.
Put bluntly, applying for a statutory will is not cheap – which is why they are not a common occurrence.
Even in a simple case, just the solicitor’s fees alone can be £5,000 to 10,000 plus VAT. And further costs – such as court fees – can total anything from £3,500 to £5,000 plus VAT upwards. All legal fees are subject to assessment by the Court of Protection after the matter has concluded to ensure that they are reasonable and fair.
The costs outlined above are based on the assumption that there is no opposition to the application. If there is opposition, then dealing with it can make the application more costly. And ultimately, there is no guarantee that the Court of Protection will approve the application.
So for it to be worth applying, there are three things you would need to consider:
By now, you’re probably thinking that there must be a more cost-effective alternative to a statutory will. After all, how are families with less extravagant estates supposed to cope under these circumstances?
There is an answer, an alternative. And it is much cheaper than a statutory will. But whether it is quicker will depend on the precise circumstances of the individual concerned.
Here is the alternative: you wait for the individual concerned to die (because statutory wills are for the living).
Shortly after the person dies, the executors and all effected persons can make a Deed of Variation to their existing will if they are in agreement. This is much cheaper and quicker than applying for a statutory will.
A deed of variation, also known as a deed of family arrangement, allows beneficiaries under a will or intestacy to redirect or alter the distribution of assets after someone has died.
The approval of a deed of variation typically requires the consent of all parties affected by the variation, including the beneficiaries who would be affected by the changes.
While the approval of a deed of variation does not require specific authorisation from a court, it needs to be signed within two years of the date of death for it to be effective for Inheritance Tax and Capital Gains Tax purposes.
Additionally, if the variation involves minor or unborn beneficiaries, the approval of the court may be required to safeguard their interests. This is particularly relevant if the variation affects their entitlement or inheritance rights.
Ultimately, getting agreement is crucial – there is always the possibility that an attempt to alter a will could trigger an inheritance dispute.
And remember, once an individual has died, any chance of applying for a statutory will dies with them.
For more information about wills, deeds of variation and statutory wills, contact Coles Miller Partner Anthony Weber, Head of Wills & Probate. He is based at our Fleetsbridge office.