With trust comes responsibility – Lesley McDonnell

LAMAn Attorney acting pursuant to a Power of Attorney is required to comply with any and all conditions and limitations of the Power of Attorney instrument. A failure to do so, can result in the Attorney’s actions being declared unauthorised which in turn can lead to unintended consequences as the following case illustrates.

The deceased died in 2008. By her Will, the deceased gifted her interest in some real estate to her daughter. Some years before her death in 2002, the deceased had granted an enduring Power of Attorney to her son. In 2006 the deceased’s son signed paperwork as Power of Attorney for the deceased to sell the parcel of real estate that was the subject of a gift in the deceased’s Will. Importantly the Power of Attorney contained a condition or limitation in these terms:

“This Power of Attorney shall only be used upon my treating Medical Practitioner certifying that I am no longer physically or mentally able to sign documents or look after my own affairs.”

The son took no legal advice before acting under the Power of Attorney. He obtained a letter from the deceased’s treating medical practitioner which provided:

“… Over the last twelve months, we have noticed significant deterioration in her mental state and recent testing show [sic] that she is suffering from significant dementia. She has reached the stage which I feel that she may not be capable of looking after her own affairs.” [emphasis added]

Pursuant to legislation, the authority bestowed upon the son to act as Attorney for the deceased pursuant to the Power of Attorney was subject to compliance with the condition or limitation that the Power of Attorney was not to be used unless the deceased’s treating medical practitioner gave a certificate that the deceased was no longer able to sign documents or look after her own affairs. The condition or limitation did not require a medical opinion. It required certification. “The formality associated with that requirement added to the protection of the deceased that the power of attorney would not be used prematurely”. In this case the Court held that the Attorney had no authority to sell the deceased’s real estate because the requirement for a certificate from the deceased’s medical practitioner was not satisfied by the doctor’s letter. Ultimately the Court ordered that the deceased’s gift of her interest in real estate to her daughter in her Will may be traced through the proceeds of sale of the real estate which was ordered to be paid to the daughter in substitution for the specific gift in the deceased’s Will.

This case serves to highlight the importance for persons acting as an Attorney to adhere strictly to the conditions and limitations of the Power of Attorney instrument. At Everingham Solomons, we have the expertise to advise you in relation to the issues involving Power of Attorney, because Helping You is Our Business.

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Be Careful What You Promise – Lesley McDonnell

LAMThe deceased married Carol in 1988. They separated in 2008 and were divorced in 2011. On the day of their divorce, the deceased and Carol entered a Contract concerning their financial affairs. The Contract was expressed to be in consideration of each of the deceased and Carol settling disputes arising out of their matrimonial affairs. Under the Contract, the deceased agreed to provide that on his death one half of his interest in a hotel business (now valued at some $4.5 million) would be gifted to their 2 daughters, Diane and Suzanne.

In 2014, 11 days before he died, the deceased made a Will which provided in effect, that his interest in the hotel business would be divided equally between his four daughters, but only at the “Termination Date”. The “Termination Date” was defined as being only if and when the deceased’s de facto partner Amanda received $1 million from that business, or she dies. This was contrary to the Contract the deceased made with Carol whereby the deceased agreed to gift half of his interest in the hotel business to Diane and Suzanne on his death and not some later event.

Carol, Diane and Suzanne brought proceedings against the deceased’s estate claiming breach of Contract and other relief. The executors of the deceased’s Will, did admit the existence of the Contract between the deceased and Carol.

Diane and Suzanne were not parties to the Contract between the deceased and Carol, however the Contract was made for their benefit. The Court was satisfied that, “by making the Will, the deceased acted in breach of his promise” under the Contract to gift to each of Diane and Suzanne an interest in the hotel business, “effective immediately on his death, and not on the ‘Termination Date’, likely to be many years later”.

Under law, Equity will enforce a Contract to leave property by Will, “not by restraining or nullifying an inconsistent Will, but by fastening a trust on the deceased’s estate to give effect to the Contract”.

The Court found that the deceased, and the executors well knew that the provisions of the deceased’s Will would contradict and amount to a repudiation of the Contract. Accordingly the Court imposed a constructive trust on the deceased’s estate enabling Carol to enforce the deceased’s promise for the benefit of their 2 daughters and an order was made for an account to be taken of profits of the hotel business since the deceased’s death and one half of those profits paid to Diane and Suzanne.

A legally binding contract to make a Will containing particular provisions can be legally enforceable. If you are in any doubt regarding anything you have said about your Will or how you plan to leave your estate, you should seek professional legal advice. At Everingham Solomons we have the expertise and experience to assist you with all of your estate planning needs because Helping You is Our Business.

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Gifting a mess to your family when you die – Lesley McDonnell

LAMIn 2015 the deceased died suddenly at the age of 55 without leaving a Will. The deceased was survived by three siblings. The applicant claimed that at the time of his death, she had been in a continuous 12-year de facto relationship with him. Pursuant to the rules of intestacy, the deceased’s surviving siblings would be entitled to the whole of his estate, unless the applicant could establish that she was the deceased’s de facto spouse.

The Court needed to determine whether the applicant was a “spouse” of the deceased as defined under legislation. The applicant claimed she was in a de facto relationship with the deceased that “has been in existence for a continuous period for at least two years” at his death. The Court found that the applicant did not qualify in the last five years of the deceased’s life as his de facto partner because she had not been in a de facto relationship with him from 2010. The applicant had quite strong financial dependence upon the deceased during the de facto relationship until 2010 with the Court describing their existence as one of a shared household up until that time, but after that the nature of the deceased’s visitation to her was as a neighbour and former de facto partner and nothing more.

The applicant sought to argue that she was an eligible person entitled to make a claim on the deceased’s estate because she was at a particular time “wholly or partly dependent upon the deceased person” and was at the time of her dependence, or at other times “a member of a household of which the deceased person was a member.” The Court was satisfied that the applicant qualified as an eligible person to make a claim for family provision on the estate on the basis of a six year long relationship. The Court then had to determine whether, having regard to all the circumstances of the case “there are factors which warrant the making of the application”.

The Court found the deceased chose to allow the applicant a place in his life. “He clearly consented to her organising social functions with him and having some degree of a life together”. “She was more than just an ex-partner to him and…for this reason there are factors warranting” the making of provision of $75,000 in the applicant’s favour from the estate. The sum was fixed “partly to take into account the fact that [the applicant] did benefit financially in a substantial way throughout her relationship with the deceased and he was quite generous towards her”.

This case involved significant uncertainty, stress and cost for the parties involved when the deceased passed away and serves to highlight the importance of not leaving legal matters to chance. At Everingham Solomons we have the expertise and experience to assist you in making a Will because Helping You is Our Business.

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Son’s claim to automatic inheritance defeated – Lesley McDonnell

LAMThe willmaker was survived by 4 adult children. When the willmaker died he left his $2.25 million estate to 3 of his 4 children. The excluded son, John contested his father’s will claiming his father had failed to make adequate provision for him in the Will. The executors of the Will opposed John’s claim for the following reasons:

(1) John had deliberately estranged himself from his father, and indeed his mother, for most of his life, causing them both great distress; and

(2) John had no need for provision out of his father’s estate, because of his and his wife’s existing personal wealth.

As a child of the deceased John was an “eligible person” to seek to make a family provision claim against his father’s estate. Having met this initial criterion, the Court was required to determine whether there was inadequate provision for John’s “proper maintenance, education and advancement in life”. What is proper means “proper in all the circumstances of the case” taking into account matters such as competing claims on the estate, the needs of the applicant and the testator’s ability to meet such claims having regard to the size of the estate.

The Court held that the provision was not inadequate for John for a number of reasons. Firstly, John had substantial assets already about double the size of the willmaker’s estate, from which provision was being sought. Secondly, this estate was one upon which the beneficiaries of the Will had real and genuine claims. The Court could see “no reason to diminish at all the entitlement of any of the other beneficiaries in this estate, who (as to at least two of them) suffer real and oppressing financial concerns of their own and whose asset positions are considerably less advantageous than John and his wife”. The beneficiaries’ interests weighed heavily in the Court’s view against the notion of any reduction of their share in the estate in John’s favour. The Court found this last consideration to be even stronger when the “tumultuous family history” was taken into account finding that John was the “prime aggressive mover in creating family chaos and disharmony over the years”.

If you have you been left out of a Will, or you are an Executor who is faced with defending a Will, you need to seek professional legal advice. At Everingham Solomons we have the expertise and experience to assist you with all issues relating to Estates because Helping You is Our Business.

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Family provision and former spouses – Lesley McDonnell

LAMIn NSW if a Will maker fails to make adequate provision in their Will for the proper maintenance, education and advancement in life of those entitled to such maintenance and support, a court is empowered to make an order for family provision to an eligible applicant. This applies equally where a person dies without leaving a Will and the rules of intestacy fail to adequately provide for an eligible applicant.  Only an “eligible person” as defined in the legislation can apply to the court for provision.  In NSW a category of “eligible person” includes a former wife or husband of the deceased.

In 2014 the deceased died without leaving a Will. The deceased was survived by a daughter and a former wife. Pursuant to the rules of intestacy the deceased’s estate of $5 million would pass to his daughter. The deceased’s former wife made an application to the court for family provision.

As a divorced former spouse of the deceased, the deceased’s former wife was an “eligible person” to bring an application seeking provision be made for her from the deceased’s estate. In doing so, the court was required to determine whether, in its opinion, “having regard to all of the circumstances of the case (whether past or present), there are factors which warrant the making of the application”.

The following factors warranted the court in this case making provision in favour of the applicant former wife:-

  • The applicant’s current circumstances of need;
  • The respective post-divorce deterioration in the applicant’s circumstances, and great improvement in those of the deceased;
  • The impact of the applicant’s care responsibility for the daughter of their relationship, for 15 years after the matrimonial property settlement, on her earning capacity, and her corresponding indirect contribution to the deceased’s estate;
  • The relative paucity of the matrimonial estate at the time of the property settlement, compared to the ample resources now available; and
  • Where the only other claim on the estate was from the daughter, for whom ample estate will remain after making proper provision for the applicant.

The court ordered by way of provision from the estate of the deceased a lump sum of $750,000 in favour of the applicant.

If you are unsure about your rights to challenge a Will or the laws relating to intestacy when a person dies without leaving a Will, please contact Everingham Solomons because Helping You is Our Business.

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Persuasion Versus Coercion – Lesley McDonnell

LAMTo make a valid Will a person must be of sound mind when the Will is made. Where a Will is the product of undue influence then it may be declared invalid if undue influence can be proven by the person alleging it. Undue influence goes beyond mere persuasion. “The essence of undue influence is coercion of the will so that the [Willmaker] does that he or she does not desire to do”. One recent Victorian case refused an application that there was undue influence exerted over the Willmaker when she made her Will.

In 2015 the deceased died at the age of 91 survived by 3 adult sons. The deceased made a Will in 2013 whereby she appointed a family friend and one of her sons as the executors of her Will. The deceased left her residuary estate to be divided between her three sons as to 20 percent, 35 percent and 45 percent respectively. The son who received only 20 percent of his mother’s estate applied to the Court alleging that the 2013 Will was invalid because it was obtained as a result of the undue influence of his two brothers who had the care and control of his mother before she died.

An allegation of undue influence is a serious matter and must be proved on the balance of probabilities and supported by full particulars. “To prove undue influence, it must be shown that the [Willmaker] did not intend and desire the disposition. It must be shown that she has been coerced into making it”.

The applicant son relied on the following matters:

(a) the applicant son placed the deceased in residential care in October 2012;

(b) some four weeks into her stay in residential care, one of his brothers removed her from residential care;

(c) thereafter the deceased was under that same brothers ‘care and control’; and

(d) the deceased executed her Will when she was being kept substantially isolated from the applicant son until her death.

Applying the test of undue influence to the particulars in this case the Court stated “there is no allegation of influence let alone that the influence was undue. There is no allegation that, in making the dispositions under the 2013 Will, the [will maker] was coerced or that her will was overborne in circumstances that her judgment was not convinced”.

It is important to note “the fact that an allegation of undue influence is a serious allegation does not mean that, in an appropriate case, it should not be made”. However “Particulars which are consistent only with the opportunity to influence a will maker are not sufficient” to prove undue influence.

At Everingham Solomons we have the experience and expertise to assist you in all matters concerning your Will or that of a recently deceased family member because Helping You is Our Business.

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Left to chance your wishes may be left unfulfilled – Lesley McDonnell

LAMToo often people don’t devote the time they should to making a valid Will and keeping it up to date. Making a valid Will is one of the most important things a person can do to protect their loved ones. Once made, a Will should not be shoved to the back of a drawer and forgotten. Over time a Will needs to be reviewed and updated to reflect life changing events. You should seek professional advice to ensure your Will reflects your wishes and is in conformity with the law. The pitfalls of not doing so could mean an expensive court case as the following case demonstrates.

The deceased died in 2011 leaving a substantial estate and a 2010 Will. After his death, a further document titled “My Last Will and Testament” dated 16 January 2011 was found amongst the deceased’s personal papers. The 2011 document had been prepared by the deceased and although signed by him, it was not in conformity with the formal requirements for making a valid Will in NSW because it was not signed by the deceased in the presence of two witnesses.

When a document fails to comply with the formalities required to make a valid Will, an application can be made to dispense with the requirements for making a Will where the court is satisfied that the person intended the document to form his or her Will. An application was made by the executors of the 2010 Will to determine whether the 2011 document was intended by the deceased to form his Will.

In the months preceding his death, the deceased typed instructions for new Wills and gave those to his solicitor to enable new Wills to be prepared for him. The instructions were all headed “My Last Will and Testament” and took the same form as the 2011 document. Just two and a half weeks after making the 2011 document the deceased attended his solicitor’s office but did not mention to his solicitor that he had changed the Will which the solicitor had prepared for him less than six weeks previously.

In describing the deceased as a “seasoned Will-maker” the deceased’s solicitor gave evidence that the deceased was well aware that a Will should be signed in the presence of two witnesses and in his view the deceased would not have wished to leave the enforceability of such a significant document as his Will to chance.

Ultimately the court was not satisfied that the deceased intended the 2011 document to form his Will. On the question of why the 2011 document was signed by the deceased, the court inferred that the deceased did so to record his then thoughts without intending the document should have immediate operation as his Will.

Don’t leave your Will to chance and risk having your wishes go unfulfilled. At Everingham Solomons we have the expertise and experience to assist you in making a Will Because Helping You is Our Business.

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The Effect of a Computer Will – Lesley McDonnell

Increasingly more of us depend on the “on-line world” to communicate whether it be for business or pleasure or to stay connected with family and friends. Recently the Supreme Court of NSW considered whether a Computer Will left by the deceased before he died was intended to operate as his Will.

Prior to undergoing heart surgery, the deceased confided in his cousin that if anything should happen to him, he had made a Will and it was saved on his computer. When the deceased subsequently died widespread searches failed to locate a signed will amongst the deceased’s personal papers however 2 USB sticks were located. The data on the USB sticks was decrypted and an electronic document was discovered saved as “My Will”.

In NSW there are certain formalities that are required in order to make a valid Will. Failure to observe these formalities can lead to additional delay and expense to your estate.The Computer Document on its own did not satisfy the legal requirements for a valid Will because it wasn’t signed by the deceased in the presence of 2 independent witnesses. An application was made for the Computer Will to be declared as the deceased’s last Will. A Court can dispense with the legal requirements for the execution of a Will and uphold a document as a valid Will if the Court is satisfied that the deceased intended the document to form his Will. The issue to be determined was whether the deceased intended the Computer Document to operate as his Will.

The Court took into consideration the conversation the deceased had with his cousin before he died where the deceased alerted her to the location of his Will “should anything happen” to him and the content of the Computer Document itself. The Court found “The language used in the Computer Document is clearly language of testamentary intention. The deceased was careful to identify with precision those items that he had decided to “leave” to the named persons in the Computer Document” and provided reasons why family members were not named as beneficiaries in the document.

The Court was satisfied that when the deceased informed his cousin that he had made a Will and that it was encrypted and gave her the password, he intended the Computer Document to operate as his last Will.

Whilst ultimately the application was successful, it was not without associated difficulty and delay and uncertainty for the family and friends of the deceased coupled with considerable legal costs much of which could have been avoided if the deceased had consulted his Lawyer to make a Will. At Everingham Solomons, we have the expertise and experience to assist you with all your Estate planning needs because Helping You is Our Business.

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Words from Beyond the Grave – Lesley McDonnell

LAMA Willmaker died in 2015 leaving a Will where she left her estate to two of her children to the exclusion of one daughter. The reasons for excluding her daughter were written into the Will with the following sentence reciting that the Willmaker considered the excluded daughter “to be a compulsive liar and her lies have hurt me severely over the years”. An application was made to the Court by the excluded daughter for the offending sentence to be excluded from the Will on the grounds that the words were of an offensive or libellous nature.

A Court has the power to omit a word or words from a Will in order to protect Court processes from abuse and to prevent unnecessary harm being caused to the subject(s) of the words but this power is to be exercised “on a case-by-case basis and with great care”.

The Court was of the view that the words used in this Will were words calculated “to wound the feelings, arouse anger or resentment in the mind of a reasonable person”. However the words used by the Willmaker did have a testamentary purpose. The words were used to explain why the Willmaker failed to make any provision for her daughter. The Court formed the view that the words used in the Will did not “represent an attempt by the deceased to use her Will as a vehicle for libel. Rather, she has sought to explain the reasons for the disposition of her estate and the exclusion of her daughter from her bounty”. Accordingly the Court refused the application to exclude the offending sentence from the Will.

The lesson to take from this case is for Willmakers to consider recording their reasons for making or not making certain gifts in their Will, not in the Will itself, but by way of a letter or statutory declaration that is separate to the Will. A Will becomes a public document once probate is granted. To avoid Willmakers airing their dirty laundry publicly and in an effort to avoid antagonising a would-be litigant, more often than not, the preferable approach is for a Willmaker to record their reasons separate to the Will. That way, the relevant letter or statutory declaration need never see the light of day unless the Will is contested.

At Everingham Solomons we have the expertise to assist you with all your estate planning needs, because Helping You is Our Business.

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Considering a DIY Will Kit? Then consider an Epic Will Kit Fail – Lesley McDonnell

LAMMaking a valid Will is one of the most important things a person can do to protect their loved ones. Over time a Will needs to be reviewed and updated so that it properly reflects life changing events. It is imperative that a Willmaker takes proper professional advice to ensure the Will reflects their wishes and is in conformity with the law. The pitfalls of not doing so are highlighted in a recent Western Australia case.

The Willmaker died leaving a ‘will kit’.  The Willmaker was survived by a daughter.  The Will left the estate to the daughter who was still a minor at the time of her mother’s death with conflicting trust provisions.

The Executor of the Will applied to the Court for direction as to whether the daughter should receive her interest in the estate upon reaching the age of 18 or 25 years. The Court took into account evidence that the deceased clearly intended that her daughter should not receive the estate until she turned the age of 25 years.

 The Court noted “On numerous occasions when dealing with so called homemade Wills, I have observed they are a curse. Homemade Wills which utilise what is sometimes known as a ‘will kit’ are not much better. This case proves the point. The disposition effected by the Will is not complicated and no doubt the testator had clearly in mind what she intended to achieve. But the way the Will is drafted is difficult, and the parties have been put to the trouble and expense of coming to the court seeking directions as to its proper interpretation. If the Will had been drafted by a competent legal practitioner, this problem would not have arisen and the parties would have been spared a great deal of trouble and expense”.

The Court determined that the Will provided for the whole of the deceased’s estate going to the daughter and being postponed only until she reached 18 years of age. Upon attaining 18 years of age, the daughter was entitled to the estate and the trust was at an end.

The inevitable result was an expensive court case over a Will that ultimately failed to carry out the Willmaker’s wishes. All of this could have been avoided if the Willmaker had consulted a lawyer and signed off on a Will which reflected her wishes.

At Everingham Solomons we have the expertise and experience to assist you in making a Will that is tailor made to meet your personal wishes and deals with your particular circumstances Because Helping You is Our Business.

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