When meeting with new clients for Estate Planning matters, we often encounter some interesting myths and misconceptions about the law and processes involved with Estate Planning.
Estate Planning and administration in Queensland is governed by the Succession Act 1981. Documents drafted during estate planning can include a Will, a Power of Attorney for Finance and/or Personal/Health matters, and an Advance Health Directive (plus any other supporting documentation recommended by your lawyer).
Estate Planning can be a complex process, and the advice given to each client is individually tailored to their circumstances – the advice we give one client will often be entirely different to that given to another (as the clients may have different priorities in their Estate Plan, or the law applies to their individual circumstances in a different way).
Due to the misconception that Estate Planning is a “one size fits all” exercise, there are many myths (which often stem from tailored advice being misunderstood as general advice) which are becoming more widely known.
We are pleased to announce the launch of our “Estate Planning Myths” Series of articles on 7 March 2016, through which the lawyers of our Estate Planning team will address the truth behind some of the most common myths and misconceptions we hear.
What myths and misconceptions are you talking about?
While there are many Estate Planning myths, we will be addressing those that we most commonly hear. These include:-
- “Making a $1 gift to a person in my Will prevents them from making a claim against my Estate”
- “If I don’t make a Will, everything goes to the government”
- “What’s the point of a Will? My Estate will get eaten up by death duties anyway!”
- “I don’t have any assets, so I don’t need a Will”
- “Anyone can challenge a Will – it’s not worth the paper it’s written on”
- “I don’t need to make a Will because my spouse will automatically receive everything”
- “I made my Will years ago and nothing has changed, so I don’t need to do a new one”
- “I don’t need a Power of Attorney because my spouse can automatically act”
- “My Executor won’t get any compensation for acting as Executor”
- “My Executor has to pay for the costs of administration of my Estate”.
Have you been told something about a Will, Power of Attorney, or Estate Planning generally, that you are not sure about?
The above indicated topics are those heard most often by our lawyers – but it is not an exhaustive list of the myths that circulate.
Is there something you think we have missed and would like us to reveal the truth of? If so, please email Caitlin Bampton with your query. Alternatively, if you would prefer to submit an anonymous query of an Estate Planning myth you have heard, please click here to complete our survey, and we will address the topic in future articles.
Simply put, Probate is the proving of a Will and in the process of “proving” the Will an “executor” or “executors” are appointed to act as representatives for the Estate of the deceased person. In Queensland, probate is issued by the Supreme Court.
When do you apply for probate?
Probate is usually required in Estates with assets held by financial institutions and/or in shares. Some Estates can be administered where the assets of the Estate do not require a Court Appointed Executor (such as furniture and vehicles), but banks, share registries and some land title offices require Probate before the Exector is permitted to deal with the Estate assets.
If the “Estate assets” are jointly held or of a superannuation death benefit type, the “Estate” may not require Probate, as jointly held assets and superannuation death benefits are disposed of without reference to a “Will” in usual course. Jointly held assets pass to the survivor of the title holders, and superannuation death benefits can be distributed at the discretion of the Superannuation Trustee (which is not your Executor).
Who applies for Probate?
The nominated Executor(s) can apply to the Supreme Court for a “Grant of Probate”. The lodgment protocol relative to proofs and publication are specific. An error at any stage can result in a costly rectification of the entire process.
How to apply for Probate?
The Courts have specific procedures that must be followed when applying for probate:
- The first step is to advertise the Application in the Queensland Law Reporter and the Public Notices section of the local daily newspaper in the area the deceased lived. You must also forward a copy of the advertisement to the Office of the Public Trustee.
- The next step following advertisement, is to lodge the Application. If a claim is made against the Estate following advertisement, the Estate will be subject to a “Caveat”, pending the resolution of the claim; and
- Your Application must attach: Original Will, Application for Probate, Affidavit of Publication and Service including copies of the advertisements, Affidavit Supporting Probate Application, and the original Death Certificate.
If the Estate is based on a “DIY” Will Kit, or handwritten by a party, additional compliance is usually required, such as further affidavits. Such “home made wills” are often subject to Requisitions, requiring further works for proving.
There are many aspects of the Application process which may be complicated due to extraneous factors, such as excluded beneficiaries, inappropriate or failed provisions and/or deceased beneficiaries.
The Nautilus Estate Team offers probate and administration services in Queensland and New South Wales. If have an issue outside of this jurisdiction, we may be able to assist with providing a referral to practitioners in the other Australian States. Further, our Practice Director, is a former United States Lawyer with experience in Estate Planning and Distribution in foreign jurisdictions.
We work on fixed fees for Probate, and hourly rates for Administration. We welcome you to contact our offices on (07) 5574 3560 or email firstname.lastname@example.org. We thank you for considering Nautilus Law Group.
Submitted by: Katrina E. Brown BA JD ATIA TEP SSA
Estate challenges are becoming more common than ever, with all members of the family seeking a share of a deceased family member’s estate. Wives, children, stepchildren, siblings, de facto partners, ex-wives are fighting viciously for what they feel they deserve. Nautilus Law Group strives to provide peace of mind to our clients to avoid the financial and emotional costs of extensive litigation.
It’s my money – I’ll do what I want with it!
When discussing the obligations of provision with clients, the most common question we are asked is ‘why can’t I give my money to whoever I want?’ Freedom to dispose of property as you wish in your estate seems to be a fundamental right, and clients are often shocked when they become aware of the fact that there are strict limitations on this right.
The law must draw a fine line between ensuring that these rights remain upheld, and introducing limitations to protect those that need protection. It is a balancing act – ensuring there is proper provision for the support of people that require such support, and the freedom to deal with your property as you see fit.
In Queensland, the relevant legislation relating to the governance of this balance is the Succession Act 1981 (Qld). Section 41 of this Act provides as follows:
“41 Estate of deceased person liable for maintenance
(1) If any person (the deceased person) dies whether testate or intestate and in terms of the will or as a result of the intestacy adequate provision is not made from the estate for the proper maintenance and support of the deceased person’s spouse, child or dependant, the court may, in its discretion, on application by or on behalf of the said spouse, child or dependant, order that such provision as the court thinks fit shall be made out of the estate of the deceased person for such spouse, child or dependant.”
In sum, this section provides that if a person dies and does not make adequate provision for the support and maintenance of one of the following classes of people:
· a spouse;
· a child; or
· a dependant;
then the court may order that further provision be made for the person who is a part of such class. This section applies regardless of whether you have drafted a Will and clearly outlined your intentions in relation to disposition of your assets.
What is a spouse?
A spouse is relatively easy to define, and encompasses someone who is a husband or wife, a de facto partner, or a ‘registered partner’.
A de facto relationship is established where two people are ‘living together as a couple on a genuine domestic basis’. The court takes into account a number of factors when determining whether a de facto relationship exists. These factors can include:
· the length of the relationship;
· whether there exists financial dependence or interdependence between the parties;
· whether the relationship is publicly known or is made public;
· how property is owned and used, and assets managed; and
· whether there is a mutual commitment to sharing a life together, including providing care and support to each other.
In order for a de facto partner to be considered the spouse of a deceased person at the time of the death, the person had to have been residing with the deceased on a ‘genuine domestic basis’ for at least 2 years continuously prior to the deceased’s death.
A registered partner is a member of a registered relationship, being a legally recognised relationship regardless of the sex of the parties.
What is a child?
For the purposes of the Succession Act, a child includes stepchildren and adopted children of the deceased.
What is a dependant?
Perhaps the most important to define is the concept of ‘dependant’. As per the Succession Act:
“dependant means, in relation to a deceased person, any person who was being wholly or substantially maintained or supported (otherwise than for full valuable consideration) by that deceased person at the time of the person’s death being—
(a) a parent of that deceased person; or
(b) the parent of a surviving child under the age of 18 years of that deceased person; or
(c) a person under the age of 18 years.”
This definition essentially means that any person who relied on the deceased person for support or maintenance, whether entirely or only partially, is entitled to make a claim for provision against the estate.
What does this mean?
The number of classes of people who may be eligible to make a claim against an estate makes it important to carefully consider who may be eligible to make such a claim, and whether they have been adequately provided for in the Will.
A common scenario
We have a number of clients who, for whatever reason, wish to leave a greater share of their estate to one of their children. In most cases, this is simply because one child has made sacrifices for the care of the Willmaker, while the other child has lead a relatively independent life. The greater share is not intended to demonstrate a greater love for one child, but simply to provide compensation for the sacrifices given by that child.
Simply dividing an estate this way is insufficient for the purposes of protection of assets within an estate. An unequal split between children will, in many circumstances, result in a challenge to the estate when it is being administered.
Whether a claim against an estate is valid or not, the estate is still required to respond to such challenge. Solicitors are retained in order to defend such action, and potentially take the matter to court if required. Such action incurs legal fees which can cause an estate to dwindle rapidly. Thousands of dollars can be spent responding to a claim against an estate, and this form of litigation can go on for years. In addition to the costs, estate litigation is emotionally draining on families and can often cause irreparable damage to relationships.
How can Nautilus help me?
Nautilus Law Group prefers to see your money go where you intend it to go. Nautilus would prefer to see your assets in your estate distributed to your family instead of lining the pockets of an estate lawyer.
Nautilus provides our clients with peace of mind – we work with our clients to establish strategies to avoid estate challenges. We aim to arrange disposition of your assets in a way that is in line with your wishes, while also mitigating the risks that may cause conflict between family members.
Nautilus strongly advocates the preventative approach to legal issues, doing our best where possible to prevent situations of conflict arising. If you have a complex family situation, we encourage you to speak to us to ensure that your assets within your estate are protected.
Please feel free to contact our office on (07) 5574 3560 for more information.
It concerns me that people view the Public Trustee as a “charity.” I am the lead lawyer on an estate matter which demonstrates quite the opposite.
Our clients are the beneficiaries of Mr Smith’s (name omitted) Will. Mr Smith died in December 2012, and nominated the Public Trustee to act as the executors of his Estate. He left a Will prepared by him, which, in sum – was astounding in terms of the powers Mr Smith believed he could exercise from the grave. Mr Smith also left a Family Trust, which Mr Smith had sought to leave “directions” to the Trustees of his Trust which were to become effective from his death. Mr Smith also left a company (which had been intended to be used for tax planning purposes during his lifetime). Both the Will and his Trust provided that the ultimate beneficiaries of each were, equally, our four clients (his daughter and her three children).
The Public Trustee (a division of the Queensland Government), exercising its discretionary powers to do so as an executor, employed the Official Solicitor (a division of the Queensland Government), which then collectively carried out a wide range of investigations to understand Mr Smith’s intentions in his Will – bearing in mind, however, that at all times the beneficiaries of his Will and his Trust were identical. In less than a year since appointment, the Public Trustee and the Official Solicitor have racked up over $100,000 in fees to the Estate. Remember, the only assets of the Estate are the house, a few accounts, personal effects, and the shareholding in company (which also only held a few accounts) and his interest (to the extent permitted by Law) to the Family Trust.
The sad fact – the Public Trustee and Official Solicitor are still “administering the Estate” and incurring further costs – but to whose benefit? Our clients have never disagreed the Estate and Family Trust ought to be distributed equally between them. There are no other claimants, there are no other debtors – there is, and has only ever been, them.
The Public Trustee and Official Solicitor serve an important function to Queensland and are critical in many aspects. However, the lesson to be learned from this is that the Public Trustee and Official Solicitor have obligations and agendas which may not be appropriate in all circumstances. Further, their services are not free and they are not a charity. Careful needs to be given anytime a person appoints a professional or the Public Trustee to act as an Executor or Attorney.
Nautilus Law Group offers a wide range of strategies for estate planning which can deal with virtually any fact scenario or client concern. We discourage apointment of professionals and the Public Trustee as “sole” Executors or Attorneys for many reasons, including, but not limited the above case study. There are times and consequences when appointments of professionals and/or the Public Trustee are the best, or only, option – but these options should only be considered after exhaustion of alternatives, such as appointing a panel of family and friends, with a professional or the Public Trustee being appointed as an arbitrator of disputes (or on a panel of three, being the third acting only in circumstances where the other two cannot resolve a unanimous decision).
Submitted by Katrina Brown BA JD ATIA TEP SSA, Senior Commercial and Property Lawyer, Nautilus Law Group