Wills & Estate Planning includes Will Creation, Estate Planning, Powers of Attorney and Enduring Guardianship. Details follow:
The area of change in the law that seems to create the most controversy is the situation where a deceased person has in fact left a will which fulfills all the legal requirements for a binding will but someone in the family of the deceased believes that they have not been left a sufficient share of the estate. This is where a claim under the Family Provision section of the Succession Act comes into consideration.
Family provision claims under the Succession Act 2006
The Succesion Act 2006 enables the:
- husband or wife of the deceased;
- child of the deceased;
- de facto spouse with whom the deceased was living at the time of death;
- former spouse of the deceased;
- grandchild of the deceased who was wholly or partly dependent upon the deceased at sometime during the lifetime of the deceased person;
- any other person who was wholly or partly dependent upon the deceased at sometime during the lifetime of the deceased person and was a member of the deceased's household; and
- any person with whom the deceased was living in a close relationship at the time of death.
The Court needs to be made aware of the applicant's relationship to the deceased and to the existing beneficiaries, the circumstances giving rise to the applicant's claim for relief and the comparative claims of the existing beneficiaries as well as particulars of any acknowledgment by the deceased as to the appliciant claims on the deceased's bounty.
Is there a time limit to make a family provision claim?
Yes - the period within which a claim is required to be made is 12 months from the date of death of the deceased. The time can be extended if sufficient cause for the delay can be established and provided the beneficiaries under the will would not be unacceptably prejudiced by such extension and depending on whether there has been any unconscionable conduct on either side which is relevant to the claim.
How do you determine that a person can claim as a "de facto" spouse?
The person has to establish to the satisfaction of the Court that he or she was living with the deceased at the date of death as the spouse of the deceased on a bona fona fide domestic basis. The definition is not restricted to heterosexual couples. Points that the Court takes into consideration in deciding whether a "bona fide domestic" relationship exists are essentially taken from section 4 of the Property (Relationships) Act 1984 and include:
- conduct in the manner of husband and wife
- sexual relationship
- joint parents of a child
- the exclusiveness of their living arrangements and sexual activity
- permanence of the relationship
- pooling their resources
- sharing their expenses
- carrying on a joint social life
- a subjective belief in their relationship being akin to that of husband and wife
- the legal right to enforce each other's obligations.
What are the rights of a former spouse?
Apart from establishing the existence of the married relationship the former spouse will need to establish factors warranting a claim and need. Points that the Court will take into consideration include:
- Where a spouse has died after divorce but before property orders have been made by the Family Court
- Where the husband and wife have not settled all their property dealing at the time of death
- Where maintenance being paid to a former spouse is inadequate for his/her provision after the death of the paying ex-spouse.
- Where after divorce the deceased ex-spouse was, because of special circumstances or a residue of affection, providing money for the former spouse's medical treatment or living expenses.
It should also be noted that under s.15A of the Wills, Probate & Administration Act 1898, a final divorce decree (a decree of dissolution of marriage or of nullity) revokes any gift by the deceased's will to a former spouse and any appointment of the former spouse as Executor and Trustee or otherwise. The only exception is where there is a specific provision in the will saving the gift or a subsequent writing by the deceased confirming the gift and/or such appointment. In the absence of any such provision or subsequent confirmation, the former spouse will not receive anything under the will in respect of the deceased's NSW property and his or her entitlment (if any) will depend on the ability to make a successful family provision claim.
What about other dependants?
Apart from the need to establish a claim and need at the date of hearing any such applicants must have been wholly or partly dependent upon the deceased at some time during the deceased's lifetime.
How is the application made?
Action is commenced by a Summons in the Supreme Court (or in the District Court, where the court can make an order up to $750,000), and the applicant is required to file a detailed affidavit setting out his/her age, occupation and marital status, particulars of the deceased's death and age at the time, particulars of any will, or other testamentary instrument, and of Probate or Letters of Adminstration, a brief statement of the estate assets, and details of the applicant's relationship to the deceased and the circumstances establishing his or her claim to be provided for. The making of an order for costs of the application, is a matter for the Court to decide. The costs of the application are not automatically payable by the estate. The important thing is to consult a solicitor so that you can be properly advised and protected, since the costs of unsuccessful claims may be and often are, awarded against the applicant.
Your solicitor will be able to advise you about alternative dispute resolution (ADR) and explain that it can be used instead of, or at the same time as, litigation, and will generally cost less. Your solicitor will be able to advise you of the different ADR processes, which include mediation, concillation, negotiation, independent expert appraisal and various forms of arbitration. If there is a need the Law Society can assist in the appointment of an independent Mediator.
A person who dies without having made a valid Will is said to have died intestate.
The Succession Act, which affects any person who dies intestate or partially intestate after 1 March 2010 has brought about a significant change to previous intestacy law. The significant change is that when a person dies intestate, the preferred person entitled to receive his or her estate is the intestate's spouse. If their are no persons entitled, the estate passes to the State as bona vacantia (that is, property which does not have an owner).
The Succession Act has expanded the definition of "spouse" to include not only a person married to the intestate immediately before the intestate's death, but also a person who was in a domestic partnership immediately before the intestate's death.
The order in which person's entitled share in the deceased's estate depends upon them surviving the deceased by 30 days, this period of time applies in all cases as set out in Parts 4.2 and 4.3 of the Succession Act. It should however be noted the the expression "domestic partnership" includes a "de facto relationship". Under the Succession Act, this means that persons who were in a "domestic relationship" for a continuous period of not less than 2 years immediatley prior to death, or resulted in the birth of a child (this includes children born within nine months of the death of the intestate and survived 30 days), are defined in the Succession Act as a spouse.
The statutory order follows:
First - If the deceased leaves a spouse or a domestic partner and even if there is issue of either of them and the deceased, the whole of the estate passes to the surviving spouse or domestic partner, provided there are no other children of the deceased from another relationship.
The Succession Act introduces a new concept of "multiple spouses" where the intestate is still married and also has a domestic partner. In these circumstances, there is a complicated process by which the whole of the estate is to be shared solely between the multiple spouses, even if there are issue of the deceased and the spouse or domestic partner.
Second - If the deceased leaves a spouse AND a domestic partner (multiple spouses) and issue of either the deceased and the spouse or domestic partner, the situation is more complicated.
The spouse and domestic partner share the whole of the estate either:
(a) in equal shares, or
(b) by agreement or court order.
NOTE: A spouse, if there is only one, is entitled to elect to acquire property from an intestate estate and in certain circumstances, requires the Court's authorization. There is a procedure to be followed by the spouse and the deceased's personal representative.
Third - However, if the deceased has a child or children other than to the spouse or domestic partner, the spouse and domestic partner lose their priority position and share the estate as follows:
(a) the statutory legacy $350,000.
(b) CPI adjustment from December 2005.
(c) interest on the legacy, if outstanding, 1 year after the death of the deceased on the amount due from the 1 year anniversary.
(d) personal effects
(e) one half of the residue, if any
Spouse and domestic partners share either:
(a) in equal shares, or
(b) by agreement or Court Order.
If all children survive 30 days after the death of the deceased, they will all share the remaining one half of the residue (if any).
Fourth - Where there is no surviving spouse and no domestic partner, but there are children of the deceased, those children get equal shares of the estate. (See commentary below).
Fifth - Where the deceased leaves no spouse and no children, the parents of the deceased get equal shares of the estate, or if only one is alive, the whole of the estate goes to that surviving parent.
Sixth - If the deceased does not leave any spouse, children or parents, the members of one of the following classes receive the whole estate. If no one falls within the first class, the whole estate will be given to the second class or to the next class of which there is a member, and so on. Once there is a person qualifying in the particular class, the whole of the estate passes to that class. No classes lower in the order would then receive any of the estate. The order of classes is:
(a) brothers and sisters (see commentary below),
(b) children of brothers and sisters (nieces and nephews),
(d) uncles and aunts (or any child of a deceased uncle or aunt).
The relationship stated is to a direct relationship to the deceased only, and not to relationships to a "spouse" or "domestic partner" of the deceased.
Seventh - If no one satisfies this order of distribution, the estate passes to the State of NSW. There is an important qualification to this - if the deceased left any dependants who are not members of the family, they may nevertheless be awarded some of the deceased's estate. This applies to person for whom the intestate might reasonably have been expected to provide; such persons could be, e.g. a foster child or a "house guest" or a "companion" who, was, dependant on the deceased s.137 or for whom the deceased might reasonably be expected to have made provision. Such an award, which is purely discretionary, is only granted after making of a petition to the Crown.
Super death benefits are distributed at the discretion of the super trustees and must be made to an appropriate beneficiary, usually a spouse, de facto, children or dependants. You can safeguard your preferred beneficiaries by making a binding death benefit nomination in favour of your personal legal representative. Your super death benefits will then form part of your estate and be distributed according to your will.
A good estate plan involves more than a will kit from your newsagent.
Powers of Attorney Act 2003
The Powers of Attorney Act 2003, which commenced on 16 February 2004, makes changes to the law governing powers of attorney in New South Wales, especially enduring powers of attorney.
What is Power of Attorney?
A power of Attorney is a legal document made by one person, who is called the "principal" that allows another person to do things with the principal's money, bank accounts, shares, real estate and other assets. Power of Attorney only authorises an Attorney to act in relation to financial matters.
It does not allow the Attorney to make personal (including medical) decisions for the principal. Anyone who wants another person to make personal decisions for them should appoint an Enduring Guardian under the Guardianship Act 1987.
Enduring Power of Attorney
An enduring Power of Attorney is one which continues to operate after the principal has lost mental capacity.
Should I make a Power of Attorney?
A power of Attorney can help if you cannot look after your finances for yourself. For example, if you become ill, are confined to hospital, go overseas, or become unable to go to banks, government offices or real estate agencies, then you may need someone else to do things for you.
By appointing an Attorney, there will be someone who is legally authorised to do things for you when the need arises. It is possible that a bank might simply accept a letter of authority from you but you should check this with the bank. If a letter of authority is not sufficient then a Power of Attorney will be necessary.
If you want someone to be able to sign documents on your behalf buying, selling or dealing with real estate, then a Power of Attorney is essential.
Do I lose my rights?
Making someone your Attorney does not mean that you lose your right to operate your bank account, deal with your own real estate or effect any other rights that you may have. You can continue to look after your money and property while you still have mental capacity to do so.
When should I make a Power of Attorney?
It is important to make a Power of Attorney before you need it. Once you have lost mental capacity, you cannot make a Power of Attorney because for a Power of Attorney to be effective, you must be able to fully understand what you are signing.
A Power of Attorney usually starts as soon as it is signed and given to the Attorney. If, however, you do not want your Attorney to start using the Power of Attorney straight away, you can state on the Power of Attorney form when you want it to start.
Who can I appoint as my Attorney?
Any person over the age of 18 can act as your Attorney. It can be a close family member or a friend who you trust. You should ask the person you want to appoint if he or she will agree to be your Attorney and look after your money and property.
If you appoint more than one Attorney you need to decide whether you want your Attorneys to act jointly (that is, only when they all agree, in which case they all must sign any document) or jointly and severally (any one of the attorneys will be able to act independently of the others).
What can my Attorneys do?
With some exceptions and depending on what limits you impose, your Attorney can do all the things that you can do with your money and assets.
More generally, an Attorney cannot vote in an election or make health or other personal decisions for you.
Attorney's authority to use principal's money for gifts
An Attorney cannot make any gift of the principal's money or property unless the Power of Attorney specifically allows the Attorney to do so.
Allowable gifts to relatives or a close friend of the principal are of a seasonal nature (for example, birthday, Christmas or other religious occasion) or because of a special event (for example, birth or marriage). Also permitted are donations of the kind that the principal made or might reasonably be expected to make (for example, to a favourite charity). However, the value of the gift or donation must be reasonable having regard to the principal's financial circumstances and the size of the principal's estate.
Attorney's authority to use the principal's money for their benefit or the benefit of others
As with gifts, an Attorney cannot use the principal's money for the attorney's benefit or the benefit of other persons, unless the Power of Attorney specifically allows the Attorney to do so.
What are an Attorney's obligations?
An Attorney is under duty to act in the best interests of the principal, except as specifically authorized in the Power of Attorney document.
An Attorney must:
keep the Attorney's money and assets separate from the principal's money and assets (unless they are joint owners or operate joint bank accounts), and
keep proper accounts and records of how the Attorney handles the principal's money and assets.
The Public Trustee, or anyone interested in the principal's welfare, can require the attorney to produce these accounts and records. If the Attorney does not carry out the obligations properly, he or she may have to compensate the donor. It is also possible that a transaction by the attorney may be cancelled, or that the Power of Attorney will be terminated or the Attorney replaced.
What happens when the Principal dies?
A Power of Attorney ceases to have any effect when the Principal dies. The only person with authority to deal with the deceased Principal's assets is their legal personal representative (executor or administrator). Usually a financial institution will only release funds from a deceased member's account in their sole name to pay the funeral account. If the deceased member holds a joint account with another person, that joint holder will usually be able to continue to operate the account.
What happens if there is a dispute?
If there is a dispute involving a Power of Attorney and the people involved cannot settle it, they will have to go to either the Guardianship Tribunal or the Supreme Court.
Why appoint an Enduring Guardianship?
We all prefer to decide for ourselves where we live, whom we see, which doctor we go to, what medical treatment we will receive and what services we will have. Unfortunately this is not always possible. Every day people are involved in accidents or become sick. Sometimes this can lead them to being unable to make decisions for themselves.
People have been able to plan ahead and appoint a person under an Enduring Power of Attorney to make decisions about their money and property if they lose the capacity to do this for themselves. There has been no similar way to appoint someone with legal authority to make personal or lifestyle decisions on your behalf.
Amendments to the Guardianship Act now give you a way to appoint an Enduring Guardian.
You can choose what decisions your Guardian can make for you.
What is an Enduring Guardian?
An Enduring Guardian is someone you choose to make personal and lifestyle decisions on your behalf when you are not capable of doing this for yourself. You choose which decisions you want your Enduring Guardian to make. These are called functions. You can give your Guardian directions on how to carry out these functions.
What sort of decisions can an Enduring Guardian make?
You can give your Enduring Guardian as many or as few functions as you like. You may give the guardian directions about how to exercise the decision making functions you give them. For example, you can direct your Guardian to consult with your close friend on each function whenever possible. You can give your Guardian a function, for example to decide where you live and direct that they can override your objection to their decision if it is in your best interests to do so. You cannot give your Guardian the authority to override your objection to medical treatment. Only the Guardianship Tribunal can do this.
What sort of decisions is an Enduring Guardian unable to make?
An Enduring Guardian cannot make a Will for you, vote on your behalf, consent to marriage, manage your finances or override your objections, if any, to medical treatment.
Who can appoint an Enduring Guardian?
If you are over 18 years, you can appoint one or more people to be your Guardian. When you appoint an Enduring Guardian, you must have the capacity to understand what you are doing.
Who can be an Enduring Guardian?
The person you appoint as your Enduring Guardian must be at least 18 years old. Your chosen Guardian should be someone you trust to make decisions in your best interest if you are not capable of making decisions for yourself. Your Guardian must act within the principles of the
Guardianship Act in your best interest within the law. You cannot give your Guardian a function or a direction which would involve them in an unlawful act.
The appointed Guardian cannot be a person providing treatment or care to you on a professional basis at the time of appointment. You can appoint more than one person. If you appoint more than one Enduring Guardian, you direct them jointly or separately. If you want the Guardians to act jointly on every function, complete only one form. If you appoint more than one Guardian and give them different functions, you need to complete a separate form for each Guardian.
How do I appoint an Enduring Guardian?
You need to discuss the appointment with your chosen Guardian and make sure they are willing to take on this responsibility if you can no longer make decisions for yourself. It would be wise to discuss the functions in detail and ensure that your Guardian clearly understands your wishes and any direction associated with any function.
You may also wish to discuss the appointment with other significant people in your life. You need to complete the form or a document containing the same information and have a lawyer or the Clerk of a Local Court witness you and your Enduring Guardian signing the form.
When does it take effect?
The appointment of your Enduring Guardian takes effect only if you become unable to make your own personal or lifestyle decisions.
Can I change my mind?
While you are capable of making your own decisions, you can revoke the appointment of an Enduring Guardian. To do this you need to complete a Revocation of Appointment of Enduring Guardian form. This form will also need to be witnessed by a lawyer or the Clerk of a Local Court. You have to advise the Enduring Guardian in writing that their appointment has been revoked.
If you are still capable of making your own decisions, you can amend the appointment by completing another form. Only the Tribunal can make changes to the appointment if you have lost the capacity to do this for yourself.
What if someone else has concerns about the actions of my Enduring Guardian?
If you are not capable of making your own decisions and others are concerned about your welfare because of your Enduring Guardian's actions, anyone with a genuine concern for your welfare can apply to the Tribunal for a review of the appointment. The Tribunal can revoke the appointment or confirm it. It may also change the functions in the appointment or make a Guardianship Order.
The Tribunal does not supervise Enduring Guardians and will only become involved if it receives information which leads it to initiate a review of your appointment in your interests.
When does an Enduring Guardianship end?
Enduring Guardianship ends when you die, if you revoke the appointment, or if the Tribunal makes a Guardianship Order or suspends the appointment.
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