Have you thought about who is entitled to your inheritance? What is your spouse’s position when you’re no longer here? Do common-law spouses have any rights to the deceased's estate? Who will take care of my mortgage if I don’t manage to pay it off? Could I also remember people other than my legal heirs? How can I avoid conflict-causing co-ownership situations?
A will is a document that determines the fate of the deceased's estate in a way that may deviate from the provisions of the Inheritance Act. The timing of its creation does not affect its applicability. A decades-old will is just as valid as a hastily written "emergency will" made just before death.
Our inheritance law foundations are almost ancient, dating back to the year the Inheritance Act was enacted in 1734. The societal reality we live in, with modern families and increasingly diverse types of assets, often clashes with our very formal and traditional inheritance legal system. The collision between outdated legislation and the changing reality often results in outcomes that are difficult to predict and sometimes illogical in real-life family law situations. The outdated and formulaic solutions produced by the law rarely align with the intentions of the will’s creator.
Even a previously drafted will may no longer reflect the testator's wishes. The current circumstances, including changing practices by authorities and banks, may not have been known when the will was drafted in the last century. Taxation alone is constantly evolving. Moreover, the testator's property and family circumstances are continuously changing.
As a general rule, whenever there is a significant change in the testator’s family circumstances, it is advisable to either update the will or at least review it. Such changes include marriage, divorce, or the birth of children or grandchildren. Likewise, changes in the value of the testator’s assets may trigger the need for a revision of the will: assets that were once of equal value may have become significantly disproportionate over time. In the worst-case scenario, changes in the value of assets could even infringe on the forced share rights of an heir, which is a particularly complex situation.
It is important to note that, in addition to the will, the final fate of the estate is also significantly influenced by any prenuptial agreements between the deceased and their spouse, as well as the deceased’s life insurance policies. If no prenuptial agreement was made, the surviving spouse is entitled to a share from the estate that balances the deceased’s and the surviving spouse’s respective assets, called the “equalizing payment” (tasinko). This right of the surviving spouse is not affected by the will in any way. On the other hand, the assets in the deceased’s life insurance policies will be distributed according to the terms of the policy to the beneficiaries. These insurance payouts are not part of the estate and are not subject to the will. Direct payments to beneficiaries from life insurance can lead to very radical outcomes, as they do not follow the principles of the inheritance law system. It is therefore critically important that the will, any prenuptial agreement, and life insurance policies be carefully coordinated as part of a unified plan that fulfills the testator’s wishes.
For business owners and entrepreneurs, it is crucial to ensure that the will addresses the fate of business assets in case a generational transfer cannot be completed during the entrepreneur’s lifetime. The risk is that the significant inheritance and gift tax reliefs for business transfers may not apply if the business assets have not been designated for transfer to the next generation in the will. In the worst-case scenario, a functional business or farm could be fragmented due to an unfavorable inheritance division, potentially resulting in the dilution of the entrepreneur’s life’s work.
It’s advisable to review and update the will, along with other family law documents, whenever significant life changes occur. Even if no changes are on the horizon, the will should be revisited at least once every ten years. I am happy to help tailor the most suitable solution for your situation. With nearly 10 years of experience in family wealth law in various roles, I am well-equipped to draft the most fitting documents for you. Don’t wait but reach out early.
