Robert Holmes a Court’s big mistake: dying without a will

Robert Holmes a Court was one of Australia’s most respected and feared businessmen who with intellect, daring and hard work built a $2 billion empire in the 1980s.

When he died suddenly aged 53, the world was stunned to find that he had not left a valid will. Legend has it that he carried a draft will around in his briefcase for years but never actually signed it. The resulting legal wrangling took nearly 20 years to resolve, seriously straining family relations.

Why would a man who was known for his ability to think strategically and act boldly, who was surrounded by lawyers, fail to compete a will? He is not alone; it is estimated that about half of all Australians die without a valid will.

Most people cite lack of time, knowledge or inadequate assets as the reason for not attending to their estate planning. But the real reason is that very few of us like to think or talk about death and medical advances have been so successful that we fool ourselves into thinking that death is always a long way off.

This self-delusion can be devastating — a mother of three young sons who recently lost her husband to cancer concedes that the period after her husband’s death was even more traumatic when she realised that she lacked the legal authority to deal with his assets and spent time negotiating with government departments and financial institutions rather than being able to grieve and support her children while at their most vulnerable.

While her late husband had been seriously ill for some time, he never drafted a will, feeling it would be an admission of defeat, mentally weakening his fight against disease, but he failed to take into account the impact this would have on his family.

Getting your testamentary affairs in order does not need to be hard or costly — there are do-it-yourself will kits and lawyers offering quality wills online in addition to specialist estate planning solicitors and financial planners.

A good estate plan

Here are the five component parts of a good estate plan.

1. A will

This is the legal document which appoints someone to deal with your assets (executor) and distribute them in accordance with your wishes to your chosen beneficiaries. Importantly it can also nominate someone to care for your children while under 18 (guardian).

2. Testamentary trust

While this will not be necessary for everyone, this is a trust which arises upon your death and can provide powerful protection and tax advantages for your beneficiaries.

3. Letter of wishes

This is a non-legal document which allows you to provide context for the decisions you have made in your will and additional information for your executors to make administration easier, like account numbers and computer passwords. It can be really helpful to keep your will itself very straightforward so it can be relevant for as long as possible and regularly update your letter of wishes as things change.

4. Superannuation death benefit nomination

Super, like company and trust assets, are not covered by your will. As such you need to instruct your superannuation trustee specifically with a death benefit nomination, which can be very important considering the level of life insurance often also held inside super.

5. Enduring power of attorney

This provides the authority to make financial and sometimes medical and lifestyle decisions on your behalf if you are still alive but have lost the ability to make decisions for yourself.

Article The Age

Author Catherine Robson
Published: November 22, 2015 – 4:42AM

Daughter cut from $5m will for witnessing mother’s adultery, court told

A woman missed out on sharing in almost $5 million because she accidentally stumbled across her mother having sex with the family doctor when she was a child, a court has heard.

The woman has told the Victorian Supreme Court that unwittingly witnessing her mother’s adultery, which led to her parents’ divorce in 1971, had cost her millions.

Justice Jack Forrest said the woman, who was not named, was the eldest daughter of a couple who married in 1948, before divorcing 23 years later.

Justice Forrest said the woman had applied to the court in December 2014 for leave to inspect her parents’ divorce file which was still available from court records.

The application followed the woman’s decision to claim damages from her mother in Western Australia for allegedly reneging on a 2004 agreement to bequeath her one-third of her assets.

“On the applicant’s account, almost $5 million has, to date, been disposed of by her mother by way of … gifts to her siblings or to a trust,” Justice Forrest said in a recent judgment.

“In her affidavit, the applicant says as follows: ‘The only rational basis that I can infer from my mother’s decision to exclude me from the distribution of her assets was that I was the unwilling witness to her adultery with the family doctor when I was a child which ultimately led to my parents’ divorce.’”

The judge ordered on January 14 that lawyers for the woman’s mother be notified about the application and given the opportunity to file any affidavit or submission opposing it.

“The court has subsequently been advised that there is no opposition to access being granted to the file.

“In essence, the applicant contends that there may be (in fact, she uses the words ‘should be’) material in the divorce file that will provide an explanation for her mother’s conduct in relation to the disposition of assets – inconsistent, on the applicant’s case, with the promise made to her by her mother in 2004.”

Justice Forrest agreed to grant access to the divorce file because there was a reasonable possibility the documents could help the woman’s damages case against her mother, and could provide an explanation for her mother’s motivation.

“Given that there is no opposition by the applicant’s mother and that the applicant’s father is deceased, I see no real privacy issues arising. Finally, I note that the applicant has, in effect said that she will use the information solely for the Western Australia proceeding,” the judge added.

The woman is expected to be given access to the divorce file in the next few days, before the case returns to WA.

Mark Russell, The Age Newspaper 26 March 2015

Small Estates

There are four main changes to the Administration and Probate Act affecting deaths on or after 1 January 2015:

# s71(1A): small estates are now defined as estates where the property does not exceed $100,000, indexed to CPI (up from the previous 2 tiers: $25K and $50K).
# s71(1): the executor/administrator of a ‘small estate’ may obtain assistance from the Registrar of Probates in making an application for a grant.
# s31(A): if an estate is less than $25,000 assets may be transferred without a grant. Acting in good faith is now a complete discharge of all liability.

In general, the changes aim to make the administration of small estates easier for laypersons.

Who can make a claim on an Estate? – new laws

New laws limiting the ability to make a claim on a will came into effect this month, prompting a call from the Law Institute of Victoria for people to ensure their wills are up to date and valid.

LIV President Katie Miller said the Justice Legislation Amendment (Succession and Surrogacy) Act 2014 applies to the estate of any person who dies on or after January 1 2015.

“The Act limits the categories of people who are eligible to challenge a will.

“The LIV worked closely with the then Government and Opposition to improve succession laws to give more certainty to grieving families, while ensuring that adult children will always be eligible to challenge a will,” Ms Miller said.

Eligible claimants under the new Act include:

1. Spouse or domestic partner of the deceased at the time of the deceased’s death
2. A child or step child of the deceased
3. Others can only make a claim in certain circumstances. They include registered caring partners, grandchildren and members of the deceased’s household.

For most claims, a court will be required to specifically consider the degree to which the person is not capable of providing for themselves, as well as the effect of a court order on the amounts received by other beneficiaries.

“The new Act was designed to limit who can make a claim on an estate and ensure families are not caught up in unnecessary disputes,” Ms Miller said.

The LIV and the Victorian Law Reform Commission had supported reform of the previous legislation that had been criticized since its inception in 1998 on the fact that there was no fixed category of people eligible to make a claim, increasing the potential for frivolous claims to be brought to court. While the latest amendments are a vast improvement, the legislation is a compromise from the recommendations of both the VLRC and the LIV that Victorian succession laws move towards national uniformity by adopting the NSW model.

Ms Miller said people often had complex family relationships, and their intentions with their wills could change over time.

Source LIV 28 Jan 2015

The ins and outs of inheriting property

Inheriting a property may seem like a dream, but it’s also an unexpected responsibility. Knowing what to do is key to your financial wellbeing.

The Age Domain

Powers of attorney changes coming – Victoria

Powers of attorney changes coming

At long last the changes to powers of attorney in Victoria are nearly here. The Powers of Attorney Act 2014 received royal assent in August and is scheduled to come into operation on 1 September 2015 unless proclaimed earlier.

The Act consolidates the provisions for non-enduring (general) powers of attorney, enduring powers of attorney and a new appointment, that of supportive attorney. It repeals the requirements of an enduring power of guardianship and provides that appointments for personal or lifestyle matters are made as enduring powers of attorney. Powers made before the commencement of the Act will continue to have effect.

Below are some of the changes to the enduring powers of attorney the Act brings in.

The donor of a power is referred to as a principal.
There are new principles for acting as an attorney.
The meaning of decision making capacity in section 4.
A description of matters for which a power cannot be given.
Allowing attorneys to be appointed to act by majority or severally as well as the current arrangements of jointly or joint and severally.
Care workers or accommodation providers for the principal cannot be witnesses.
The attorney or alternative attorney‘s signature on the statement of acceptance must be witnessed if the attorney is not a trustee company.
The statement of acceptance is worded differently.
A power of attorney may be used even if any specified time for its operation has not been reached if the principal loses decision making capacity.
Unless the power of attorney specifies how it is to be revoked, it has to be formally revoked by signing an instrument of revocation which has to be witnessed in the same way as creating the power. This means it must be witnessed by two people, one of which must be authorised to witness affidavits or a medical practitioner. It can no longer be revoked orally by the principal.
The power of attorney will also be revoked if the attorney becomes a care worker, a health provider or an accommodation provider for a principal or where the attorney has the power to deal with financial matters and is convicted or found guilty of an offence involving dishonesty.
There are specific provisions on how gifts can be given.
The Supreme Court or VCAT may order the attorney compensate a principal for loss caused by the attorney breaching the Act.
There are a range of offences created by the Act.

Source LPLC

Informal wills – the next instalment

Howe v Fischer [2014] NSWCA 286 is a successful court of appeal decision in NSW for a practitioner who did not obtain an informal will before his client died.

The first instance decision of Fischer v Howe was referred to in issue 59 of In Check as a timely reminder for practitioners to consider the need to prepare informal wills. The practitioner was initially found negligent for failing to procure an informal will at the initial conference with his 94 year old client when she gave him instructions for a new will.

The court of appeal found that the client, Mrs Fischer, had not irrevocably committed herself to the bequests she instructed the practitioner about or the identity of the executor. The court also found that the mere fact that the client was 94 was not enough to say there was ‘not insignificant risk’ of death or loss of testamentary incapacity. There was no evidence that Mrs Fischer’s health was such as to indicate pending death or mental incapacity.

The court concluded the duty of the practitioner to the client, and any disappointed beneficiary, arising from his retainer was:

a duty to take reasonable steps to achieve, by the exercise of the care and skill of the ordinarily skilled solicitor, two things: first, fulfilment of the client’s objective of making a formal will according to the agreed timeframe and, second, the avoidance of any reasonably foreseeable frustration of that objective.

The court disagreed with the primary judges’ finding that the practitioner was under a duty to procure the informal will. They said the most that could be required of a practitioner if they were aware of any factors that might frustrate the making of a formal will was to explain the option of making an informal will to the client and the possibility that the court might be expected to declare it her final will if necessary later.

The decision largely turned on the facts of the case but it is still a good reminder for practitioners to consider their client’s circumstances as well as physical and mental condition when taking instructions for a will. Advice about an informal will should be given if there is a likelihood that a formal will may not be executed within time.

Source LPLC Victoria

Informal Wills

Most people know that a will needs to be in writing and signed in front of two witnesses (Wills Act 1997, s7). The court can, however, dispense with those formal requirements if it is satisfied that a person intended a document to be his or her will (Wills Act 1997, s9).

The definition of “document” in the Interpretation of Legislation Act 1984 (s38) is very broad and includes, for example, devices on which sounds and/or visual data can be recorded. So an informal will can be admitted under the dispensing power even if it is not in writing.

Examples of documents that have been admitted to probate under the interstate equivalents of s9 of the Wills Act 1997 include:

Law Institute welcomes amendments to allow adult children to challenge wills

The Law Institute of Victoria has welcomed compromise between the Government and the Opposition to improve proposed succession laws and ensure adult children will always be eligible to challenge a will.

LIV President Geoff Bowyer said the Government and Opposition had listened to concerns raised by the LIV and others about the Justice Legislation Amendment (Succession and Surrogacy) Bill 2014.

Mr Bowyer said the LIV and other legal stakeholders worked with all parties to ensure concerns with the original Bill were understood and were reflected in House amendments introduced by the Government this week.

“The outcome is a better piece of legislation that will protect the rights of adult family members with good reasons to challenge wills,” Mr Bowyer said.

He said that the proposed Bill would have limited eligible claimants, disadvantaged those with meritorious claims and created injustice.

The amendments related to four key issues – the removal of the dependency test for children, introduction of a requirement that eligible people, such as grandchildren, show dependency on the deceased at or nearthe time of death, the removal of a release of rights provisions and some transitional amendments.

The Government has also indicated that the new provisions only affect applications made in respect of the estate of a person who died after the commencement of the Bill.

“The amendments are sensible and we are pleased that both the Government and the Opposition have listened to concerns raised by us. We have a better Bill and a better outcome for Victorians as a result,” Mr Bowyer said.

Mr Bowyer said the LIV and the Victorian Law Reform Commission had acknowledged that the existing law allows opportunistic claims, but the initial Bill went too far in removing rights to challenge.

The Bill has passed the Legislative Council and is listed for debate in the Legislative Assembly.

Source LIV Media Release

Experts fear planned changes to estate laws will encourage ‘gold diggers’

Herald Sun

PARENTS, carers and adult children of the deceased would be barred from contesting wills under radical reforms to Victorian succession laws.

Legal experts have slammed the crackdown, which they say would remove the power from courts to deal with complex family dynamics in settling will disputes.

The changes would create a four-stage test to making a claim and legislate that claimants be wholly or partly dependent on the deceased at the time of death.

The dependency reform comes despite strong objection by the Law Reform Commission.

In its Succession Laws Report published in August last year, the commission rejected the threshold test of dependency with just one of 46 submissions recommending the approach.

Attorney-General Robert Clark said the reform was about ending the free-for-all that could see a large part of a deceased’s estate eaten up in legal fees over claims made for a share of the estate.

“The legislation is about re-establishing the principle that a deceased’s person’s will ought to be respected unless it is shown they have failed in their duty to provide for someone they should have made provision for,” he said.

“Adult children leading independent lives will not be able to make a claim simply because they believe their parent should have left them more.”

The government introduced the changes in the Justice Legislation Amendment (Succession and Surrogacy Bill) 2014 in Parliament last week.

Under the proposed changes, people eligible to contest a will would be limited to children and stepchildren who had a disability, were under 18, or under 25 but studying.

Grandchildren and spouses or domestic partners at the time of death, and former spouses who are not yet divorced, would also be eligible.

Presently there are no limits on who can challenge a will, but they are most regularly contested by spouses or children of deceased.

If successful, the Supreme Court can make an order varying the terms of the will of the deceased.

The proposal would roll back Victoria’s succession laws to be more restrictive than almost two decades ago.

In 1997 the legislation was amended to remove any requirement for a specific relations with a deceased.

Original legislation provided only for claims to be made by widows and orphans.

Experts say the proposed changes would encourage “gold digging”.

“If you know you can get some old widower to change their will and their family won’t be able to contest it, you’d give it a go,” one said.

Arnold, Thomas & Becker senior practitioner for wills and estates Michel Margalit said the new requirements would prevent those who had been ostracised, or had a falling out with the deceased shortly before their death, from bringing a claim.

“The proposed changes really are appalling,” she said.

“They leave the more isolated and vulnerable members of our society out in the cold.”

Under the changes, Rebecca Cowan, 19, could be banned from bringing an action against her late father’s estate.

Ms Cowan, her father’s only child, lived with him for most of her life until he took his own life in December last year.

She was left a bequest worth just 3 per cent of the $650,000 estate.

Shadow Attorney-General Martin Pakula said he would be briefed on the proposal on Wednesday ahead of it being put to the shadow cabinet on Monday.

“There’s no doubt that the response from the legal fraternity has been visceral, it’s been extraordinary and unanimous,” he said.

“The changes that the government are proposing at first blush seem inexplicable and completely unfair.

“The government really needs to explain what has brought this on and why they are proposing to make a change which on its face seems to fundamentally infringe on the rights of the children of deceased people to contest a will.”

Herald Sun
26 August 2014
Shannon Deery