White Paper on Wills

Philosophy

It’s all about getting the proceeds of the estate into the hands of your loved ones, in as little time, and with as little expense as possible.

Introduction

Your Will is a legal document prepared and signed by you to distribute your assets upon death. The document enables your Trustees and Executors to deal with your assets according to your wishes. The assets of real and personal property are usually to benefit your family and the people you love and care about.

If you don’t have a will you die intestate and your assets are distributed according to the succession laws. For example if you are married with two children and do not have a will your wife will receive $150,000.00 and a third of your estate and each of your children will receive a third of the balance of the estate. The public trustee will appointed to manage the affairs of the estate and they will not distribute funds (or more importantly two thirds of your estate) until each of the children turn 18 years of age at which time two thirds of your estate will be given directly to your children. Naturally this puts your wife in an impecunious position and may financially struggle to bring up the children. There are other examples of who will benefit under the intestacies laws when you die, for example it will be distributed amongst your parents, siblings, nieces and nephews depending upon who is the next of kin. If you do not have any next of kin then your property defaults to the crown.

To avoid these disturbing consequences we can arrange to interview you and design a will that best suits you being able to leave your assets to the people you care about quickly and efficiently without involving additional costs of administrators being appointed, the public trust office, the adult guardian or interference from outside authorities or persons.

People have heard of what is known as a testamentary trust. These have a limited use and tie up your assets in trusts so you are controlling what assets you have from the grave so to speak. It is my intention to break the myth of needing a testamentary trust because in reality all this does is tie people up with administrators, trustee’s, solicitors, accountants and any other person who feels they are able to skim off the top of your estate. The beneficiaries of testamentary trusts also can make an application to the court to have assets distributed to them directly without the need for the cost of the aforesaid people. The people you care about should be able to move forward in their lives with some certainty as to what assets or funds are available to them and have control over their own destiny. In short, generally I am apposed to most applications of testamentary trusts because at the outset they are costly to set up and after death, very cumbersome and expensive to administer. An example of where a testamentary trust would be suitable is if the family owned a shopping centre worth in excess of $5million and the directors (being mother/father) had 5 children, one of which was in jail, one being a drug addict, two married and having children in various relationships and the third one being a lawyer, in that case it would be appropriate to have a testamentary trust to enable the beneficiaries to be paid money periodically to live on.

Most families have a similar dynamic where there is the black sheep, the over achiever, a middle man, somebody fearful and someone optimistic. This dynamic I don’t believe gives rise to the need for a testamentary trust when the assets are less than $2million. However during the interview process we carefully screen who are your likely beneficiaries so the will can not be contested by illigitimate children, defacto arrangements, and all the permutations we have in relationship in today’s society.

Generally most people have overcome the family dynamic and sincerely want to protect the people they care about and visa versa the loved ones who care about them. To do this effectively you need a valid will.

We do see wills that have been done by way of a will kit and invariably these wills are invalid and will not be held up by the court. Avoid the mistake of purchasing a do-it-yourself kit as you won’t know the pitfalls to doing your own will.

If you would like to make an appointment to discuss your will and the needs of your family, please complete the attached (*) form and we will make an appointment for you to see me.

Powers and duties of the legal personal representative

A legal personal representative is a person who is:

• an executor of another person's will;

• the administrator of deceased person's estate;

• the trustee of a legally disabled person's estate or affairs; or

• a person who has been granted an enduring power of attorney over the affairs of another person.

In connection with wills, for example, the legal personal representative carries out the stated wishes of the deceased person. Usually the legal personal representative is someone known to the deceased; he or she may be a family member, a trusted family friend, or a solicitor. As the powers of a legal personal representative can be quite wide under the legislation or common law, there are corresponding duties that a legal personal representative must adhere to. In other words, with power comes responsibility.

It is the purpose of this article to examine the powers and duties of the legal personal representative in connection with an area of the law known as Wills, Probate, Estate Planning & Administration. The following is a general summary only. For specific legal advice tailored to your circumstances please contact a legal practitioner.

Powers of the legal personal representative

The powers of the legal personal representative are quite extensive and include (but are not limited to) the power to:

• sell or mortgage the real estate of a deceased person for purposes of administering the estate;

• administer the deceased person's estate eg. pay the deceased person's debts or funeral expenses;

• distribute the proceeds of the sale of real estate to beneficiaries under a will (or to people otherwise entitled to a share of an estate);

• lease the real estate of the deceased person (usually for a term not exceeding three years);

There is also provision for the legal personal representative to apply to the court for an extension to his or her powers. The court may grant the powers if it considers that they are necessary for the administration of an estate.

Duties of the legal personal representative

The duties of the legal personal representative include (but are not limited to):

• burying or cremating the deceased;

• keeping and filing accounts in connection with the estate;

• collecting outstanding debts due to the estate;

• reasonably investing the proceeds of an estate for the benefit of the beneficiaries;

• discharging the debts of the deceased; and

• distributing the assets of the estate to its beneficiaries.

There are a variety of other duties that a legal personal representative has. These may be found, for example, in the Trustee Act 1925 & 1957 (ACT), the Administration and Probate Act 1928 (ACT), and the Wills Act 1968 (ACT).

Legal personal representative is protected

The oftentimes complicated nature of Wills, Probate, Estate Planning & Administration means that the legal personal representative needs to be protected, especially against the claims of creditors of the estate.

Believe it or not the common law (judge made law developed originally in England) used to hold the legal personal representative liable for the estate's debts in various circumstances! Clearly this lays unduly onerous expectations upon a personal representative.

A personal representative is now protected by sections 64-66 of the Administration and Probate Act 1928 (ACT). In summary these sections protect the legal personal representative against the claims of beneficiaries and creditors, provided that the representative has given the appropriate statutory notice calling for such beneficiaries or creditors to make their interest or interests known.

Disputes and Grounds for Contesting a Will

Family Provision Act Claims

Sometimes when a family member passes away some of the deceased’s relatives believe that they have not been adequately provided for in the deceased’s will.

These persons are often current or former spouses, de facto spouses, children or step children. Sometimes grandchildren also may make a claim as well as other persons who have, at some time, been at least partially financially dependant on the deceased and a member of the deceased's household. Frequently the deceased is viewed as having had a moral obligation to make some provision for that person on their death.

In these circumstances it may be possible to make a claim under the Family Provision Act 1982 (NSW). Proceedings for an order under the Family Provision Act must be commenced within 18 months after the death of the deceased person. The court has the power to extend the time for commencement of proceedings where sufficient cause is shown for the application not having been made within the 18 month period.

In order for a court to alter the deceased’s will the court must be satisfied that the deceased failed to make adequate provision for the “proper maintenance, education and advancement in life” of the person making the application. Whether the deceased made “adequate” or “proper” provision depends on all the circumstances of the case.

For this reason courts consider a wide range of factors such as: the wealth of the deceased, the number and needs of other dependents and beneficiaries, the age and capacity of the applicant and the relationship between the applicant and the deceased.

Where a court is satisfied that the deceased failed to make adequate and proper provision for someone, the court then decides what, if any, provision should be made for the applicant. In making this second determination, courts again consider a wide range of factors. For instance, if the applicant is a person with an intellectual disability the court may consider issues such as the availability of social security benefits and the extent to which the person’s disability inhibits his or her ability to gain employment.

Undue Influence & Duress

Courts can declare a will to be invalid in situations where it was made under duress or undue influence. In either situation, someone attempted to influence the terms of the will. Duress can be physical, psychological or in the form of a threat. Actual evidence of duress is required.

Undue influence can arise in circumstances where a relationship exists between a person making the will and another person such that the other person was in the position to exert some power over the person making the will to make the will in a certain way. Most often the person exerting the undue influence is likely to be a family member.

Incapacity

A will can also be challenged in the event that, at the time it was made, the person making the will lacked the necessary legal capacity to make the will. In effect, this means that the person making the will, at the time, did not understand the nature and effect of a will they were making, or were unable to make rational decisions regarding the distribution of their property.

This situation most frequently occurs in relation to the elderly, people in frail health, or those suffering from an illness which affects their mind.

In almost all cases, medical evidence as to the person's lack of capacity will be required to establish the incapacity at the time the Will was made.

Contract to Make a Will

In some situations, people (usually married or de facto couples) may choose to enter into a binding contract to make their wills in a certain way. Usually both people make a will in accordance with the contract at or about the time the contract is entered into.

It sometimes happens that one of those persons may make a later will which is inconsistent with the contract, often without telling the other contracting party about their new will, or perhaps after the death of that person.

Where the contract regarding the making of the wills has been properly drafted and is legally enforceable, persons affected by a breach of the contract may be entitled to make a claim for damages or other relief from the court.

How to Dispute a Will

If you were left out of the Will or not properly provided for, you may have a claim under the Family Provisions Act 1982 (FPA).

To make an FPA claim you need to be an eligible person. Eligible persons are:-

a spouse including a de facto spouse and a person living in a domestic relationship with the deceased at the date of death. That relationship can be a same sex relationship;

a child of the deceased;

a former spouse of the deceased;

a dependent person;

A dependent person is a person wholly or partially dependent upon the deceased who is a grand-child of the deceased or is or was a member of the household of which the deceased was a member. This category may include persons related or unrelated to the deceased including foster children and persons in a same sex relationship.

In order for a Court to change a Will, it carries out a two stage process:

1. Has the eligible person been left without adequate provision for his or her proper maintenance, education and advancement in life?

2. If the answer is yes, what provision, if any, should be made out of the Estate?

This is a complex area of law whether you are an applicant seeking provision out of the Estate or the Executor dealing with a claim.

There are three main avenues to challenge or dispute a will. But first you need some basic points about wills.

Usually, the executor named in the will (ie the person who carries out the instructions in the will) must obtain a grant of probate from the Supreme Court which gives legal authority to deal with the deceased's property. In order to obtain a grant, the executor must lodge the will and certain other documents with the Court. Once the Court Registrar is satisfied that the documents are in order and that the will is formally valid, a grant of probate "in common form" is issued. (Alternatively, if there are contentious issues surrounding the will, a grant of probate "in solemn form" will be issued. Contentious issues often arise where parties seek to challenge the will using the methods outlined below. The focus here is challenging wills that receive grants in common form.)

Of the three avenues for challenging a will, one is available before the grant of probate, and two are available after.

Challenging a Will Before a Grant

Caveats

If a grant in common form has not yet been made, a caveat (which is a warning entered in the books of the Court Registry) can be lodged with the court. This prevents the Court from issuing a grant of probate without first notifying the person who lodged the caveat. Each type of caveat is appropriate to different circumstances.

(1) Caveats seeking proof of the will in solemn form

These can only challenge the will on the issue of due execution, no other issue can be raised. They are used where there are concerns about forgery or doubts about whether the will was properly signed and sealed.

(2) General caveats

Used where doubts arise about the testator's capacity to make the will, the identity of the intended beneficiary, the testator's understanding of the content of the will or its effect, whether the deceased acted under duress or undue influence in making the will, or if there are concerns about forgery.

(3) Caveats forbidding grants in respect of informal documents

In some circumstances, the Court has the power to treat informal documents as wills even though they may not have been properly signed or witnessed. This type of caveat prevents a court from making such a grant without first hearing from the caveator regarding whether the informal documents should be granted validity.

Challenging a Will After a Grant

Application to the Equity Division of the Supreme Court under the Family Provision Act 1982

The Family Provision Act 1982 specifically applies to people who have not been provided for in the relevant will. If the Court is satisfied that the person applying is an "eligible person", it may order that provision out of the estate be made for that person's maintenance, education or advancement in life.

An "eligible person" is defined in the Act as:

• wife, husband or child of the child of the deceased, or former wife or husband;

• grandchild who was wholly or partly dependent on the deceased, or who was a member of a household of which the deceased was a member;

• person living in a domestic relationship with the deceased when they died.

The most recent amendment to these categories was the inclusion of the "person living in a domestic relationship" as an eligible person. This covers partners who do not fit within the formal definition of de facto couple to apply for provision under their partner's will. However, not all partners can claim. For example, a girlfriend who lived separately from the deceased will not be able to claim, whereas a partner in a same-sex relationship who was living with the deceased (thus fulfilling the statutory definition of "domestic relationship" in the Property (Relationships) Act 1984) will be able to claim.

Despite this broadening, there are a number of requirements to be fulfilled in order to successfully challenge a will. The Family Provision Act 1982, the Property (Relationships) Act 1984, the Wills, Probate and Administration Act 1898 and the Supreme Court Rules 1970 all contain different parts of the legal jigsaw. The Court's discretion to grant an application in these circumstances is not unrestricted. Therefore, care should be taken with these matters, and anyone considering making such an application should seek expert legal advice.

Application to the Probate Division of the Supreme Court for Revocation

Where a grant of probate in common form has been made, an application can be lodged with the Court to revoke that grant. The grounds for revocation are very limited, but include where the grant:

• has been made to the wrong person (eg if a later will is discovered);

• is irregular (eg one made despite a caveat being in force);

• has become ineffective (eg where the executor has become mentally ill).

Any interested person can apply for a grant to be revoked, including anyone entitled to the estate if there was no will, any beneficiaries named in either the current or a previous will, and any executor named in the will. Revocation is not lightly granted and any person considering such a step should seek expert legal advice.

Probate

In thinking about organising your affairs, you have probably heard the phrase “wills and probate” at some stage. Most people have a fair understanding about wills – what they are, how you make one, etc. But what about probate? Do you know what it is and how it works? Do you understand the relationship between the will and the probate? If not … read on.

What is Probate?

Probate is the grant of official approval from the Court that certain formal requirements have been met in relation to a will. Therefore, while the “will” is the actual document containing the last wishes of a deceased person, “probate” is the legal authority granted by a court allowing those wishes to be carried out. The granting of probate is usually a formality and the grant is called “Probate in Common Form”.

A number of formalities must be satisfied before probate will be granted.

A will must be the last will of the deceased.

The person named as the Deceased must be in fact dead.

The executor must be authorised to collect assets from persons/body holding them.

Probate can be revoked if the will is proven to be not the last will made by the deceased or if any other defects are found in the process. Therefore, even if all seems straightforward, the best course for any would-be executor is to seek legal advice to ensure that all legal bases are covered before proceeding.

Generally, a Registrar performs the process rather than a Judge and if you are the executor, you won't have to go to court unless there is a dispute about the will. However, if there is a dispute, the process is not as straightforward and probate is granted in a different form which is called "probate in solemn form".

How is probate granted if there is a dispute about a will?

The answer is: it depends. It depends on when the dispute arises. Basically, a dispute can arise before the granting of probate, or after it has been granted.

What if there is a dispute before probate is granted?

If concerns exist about a will before the granting of probate, a Caveat can be lodged with the Supreme Court which prevents probate being granted until certain conditions are satisfied. There are three types of Caveat:

Caveats seeking proof of the will in solemn form: used where there are concerns about forgery or doubts about whether the will was properly signed and sealed.

General caveats: Used where doubts arise about the will regarding:

• the testator's capacity to make the will;

• the identity of the intended beneficiary;

• the testator's understanding of the content of the will or its effect;

• whether the deceased acted under duress or undue influence in making the will;

• questions of forgery.

Caveats forbidding grants in respect of informal documents: The Court has the power to treat informal documents as wills even if they don't meet all the strict criteria. This type of caveat prevents a court from making such a grant without first hearing from the caveator regarding whether the informal documents should be granted validity.

If a Caveat is lodged, this does not necessarily mean probate will not be granted. All that it means is that the Court will examine the circumstances surrounding this will more thoroughly than normal, and if satisfied will issue then issue grant – although the grant will now be in solemn form.

What if there is a dispute after probate is granted?

If concerns arise after probate is granted, the grant can be challenged. This is what is generally referred to as challenging a will. There are two main avenues here:

Family Provision Act 1982 (NSW): The Court may order that provision out of the estate be made for a person's maintenance education or advancement in life, but only if t is satisfied that the person applying is an "eligible person" (eg, immediate family or person in a domestic relationship with the deceased).

Revocation: An application can to the Probate Division of the Supreme Court to revoke the grant of probate. However, this is extremely complicated and rarely granted by the court.

It's clear that numerous requirements must be fulfilled in order to successfully challenge a grant of probate. The Family Provision Act 1982 (NSW), the Property (Relationships) Act 1984 (NSW), the Wills, Probate and Administration Act 1898 (NSW) and the Supreme Court Rules 1970 (NSW) all contain different parts of the legal jigsaw. The Court's discretion to grant an application in these circumstances is not unrestricted. Therefore, care should be taken with these matters, and anyone considering making such an application should seek expert legal advice.

So, although the granting of probate usually involves more of a process than a contest, this process is not something that should be entered into lightly. You must be sure of the formalities and technicalities, as well as be prepared if any disputes do arise. Therefore, there is no better option than to entrust a suitable legal adviser to assist you with matters of probate.

In a recent case the Supreme Court ordered a son who had power of attorney for his elderly father to reconvey the family home and money which the son had transferred to himself to the exclusion of his 3 brothers and sisters. All children were named in the will of the deceased.

The son resided in the property of his father who was living in a nursing home and suffering from dementia. The son had a transfer prepared transferring the family home to himself before his father died. The son signed the transfer for his father under the power of attorney and also signed for himself. He also withdrew from the fathers bank account substantial amounts over time . By signing the transfer of the property from his father to himself for a nominal amount the son sought to exclude the family home from the deceased estate with the result that his brothers and sisters would only receive ¼ share in the small remaining savings of the father. These saving had been depleted prior to the fathers death by the son operating the bank account for his own benefit.

The brothers and sister successfully challenged the son's actions and commenced litigation over the deceased estate and the terms of the will. The Court ordered the son to reconvey the property to the estate of the father and repay the money with interest even though the power of attorney was valid. The court applied the legal principals of equity to find that the son held the property and the money on trust for the estate and that all the deceased's children were to receive an equal share of all of the father's property.