With an ageing population and mental illness on the rise, a recent Supreme Court case provides a unique insight into how one family resolved the dilemma of administering an incapable family member’s estate to accommodate his needs and the wider needs of his family as a means of avoiding future litigation after the man passed away. The case was unique insofar as it resulted in a 94 year old family patriarch’s estate being distributed before his death and was facilitated by family agreement with the approval of the court.
The case involved a 94 year old patriarch of a family, whose estate was subject to a financial management order (because the man had previously been declared incapable of managing his own affairs) with an estimated worth in excess of $15 million. The man’s family consisted of his de facto partner of over 30 years, a step-daughter and three adult sons by a previous relationship. One of the adult son’s was the appointed financial manager of his father’s estate pursuant to the NSW Trustee and Guardian Act. Prior to his admission to hospital in 2014, the man had lived in his own home with his de facto partner and step-daughter. Following his admission to hospital in 2014, it was clear that the man would not be fit to return home and would need to take up residence in an aged care facility.
The man was asset rich and cash poor. He owned his own home in which his partner and step daughter lived, and an investment property but a decision needed to be made as to what assets would be sold to come up with the funds necessary to meet the man’s ongoing needs. This inevitably led to family tensions. The issues to be resolved were fourfold:
(a) whether one or both of the man’s properties should be sold;
(b) the nature and extent of provision to be made, for the man’s de facto partner and step daughter, out of his estate;
(c) whether the Court could, and should, authorise the making of a statutory Will for the man; and
(d) if so, the terms of any such Will.
With the approval of the court, the man’s home was sold and out of that sale funds were paid to the de facto partner and step daughter to enable them to buy another home, the creation of a court made Will which amongst other things, made provision for the man’s three sons, and the man’s son was confirmed as his financial manager for the remainder of the man’s life.
Although each case turns on its own facts, this case demonstrates how in appropriate circumstances, a court can be empowered to facilitate the administration of estates, before and after death provided that stringent safeguards are adopted so as to ensure primacy is “given to the welfare, interests and benefit of the person in need of protection”.
Whilst this case was in many ways unique it does serve to highlight the need for people to plan ahead in case disaster strikes. At Everingham Solomons, we have the experience and expertise to assist you with all your Estate planning needs because Helping You is Our Business.
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A grandfather testator made a Will in which he left his estate to his only daughter (the defendant). The plaintiffs were the only grandsons of the testator, who owned, controlled and operated considerable pastoral holdings near Walgett. The plaintiffs commenced court proceedings against their mother as the executor of their grandfather’s estate, claiming that they were entitled to the entirety of their grandfather’s property, to the exclusion of their mother. Affronted by their conduct, the defendant made the decision to leave her sons out of her own Will. The result would have been, absent a court order or a change of heart by the mother, the plaintiffs would never receive the inheritance they long aspired to receive. It was left to a Court to determine the outcome of the family provision claim made by the plaintiffs against their grandfather’s Will.
Within the family group, the plaintiffs and their parents were all partly dependent upon the testator. He acted as a father figure to the plaintiffs, especially after their parents separated in 1992. He paid for the grandsons’ education. He provided the grandsons with paid work and accommodation on his properties. He shaped and directed their lives after school and to a considerable extent, groomed them for what he expected would be their eventual inheritance. “In the case of both young men, he encouraged them in the expectation that they would inherit the properties. In the circumstances in which they were brought up, the plaintiffs understandably developed an unhealthy sense of entitlement. But there were no promises and there was no agreement”.
The testator made Wills in 1987 and 2002. In both Wills, the testator left his estate to the defendant and provided for the properties to go to the plaintiffs only if his daughter pre-deceased him. The testator “never intended to leave the properties directly to them [the grandsons] while ever his daughter was alive and well, living on the properties and operating them”.
“It should be understood that the position under our law is that grandchildren have no claim as of right to the beneficence of grandparents…Nor should it be assumed that generosity by a grandparent to a grandchild, including by the payment of school fees, automatically converts the relationship into one of obligation to provide for the grandchild on the death of the grandparent”.
In order to make a family provision claim, a grandchild must be a person “who was, at any particular time, wholly or partly dependent on the deceased”. It is not enough for a grandchild to simply put their hand up for a greater share in an estate. Additionally, grandchildren must be able to demonstrate to a Court that “having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application”.
When determining an application for family provision, the Court noted it is appropriate to have regard to “perceived prevailing community standards of what is right and appropriate. This may be an imprecise, variable and contestable standard”.
Ultimately the family provision claim was not successful as the Court formed the view that the factors relied upon by the plaintiffs did not warrant the making of the family provision claim.
In family provision claims, there are principles that emerge from the cases which take into account prevailing community standards of what is right and appropriate but ultimately each case depends on its own facts. At Everingham Solomons, we have the expertise to assist you with all matters relating to deceased estates, estate planning and Family Provision claims, because Helping You is Our Business.
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A recent NSW decision has ignited the debate amongst those who oppose fettering a testator’s right to testamentary freedom against the proponents of current legislation which seeks to protect the family of the deceased by providing for members of the family who would otherwise be left without adequate provision. A recent case saw an applicant bring a successful family provision claim against her former lover’s estate.
The deceased died in 2011 aged 65 years. The deceased left a Will made in 2006. The Will provided for the estate to be divided equally between the deceased’s wife, son and daughter. The estate was worth over $6 million. No provision was made in the Will for the applicant who was the former de facto spouse of the deceased.
In order to make a family provision claim a person must be an “eligible person” as defined by legislation. In NSW the categories of eligible persons generally consist of a spouse of the testator (including de facto spouse) at the time of the testator’s death, a child, a former spouse, a dependent grandchild or a dependent member of the testator’s household or a person with whom the testator was living in a close personal relationship at the time of the testator’s death.
In this case the applicant was an eligible person because she was a person who was, for a time, wholly or partly dependent on the deceased and a member of his household.
The de facto relationship between the applicant and the deceased lasted about 8 years and ended 30 years before the death of the deceased. There was a child of the relationship. After the relationship ended, both re-partnered but there was no property settlement.
The wealth accumulated by the deceased came long after the relationship between the applicant and the deceased had ended. When the applicant returned to Australia in 2006 after working abroad, she turned to the deceased and he provided her with assistance.
The Judge stated “At first blush, one naturally hesitates to find factors warranting a family provision application in a case involving a de facto relationship 30 years distant from the deceased’s date of death, coupled with a divergence in the lives of the former de facto partners as they re-partnered and pursued different economic paths”. Against this the Judge noted “as life unfolded, there was (in social terms) a reconciliation” between the applicant and the deceased; “their estrangement was not, in that context, absolute or complete; the deceased remained solicitous of the welfare” of the applicant “in part, but not only in part, because he recognised her as the mother of his son; he encouraged her to return to Australia in 2006; and, when she did so, he provided her with assistance”.
In making an evaluative judgment, the Court made provision out the deceased’s estate to the applicant in the sum of $350,000.
At Everingham Solomons we have the expertise to assist you with all matters relating to family provision claims, because Helping You is Our Business.
Making 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. A recent South Australian court case highlights what can happen when appropriate professional advice is not sought before changing a Will. The effect can be devastating if the gift fails which was the result in this case.
The deceased left a valid Will dated 21 January 1993. The deceased subsequently prepared a note by hand on 12 May 1994 which sought to make a change to the 1993 Will. The terms of the 1994 document provided “Michael may have the use of the house for as long as he needs it”. Unfortunately the 1994 note did not comply with the legal formalities required to change a Will for example there were not two witnesses present when the note was written out by hand by the deceased and signed. This resulted in the case having to go before a court to determine a proper construction of the 1994 handwritten note of the deceased. This in turn caused delay and inconvenience to the administration of the estate.
Notwithstanding that the 1994 handwritten note prepared by the deceased did not comply with the strict formalities prescribed by legislation, courts are empowered to dispense with the formal requirements of a Will if certain requirements are met. In this case much turned on the 1994 document using uncertain language. “In the circumstances of this case, the expression ‘for as long as he needs it’ is, without more, entirely uncertain”. For example, how is Michael’s ‘need’ for the residence to be determined, by an independent arbitrator or by Michael himself? Is regard to be had to Michael’s financial situation and are emotional factors, such as sentimentality, to be considered also? The Judge emphasised that a reasonable beneficiary would require answers to these kinds of questions since the ultimate realisation of their bequest depends upon their answer.
In the end the court determined that the gift set out in the 1994 document was uncertain and therefore the gift failed. “In the circumstances, I am unable to give precise meaning to the expression, ‘as long as he needs it’, and therefore the duration of the … the gift is uncertain. I am not prepared to make any presumptions to remedy the ambiguity”.
In a 2013 case, a timely warning was issued “Homemade Wills are a curse. Occasionally where the assets of a testator are limited and where the beneficiaries are not in dispute no difficulties may arise in the administration of an estate. Flaws in the Will can be glossed over and the interests of all parties can be reconciled. But where, as here, the estate of the deceased is substantial, the Will is opaque and there is no agreement among the beneficiaries, the inevitable result is an expensive legal battle which is unlikely to satisfy everyone. All of this could have been avoided if the testator had consulted a lawyer and signed off on a Will which reflected his wishes”.
At Everingham Solomons we have the expertise and experience to assist you in making a Will that is in conformity with current law and deals with your particular circumstances Because Helping You is our Business.
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“[T]he complexity which attaches to family relationships” is never more apparent than in the arena of family provision cases. For one Queensland family “the bonds of family life were tested to extremes”, leaving some of the children “hurt and resentful by the actions of their father [the deceased]”. This case is significant because it is the largest provision order made ($3,000,000) by a Queensland Court to date.
The deceased died in 2010 aged 78 years leaving a will made in 2000 and codicil in 2008. The deceased left behind a wife and children and a $27,000,000 estate. The applicant in this case was Steven, a son of the deceased. The deceased named his widow, Jane as executor of his Will and left her the majority of his estate save only for some real estate left to one son, Jonathon. The deceased made no provision for Steven or his daughters, Natasha or Tania setting out reasons for each in the Will.
There were three other applications for provision made by Jonathon, Tania and Natasha. Each of them was settled out of Court.
Steven contested his father’s Will arguing that his father failed to make adequate provision for him in the Will. Steven relied upon the work he had undertaken over many years for his father, and the extent to which that work assisted in the amassing of the estate. Also Steven had been involved in a motorcycle accident prior to his father’s death, sustaining injuries that prevented Steven from working as a pilot and restricted him performing physical work.
The Court’s role was to determine whether Steven had been left without adequate provision for his proper maintenance, education and advancement in life. There were a number of factors that the Court was required to take into account. The following factors were persuasive for the Court in finding that Steven had been left without adequate provision:-
(a) The estate was very large.
(b) Steven worked long and hard for his father and contributed to the growth of his father’s property interests.
(c) At the date of death Steven had substantial assets but also had substantial liabilities which were subject to the vagaries of the financial market.
(d) Two of the reasons for the deceased not providing for Steven in the will were either misconceived or based on a misunderstanding of their value.
(e) Steven‘s injury meant he could no longer be a pilot and he could not perform labouring work on his own properties.
(f) The provision made during the deceased‘s lifetime was subject to Steven entering into debt in order to obtain the benefit of the properties. In other words, what was received was not a gift but, in effect, a discounted sale.
At Everingham Solomons we have the expertise and experience to assist you in all aspects of family provision claims because Helping You is Our Business.
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Buying off the plan involves an element of mystery and a high degree of uncertainty particularly for the unwary. Buying off the plan differs from when you buy an existing property. The main difference is that buying off the plan requires you to imagine the finished product, a building that is yet to be constructed and often exists only in the form of plans and artists impressions, whereas buying an existing property is much more certain insofar as what you see and inspect is what you get.
Just as each development differs so to does the contract for an off the plan purchase. Normally the contract for sale of land will contain a draft strata plan, a copy of any by-laws, a copy of preliminary plans submitted to Council, the type and standard of finishes to be used in the building and inclusions.
All off the plan contracts afford the developer varying degrees of flexibility to change the property. Part of this can be explained by the developer wanting to retain some discretion but more importantly the developer needs to retain flexibility to make changes when they are required for example where council or engineering requirements dictate a change must be made to the development. This is usually balanced by provision in the contract for a purchaser to be able to pull out if the change significantly affects the property to the detriment of the purchaser.
Another feature of the off the plan purchase is a delayed settlement date. Where an existing property can be completed within a 6 week period, an off the plan purchase can take many months if not years to complete. Normally contracts will contain a ‘sunset clause’ that allows a developer to extend beyond that date to accommodate unforeseen events. However it is important to document in the contract some final date after which the purchaser knows that if the plan is not registered by that date, the purchaser can pull out and be refunded their deposit.
Buying off the plan can be advantageous for both buyers and sellers. It is essential that legal advice is obtained before an off the plan purchase contract is signed because the contract can contain pitfalls for the unwary. At Everingham Solomons we have the expertise and experience to assist you in all aspects of buying and selling because Helping You is Our Business.
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Every day people are involved in accidents or become sick. Sometimes this can mean that you are unexpectedly not able to make decisions for yourself. There is a way to ensure that someone you trust can make decisions for you should this power be taken away from you.
Making a document called an Appointment of Enduring Guardian is a powerful and proactive step that you can take today whereby you can appoint a trusted friend or family member (or more than one) to make health and lifestyle decisions for you in the event that you are unable to make decisions for yourself.
It is a common misconception to think that only the elderly need to appoint an enduring guardian. Accidents and illness happen to people at all stages of life and from all walks of life. If you are over 18 years of age and you have the capacity to understand what you are doing then you can make an Appointment of Enduring Guardian.
Too often people think “well if I get sick, then I will make one”. By then it is often too late. If a person is suddenly rendered incapacitated and a decision needs to be made for them often this will necessitate an application to the Guardianship Tribunal. This in turn can make an already stressful situation more difficult with no guarantee as to who may ultimately be appointed by the Tribunal.
Making an Appointment of Enduring puts the power in your hands. You can choose who makes decisions for you and the types of decisions. For example your guardian (s) can decide:
where you live
what health care you receive
what personal services you receive
to consent to medical or dental treatment for you, and
to refuse medical and dental treatment in certain
circumstances
You can also make the above decisions subject to directions such as turning off life support where there is no reasonable chance of recovery and enabling your guardian to be able to obtain and view all of your health and lifestyle records where they would otherwise be unable to due to privacy laws.
Importantly, an Appointment of Enduring Guardian only takes effect if you become unable to make health and lifestyle decisions for yourself.
Thinking about not being able to make decisions for yourself is difficult but giving the power to someone you trust to make decisions for you is easy and can bring some much needed peace of mind to you and your family.
At Everingham Solomons, we have the experience and expertise to assist you in making an Appointment of Enduring Guardian which will ensure that your wishes are carried out, because Helping You is Our Business.
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Recently, the Office of State Revenue announced that the First Home Owner Grant (New Homes) of $15,000 is being extended for a further two years from 31 December 2013 to 31 December 2015. On 1 January 2016 it will reduce to $10,000.
The First Home Owner Grant (New Homes) applies to the purchase of a new home only. It does not apply to the purchase of an established home, vacant land, business premises or a holiday home. A new home is a home that has not been previously occupied or sold as a place of residence.
To be eligible to apply for the Grant, you must be able to meet at least the following conditions:
You must be over 18 years of age;
The property must be purchased in your name and not in the name of a company or trust;
If there are two people buying together, one person must be a permanent resident or an Australian citizen;
All applicants and/or their spouse/de facto must not have previously owned a residential property, jointly, separately or with some other person in any State or Territory before 1 July 2000;
The purchase price must not exceed $650,000;
The applicant and/or their spouse must have not previously received a first home owner grant in any State or Territory; and
At least one applicant must occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months of purchasing the new home.
Like most applications, conditions apply and penalities will be imposed on any person who knowlingly supplies false or misleading information at the time of making an application for the grant. An assessment as to whether you are eligible to apply must be determined based on your individual circumstances at the time you are seeking to purchase a new home.
If you are a first home buyer and you are considering buying a new home, you should come and see our experienced property team who can help answer all of your questions and put you on the path towards owning your new home, because Helping You is Our Business.
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The transition to retirement living can be a rewarding one. Along the way some important decisions need to be made. One of those decisions may include moving into a retirement village. In an effort to help make that decision process easier for prospective residents, new laws come into effect on 1 October this year. It is timely to look at those changes and retirement living more generally.
Under the law, a retirement village is defined as being a complex containing residential premises that are predominantly or exclusively occupied by retired persons who have entered into a village contract with an operator of the complex. A retired person “means a person who has reached the age of 55 years or has retired from full-time employment”.
Up until this point in time there have been various forms of retirement village contracts.
From October there will be three main changes. Firstly, village operators will be required to use a new standardised village contract. Secondly, prospective residents will receive a general enquiry document that explains the services and facilities available to them in the village. Thirdly, a new simplified disclosure statement will be given to prospective residents before they sign a village contract.
According to the Minister for Fair Trading Anthony Roberts: “These reforms will make the move into a village easier and less stressful for retirees and their families”. The new standardised contract “will allow prospective residents to compare apples with apples when making the important choice of which retirement village to move into”.
After making an initial enquiry with an Operator of a retirement village, a prospective resident will be provided with a two page general inquiry document. The document provides general information about the village including the village type, costs to enter the village and village facilities.
The new version of the disclosure statement provides more detailed and specific information including financial arrangements particular to the village and unit.
The new standard contract covers matters such as what residence rights are involved, entry costs, the settling-in period, recurrent charges, services and facilities, alterations and additions, repairs and maintenance, sharing of capital gains, and departure fees.
As an added measure of protection for residents and their families, the legislation still provides for a settling in period and cooling off period.
Making the move into a retirement village has significant financial and legal implications. Taking the time to properly know and understand the village contract is essential to ensuring that the choice of retirement village is the right one for you. The experienced team at Everingham Solomons can help guide you through the process because Helping You is Our Business.
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Last year the NSW New Home Grant Scheme was introduced to stimulate the construction of new homes in NSW and remains open today to non-first home buyers and investors alike. Eligible purchasers can receive a $5,000 grant towards the purchase of a new home, a home off the plan and the purchase of vacant land on which a new home will be built.
To take advantage of the $5,000 grant, purchasers must fall into one of these categories:-
The value of the new home must not exceed $650,000; or
The value of the vacant land (upon which a new house will be built) must not exceed $450,000.
This means that a purchaser seeking to purchase a new home will be eligible if the agreement provides for the purchase of land that is the site of a new home which is complete and ready for occupation. A new home is a home that has not been previously occupied or sold as a place of residence, and includes a home that is a substantially renovated home. Whether a home has been substantially renovated needs to be determined in the particular circumstances because it is a defined term under the legislation.
Likewise an off the plan purchase is also eligible for the grant. An off the plan purchase involves a contract for the purchase of land intended to be used as the site of a new home, which is to be built before completion of the agreement.
And finally, a purchaser of vacant land that is intended to be used as the site of a new home and which is not an off the plan purchase may also be eligible for the grant if the value of the land being purchased does not exceed $450,000 and the laying of foundations for the home must commence within 26 weeks of settlement of the purchase of land.
The grant will not be available to purchasers if the new home, or the land on which the new home is located or to be built, is intended to be used for any purpose other than residential such as commercial, industrial or professional.
The above scheme should not be confused with the First Home—New Home scheme. If you are eligible for a stamp duty exemption/concession under the First Home – New Home Scheme, you cannot receive the $5,000 New Home Grant.
If you are considering buying a new home or vacant land to build your new home on there are conditions that apply and you should come and see our experienced property team who can help answer all of your questions, because Helping You is Our Business.
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With an ageing population and mental illness on the rise, a recent Supreme Court case provides a unique insight into how one family resolved the dilemma of administering an incapable family member’s estate to accommodate his needs and the wider needs of his family as a means of avoiding future litigation after the man passed away. The case was unique insofar as it resulted in a 94 year old family patriarch’s estate being distributed before his death and was facilitated by family agreement with the approval of the court.