Don’t make promises you don’t intend to keep

Headshot of Lesley McDonnell - Senior Associate at Everingham Solomons TamworthDuring their lifetimes, the deceased and her late husband had a longstanding share farming arrangement with David “[T]heir aspiration to be able to enjoy an idyllic farming property depended upon their being able to secure the services of a farmer like David, who was prepared to work hard for very little income”. In 1988, after the death of her husband, the deceased represented to David that the farm was to pass to him upon her death, together with a sum of money. The deceased died in 2016. The deceased was survived by her 2 daughters Hilary and Jocelyn.  At the time of her death, the deceased was the owner of the farm that she left by her will to Hilary and a bequest of $200,000 to David in her will.

David applied to the Court alleging that by leaving the farm to Hilary in her will rather than to him, the deceased had acted unconscionably in conflict with a promise that had been made to him by the deceased to the effect that the farm would one day be his, in return for David continuing throughout the deceased’s lifetime to conduct share farming on the farm. David claimed that he continued with the share farming agreement, and undertook additional tasks on the farm, in the expectation that the deceased would uphold the promise and leave the farm to him.

Proprietary estoppel by encouragement “comes into existence when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to their detriment. If these matters are established equity may compel the owner to give effect to that expectation in whole or in part”.

The Court was “satisfied that David acted on the faith of that assurance to his detriment by continuing the farming operation” on the farm “for about 23 years thereafter in the belief that he would inherit that property” under the deceased’s will. “The average income received by David was in the order of one third of the average annual total male income calculated on the basis of 2020 equivalent dollars”. The deceased ought to have known that part of David’s “motivation for continuing was the expectation that he would inherit the farm”. “In those circumstances, it was unconscionable” for the deceased “not to have left the farm to David in her will”. Accordingly, David established his case and was entitled to the farm.

A promise or representation made by a willmaker to another may be enforceable particularly when another person acts on the faith of a promise or representation to their own detriment believing they will inherit property. At Everingham Solomons we have the expertise and experience to advise you on your legal rights because Helping You is Our Business.

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“With great power comes great responsibility”

Headshot of Lesley McDonnell - Senior Associate at Everingham Solomons TamworthWhilst the role of executor of a will cannot be forced upon a person, the role if accepted, means the executor “owes a fiduciary duty to the estate in exercise of each of the duties of an executor”. If an executor prefers his or her own personal interests to those of executor and intends to neglect his or her executorial duties, they can be removed from the office of executor and stripped of power as a recent case illustrates.

The deceased died in 2019 survived by three (3) adult children Scott, Marla and Donna.  By her will, the deceased appointed Scott as executor and left shares in a company to Scott and the rest of her estate to a discretionary Trust. The beneficiaries of the Trust included Scott, Marla and Donna. The effect of the will was to transfer the estate either to Scott or to the Trust for which Scott controlled the Trustee. Donna and Marla, having effectively been excluded from the estate, commenced family provision proceedings.

About 17 months before the deceased died, the deceased entered into what the Court described as a ‘series of extraordinary documents’ which had no commercial purpose but were designed only to avoid the existence of a fund upon which a family provision application could be made.

Of significance was a conversation that took place between Scott and Marla in 2019. The Court noted “The recorded conversation shows a deep-seated animosity of Scott towards Donna. In my view, in the recorded conversation, Scott reveals his intention to access the estate’s funds to fight any claim knowing that Donna will have to fund any legal fees herself. There is a plan stated by him to run her out of money”.

Probate of the deceased’s will was granted to Scott in early 2020.

Donna made an application to remove Scott as executor and revoke the grant of probate.

The Court noted “The starting point is that the choice of an executor is that of the testator and that choice ought to be honoured unless there is some good reason why the chosen executor ought not continue to administer the estate”. “Here, the applicant has made out an overwhelming case for the removal of the executor”. The transactions that took place 17 months before death “were designed… to defeat any family provision application by Donna and Marla. Scott has a clear interest in defending the inter vivos transactions. Therefore, a central question is whether that circumstance is likely to lead Scott to prefer his own interests to the due administration of the estate”.

The Court held “The proper administration of the estate will be frustrated by Scott continuing as executor. An executor should be appointed who will objectively consider the issues facing the estate”. Accordingly, the grant of probate to Scott was revoked and Scott was removed as executor of the will.

Whether you are an executor of a will, or wishing to make or update your own will, we have the expertise and experience to assist you because Helping You is Our Business.

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Skimping on a Will now may cost a small fortune later

Headshot of Lesley McDonnell - Senior Associate at Everingham Solomons TamworthWhen people seek to make a homemade Will ‘on the cheap’ without professional advice, it can cause additional stress and anxiety for the Willmaker’s family if a dispute arises as to the meaning of the Will with associated costs of litigation to resolve issues depleting the estate. A recent case serves as a timely reminder of why expending time and money on a professionally drawn Will now “is a sound investment” for the future.

The deceased died in 2017. The deceased was survived by her husband and her two children. The deceased left only a modest estate. When she died, the deceased left a homemade Will. By her Will the deceased sought to make a gift of a particular residence with a direction that the residence was not to be sold “until majority of the residing tenants agree to the action. I wish my children to remain in abode as long as it is deemed reasonable” (‘the first clause’). After making a number of other gifts, a subsequent clause in the Will empowered the Executor to sell assets in the estate on such terms as he considered expedient (‘the subsequent clause’).

As the Will was not clear and the beneficiaries adopted different positions on what they viewed the Will to mean, the Executor applied to the Court for directions as to the proper interpretation of the Will.

The Court observed that the subsequent clause of the Will was quite difficult to reconcile with the rest of the Will. Having made quite specific directions in the first clause of the Will, the subsequent clause appeared to get the Executor to ignore the first clause of the Will entirely. On the face of it at least, the Court observed “it was not possible to reconcile” the first clause with the subsequent clause of the Will.

After undertaking a review of the rules to be applied when construing a Will, the Court ultimately determined there was “no alternative” but to conclude that the first clause of the Will was void for uncertainty. When the wide ambit of the subsequent clause is added in “it is simply not possible to give a construction of this Will which makes sense”.

The consequence was a partial intestacy which resulted in the share of the deceased’s husband in the estate being enlarged by the addition of the gift of the particular residence that failed in the first clause of the Will.

Where the Court has to determine the proper interpretation of a homemade Will, “there is no doubt a good part of the estate will be consumed in a contest over the meaning of what by any measure is a difficult document. It is invariably the case that money spent on having a Will professionally drafted is a sound investment”.

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

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When is enough ever enough?

Recently we wrote about adult children seeking to contest their parents will. Whilst an adult child may assert “as of right” that a parent is bound to treat children equally in their will, that is not an automatic right as the following case from last year illustrates.

A mature aged adult son, with a reputation for being “a spendthrift of sorts” sought to make a claim against his mother’s estate at the expense of his only sibling despite the fact that his mother by her will, left him a property in excess of $1.2 million coupled with several years’ annuity of $66,000, but he wanted more.

As a child of the deceased, the son qualified as an “eligible person” to apply for a family provision order against his mother’s estate. When she died, his mother left an estate with an estimated value of over $6 million.

When his mother and his late father were still alive, the son took what was described as an early “inheritance in the form of substantial parental assistance, from time to time, as he encountered crises in life (with a divorce, involvement in court proceedings, and subjection to disciplinary proceedings affecting his entitlement to practise his chosen profession)”. “Having received his inheritance, and (not for the first time) fallen on hard times, the plaintiff looks to his mother’s estate (more particularly, the defendant’s inheritance) for relief against pressing debts and for a larger share of the estate”.

To succeed in his claim, the son was required to establish that he has been left without “adequate provision for his maintenance, education and advancement in life” from his mother’s estate and that further provision “ought” to be made for him from her estate. In his application the son sought a further $1 to $1.5 million from his mother’s estate to which the court noted such an “ambit claim suggests that he has a misplaced sense of entitlement”.

In undertaking a review of previous wills made by the deceased, the court noted throughout her son’s adult life “the deceased accommodated his claims of necessity on her generosity; but she remained mindful of her desire, by her will, to even up the scales as between” her son and daughter.

Ultimately the court determined the son failed to establish that he had been left without adequate provision for his proper maintenance, education and advancement in life out of the estate and his application was dismissed.

At Everingham Solomons we have the expertise to assist you with all matters relating to family provision claims, because Helping You is Our Business.

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A Promise is a Promise

If a person makes a promise (“the promisor”) to another that s/he will obtain an interest in the promisor’s land and in reliance upon that promise, the other person then acts to his/her detriment, the law will intervene to prevent the promisor from going back on his/her word when it would be unconscionable for the promisor to do so. A recent NSW Supreme Court case has considered this legal principle known as proprietary estoppel where disgruntled neighbours sued the estate of his deceased neighbour after it was discovered that she reneged on her promise to leave them certain land by her Will.

David and his partner were neighbours of the deceased describing their property, No 70, at the time they purchased it as “the worst house in the best street”. The deceased was the owner of two adjoining properties (No 66 and No 68). The deceased resided in an upstairs unit at No 68 which had views of Sydney Harbour.

After David and his partner moved into No 70 in 2001, the deceased voiced her concerns about their plans to develop their property. It was contended that the deceased promised to leave them her houses (No 66 and No 68) in return for them looking after her for the rest of her life and agreeing not to undertake their desired building works to the extent that such works would impede her Harbour views.

David and his partner performed their side of the agreement but when the deceased died in 2015, she did not leave her properties to them in her Will as she had promised. David and his partner sued the executor of the deceased’s estate seeking to enforce their rights by estoppel against her estate.

The court found David and his partner did provide services to the deceased and altered their lifestyle to accommodate the deceased’s needs, and provided companionship and support as the deceased aged over a number of years in reliance upon her promise to them. “Estoppel by encouragement vindicates a plaintiff’s expectations when a defendant seeks unconscionably to resile from an expectation that he or she has created”. The court determined that detrimental reliance “sufficient to render it unconscionable for the deceased to resile from the testamentary promises has been established” and the elements of proprietary estoppel were made out. The court ordered the executor of the deceased’s estate to transfer the 2 properties to David and his partner.

A promise made by one person to another may be enforceable against the promisor particularly where significant steps have been undertaken in reliance upon the promise and you should seek professional legal advice. At Everingham Solomons we have the expertise and experience to advise you on your legal rights because Helping You is Our Business.

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Making your Will while under lockdown

COVID-19 has made many people think about their mortality. Making a Will has become a priority for a lot of people in an effort to protect loved ones and as a means by which we can create some certainty as to our last wishes in an otherwise increasingly uncertain world.

Usually, a valid formal Will must be signed by the Willmaker in the presence of two witnesses. This requirement can present an obstacle when you take in account the current social distancing and isolation directives issued by the Government. These directives really do not make the task of signing a Will in the presence of two witnesses who are not family members an easy one.

If you die without leaving a Will, the intestacy laws of each State and Territory will apply to determine how your assets will get distributed on your death according to a prescribed legal formula. Importantly this formula may not reflect your true wishes.

Taking into account the above dilemma, the NSW State Government has introduced temporary new laws that will allow the witnessing of Wills, Enduring Powers of Attorney and Appointment of Enduring Guardianship documents as well as other important legal documents by videoconference.

“These changes will make it easier for people to stay home and reduce physical interactions, while still completing important transactions”.

Everingham Solomons is continuing to assist our clients during COVID-19 and this includes conducting meetings via videoconference.

If you are concerned about your estate planning, it is important to know that we can assist you to put in place a Will that reflects your wishes and will bring peace of mind to you and reduce the burden on your family and loved ones when you die. 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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Special Disability Trusts

Planning ahead for individuals can be challenging but that task can seem harder for family members of individuals affected by severe disability and will often involve more than making a standard Will and appointing a Power of Attorney or Enduring Guardian.

In 2006, the Government introduced Special Disability Trusts into social security legislation with the aim to encourage the private funding of accommodation and care needs for people with disabilities. A Special Disability Trust allows family members to leave assets in trust for an individual with a ‘severe disability’ which can be used to fund that person’s ongoing care, medical expenses, accommodation, and some discretionary expenditure for that person into the future without adversely affecting their entitlement to a disability support pension.

A Special Disability Trust can be established by a Will and allows assets to be left to a beneficiary without having adverse effects on their Centrelink entitlements. A Special Disability Trust may also be set up during a person’s lifetime (for instance by a parent for their child with a severe disability) and the restrictions and concessions applicable will be the same as those that apply to a Trust created by a Will.

A Special Disability Trust must conform strictly to very prescriptive rules and as such it will not suit everyone with a family member who has a disability.

The starting point must always be to determine whether the person with a disability qualifies as a beneficiary of a Special Disability Trust which must fit the definition of ‘severe disability’ under the social security legislation.

Funds in a Special Disability Trust can only be used to pay for accommodation and care expenses related to the disability (including medical and health insurance expenses) and reasonable discretionary expenditure (up to a limit of $12,250 a year, as at July 2019).

A person with a ‘severe disability’ can have $681,750 (as at July 2019, indexed annually) plus a residence held in trust before the assets test applies to reduce his or her social security entitlements. The income from the assets of a Special Disability Trust will not be included as income of the beneficiary. Family members contributing assets of up to $500,000 into such a trust may receive an exemption from the usual Centrelink gifting rules.

It is strongly recommended that individuals obtain expert legal and financial advice to determine whether a Special Disability Trust suits their circumstances. For advice a Special Disability Trust, please contact the experienced team at Everingham Solomons because Helping You is Our Business.

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Putting out your hand, without more, is not enough for family provision

The deceased died in 2016 aged 76 years survived by his widow and two adult sons and 6 grandchildren. The deceased made a Will on the day he died leaving his widow the right to reside in their matrimonial home for life. Upon termination of such right, the deceased sought to provide for 3 of his 6 grandchildren, to make a gift of $10,000 to each of his sons, and for the remainder of his estate to pass to his daughter in law who was also named Executor of his Will. The net value of his estate was in the vicinity of $3.8 million.

The deceased left a statement of wishes acknowledging that the gifts of money to his 2 sons represented “a small component” of his estate. The deceased recounted the substantial financial assistance he had provided to both of his sons during his lifetime especially during their “formative business years”.
A claim was brought by one son, a self-described “professional punter” for a greater share of his father’s estate. A pivotal aspect of every application for family provision is to establish need as this is an area of law that has “developed to address those circumstances where an eligible applicant has not been provided with ‘adequate’ and ‘proper’ maintenance from the estate of a deceased”. Unfortunately the applicant in this case did himself no favours in putting forward contradictory accounts of his financial position without adequate explanation. Far from presenting a convincing case of need, the Court determined that the applicant had made no effort to place before the Court an accurate statement of his financial position. Additionally the Court heard evidence of their long lasting estrangement which the Court noted provides an explanation (perhaps not the only explanation) for the deceased’s decision to make only modest provision for his son in his Will.
The son’s failure to accurately account to the Court for his true financial position, meant the Court was in “no position to assess whether the provision made for the applicant in the Will in question was otherwise than adequate”. “It is the applicant’s duty to place before the Court, candidly and fulsomely, the applicant’s financial position”. The applicant’s failure to do so in this case resulted in his application being dismissed.
At Everingham Solomons we have the expertise to assist you with all matters relating to family provision claims, because Helping You is Our Business.

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Giving The Gift Of Life – Lesley McDonnell

I am often asked by clients who want to donate their organs, if they should include this wish in their Will. Due to the fact that a Will is not read until after a person’s death, there are better options for people to record their wishes to donate their organs.

Firstly, the Australian Organ Donor Register is Australia’s only national register that enables people to record their decision about becoming an organ donor after their death. Registration is easy, voluntary and allows a person to choose which organs and tissues they are willing to donate. There are a number of ways to register including, but not limited to, the following:

Register through your existing online myGov account;

Register using an Online form through https://donatelife.gov.au website;

Download a registration form from the Department of Human Services website at www.humanservices.gov.au; or

Visit a local Department of Human Services Centre and pick up a Donor Register brochure and registration form.

If you register, doctors around Australia can see you are a donor 24 hours a day, 7 days a week. “Transplants need to be fast, so this is vital”. “Around 1,400 Australians are currently waitlisted for a life-saving organ transplant. In 2018, 554 deceased and 238 living organ donors and their families gave 1,782 Australians a new chance at life. The majority of Australians (69%) are willing to become an organ and tissue donor but only 1 in 3 Australians have joined the Australian Organ Donor Register”.

Secondly, people can record their wish for organ donation in their Appointment of Enduring Guardian. This is not a substitute for registering as an organ donor. An Appointment of Enduring Guardian is a legal document that gives a person the power to say who they want to have authority to make medical and lifestyle decisions for them if through accident, illness or misadventure a person loses the ability to make decisions for themselves.

Finally, it is important that you discuss your wishes with your family as they will have the final say. When you die, family are more likely to follow your wishes if they already know about them. If over time your views or goals change, it is important that you let your family, friends and enduring guardian(s) know.

If you need assistance in any estate planning matter, please contact Everingham Solomons, because Helping You is Our Business.

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The importance of a Will and its whereabouts – Lesley McDonnell

LAMA Will is a legal document which sets out who will receive your assets when you die. Taking the time to make a valid Will is an important first step but it is not the end of the story. A Will should be reviewed regularly and particularly when significant life events occur such as marriage, divorce, birth of a child, or if one or more of your beneficiaries die. Equally so, you should always keep your Will in a safe place and let the Executor(s) of your Will know where it can be located. This is because if a Will cannot be found at your death, it can lead to considerable uncertainty, distress and expense for your family as the following case illustrates.

The deceased committed suicide in 2013.The deceased had two adult children and a wife who survived him. The deceased had separated from his wife in 1991 but they never divorced. Following his death, no original Will could be located.  In 2014, the deceased’s daughter applied for Letters of Administration on the basis that the deceased had not left a Will. Letters of Administration were granted to her in 2014. In 2015, the deceased’s son located an unexecuted copy of a 1991 Will of the deceased and made application to the Court for proof of the 1991 Will.

To be successful in this case, the deceased’s son had to prove to the Court that the lost Will had not been revoked. This is because under the law “If a will known to have existed and last known to have been in the possession of the deceased cannot be found after death, it is presumed that the deceased destroyed it with the intention of revoking it”. To rebut this presumption, “the evidence must show it is more probable that the Will was lost or stolen or, more generally, could not be produced for some reason other than that it was destroyed by the deceased with the intent to revoke it”. The strength of the presumption of revocation varies according to the facts of each case.

The Court found that in 1991 the deceased executed a Will but the original Will could not be found. On the evidence before the Court it was held that, by mid-2013, the deceased had destroyed the 1991 Will. As a consequence the Court found the deceased died intestate meaning his estate would be distributed according to the rules of intestacy.

The above case reinforces the importance of keeping your Will in a safe place and letting the Executor(s) of your Will know where it can be located. At Everingham Solomons we can help you both with making a Will and safely retaining your Will for the peace of mind of you and your loved ones because Helping You is Our Business.

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