The Public Trustee is not a charity

by | Jan 30, 2013 | Estate Administration and Litigation, Succession Law

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
katrina@nautiluslaw.com.au

Elder Law and Testamentary Undue Influence

by | Jan 15, 2013 | Special Needs and Disability Planning, Succession Law

Testators or will-makers can be at significant risk of testamentary undue influence when drafting a Will, applying a codicil to a Will or otherwise amending a Will. Whilst undue influence is certainly not specific to Elder Law, the risk of an elder being subject to undue influence is increasingly apparent. This could be due to the elder being subject to infirmity, fluctuating capacity, loneliness or a significant reliance on others for daily care and wellbeing.

As a result, it is vital to ensure that any significant changes to an existing Will or a significantly skewed distribution of assets are indeed the wishes of the testator and not the product of coercion. If coercion is evidenced, the Will may be challenged. This will have significant implications for the administration of the Estate.

UNDERSTANDING TESTAMENTARY UNDUE INFLUENCE

Testamentary undue influence involves the coercion of the testator or Will-maker to draft a Will in a way that the testator did not intend. For instance, this coercion could result in a significant portion of the Estate, a specific heirloom item or another item of value being left to a certain beneficiary contrary to the true intention of the testator.

This is certainly not a new concern. The Courts have refused to grant probate of a Will that was drafted under coercion as early as 1634 in the case of Hacker v Newborn (1634) Sty 427. There has been a plethora of case law on this topic since. What is an emerging concern however is the significant risk to elders specifically. It is therefore important to understand what constitutes testamentary undue influence.

WHAT CONSTITUTES COERCION? 

The test for whether undue influence has been exercised on a testator or will-maker remains coercion, as defined by the seminal case of Boyse v Rossborough (1857) 10 ER 1192. Contemporary Australian case law, such as the case of Nicholson v Knaggs [2009] VSC 64, reaffirm this principle.

In order to render a Will void, there are a number of factors that must be satisfied to demonstrate undue influence. Firstly, this influence may be persuasion, moral pressure or coercion. The case of Hall v Hall [1868] LR 1 P&D 481 outlines what constitutes coercion specifically. In brief, coercion entails pressure of any kind such as “importunity or threats” as well as “moral command asserted and yielded to for the sake of peace and quiet, or of escaping distress of mind or social discomfort”. An elder could certainly be subjected to such coercion by any number of individuals. Secondly, the effect of this influence must produce a provision in the testator’s Will that is contrary to their true and independent intention. This too is unfortunately feasible.

CHALLENGING A WILL ON THE GROUNDS OF TESTAMENTARY UNDUE INFLUENCE

Given the risk, there is an increasing number of family members and friends wishing to plead undue influence in challenging a Will. However, it is important to note that the evidentiary burden for establishing testamentary undue influence is significant.

Firstly, the burden of proof for establishing testamentary undue influence lies with the party making the claim. Secondly, the requisite evidence of coercion cannot be presumed. As a result, it is insufficient to establish that an individual had the potential or the opportunity to unduly influence or coerce an elder with regard to their Will. In fact, undue influence must be proved directly and the influence must be related directly to the Will itself. Whilst distinguished from more general instances of coercion, the Court will certainly assess the evidence as a whole.

Satisfying this high evidentiary burden is frequently problematic for challengers. As a result, there have been very limited circumstances where undue influence is pleaded solely. Undue influence is often pleaded as a secondary claim in conjunction with pleadings relating to testamentary capacity, fraud or forgery. As such, it is again imperative to ensure that all Planning Instruments are drafted and executed whilst the testator has full capacity.

MINIMISING THE RISK

There are a number of ways to limit the risk of testamentary undue influence. Firstly, it is vital to obtain independent legal and financial advice when drafting a Will and other Estate Planning Instruments. This advice should be sought whilst capacity is assured. Planning instruments may then be subsequently reviewed as needed. Your lawyer will draft your Will in a way that is as you intend with regard to the best interests of those you wish to nominate as beneficiaries. To do this, your lawyer will need to be fully aware of your circumstances and your interests.

Also, if there are significant changes to the existing distribution of assets, it is important for your lawyer to ascertain why this is the case and whether such changes are in consideration of recent circumstances. Such circumstances could be a desire to compensate a friend or family member for significant care provided to you, the testator, late in your life. If this is the case, it is important that your Executors are made aware of this. This could be through drafting a Statutory Declaration outlining your intentions.

HOW CAN NAUTILUS ASSIST?

Nautilus practices in Elder Law and has a team with significant experience in this area. If you would like more information on this area of law or have a specific concern, please do not hesitate to contact us and discuss this further. For all questions or further information, please contact Katrina by email at katrina@nautiluslaw.com.au or by calling our offices on (07) 5574 3560.