Mesne Profits & The Estranged Co-owner​

Laura Angius and her estranged husband John Angius co-owned a residence at her death in 2012. They had separated in 2010 but had not had commenced divorce proceedings. Laura’s estate was valued in excess of $23 million. On 1 April 2014, Laura’s solicitor Gordon Salier was granted letters of administration with a copy of the will annexed.

On 30 September 2015, following multiple applications the Supreme Court made the following orders:

  1. The residence was to be sold, and
  2. John agreed to vacate the residence within 28 days.

John vacated the premises in 2017 following further proceedings; however, he brought a claim against the estate seeking $41,471 equal to 50 per cent of the repairs maintenance and improvements he’d undertaken to the residence since Laura’s death.

The Court awarded John $6,589 equal to 50% of the amounts in relation to fixtures, fittings and maintenance outlined in five invoices totalling $13,178.64; and a further $4,260 for 50% of the council rates, water rates and insurance premium for the years 2012 to 2016

John claimed that he had spent $55,738 on Laura’s funeral and $385,000 on a 12-person vault in which she was buried.  The Court held that the “reasonable cost of a reasonable headstone” is recoverable from a deceased estate however the cost of a twelve-person vault was not a reasonable cost of a reasonable headstone for which the estate should be liable.  Accordingly, the court awarded John $55,738.72. equal to one-twelfth of the cost of the vault plus the cost of the funeral expenses.

Gordon sought mesne profits at half market rent for his occupation of the residence from the date of death to the date he vacated the residence.

Mesne profits are the damages which a lessor is entitled to receive due to the tort of trespass of the lessee in remaining in possession following termination of the lease: the usual measure of mesne profits is the market rent for the premises which should have been paid for the period of its occupation. Importantly it does not depend on whether the person entitled to possession would have been able or willing to let the premises to someone else during the relevant period.

The Court held that as co-owner John had an implied licence to occupy the residence until 2015 because his occupation was with the apparent acquiescence or implied consent of the estate. Mesne profits were awarded for the period from 2015 to 2017 in the amount of $67,371.43 based on expert evidence that valued market rent for the property at $1,800.00 per week between 1 January 2015 and 31 December 2016 and $1,950.00 per week between 1 January 2017 and 1 May 2017.

The amount payable to John by the estate ($98,672.05) was set off against the amount he owed the estate ($118,333.48). Therefore John was ordered to pay $19,661.43 to the estate.

 

 

 

 

 

John Singleton

John Singleton was an American film director, screenwriter, and producer best known for directing Boyz n the Hood (1991); for which he was nominated for the Academy Award for Best Director, becoming the first African American and youngest person to be nominated for the award.

The son of Sheila Ward-Johnson, and Danny Singleton, John was raised and attended schools in South Los Angeles before enrolling in USC’s Filmic Writing program; designed to take students directly into the Hollywood system as proficient writer/directors.

Many of John’s early films, deal with the implications of inner-city violence including Poetic Justice (1993), Higher Learning (1995), and Baby Boy (2001), However he also directed action films such as the remake of Shaft (2000), 2 Fast 2 Furious (2003), and Four Brothers (2005); recently he co-created the crime drama Snowfall.

John died on April 29 in Los Angeles, nearly two weeks after he suffered a stroke and fell into a coma. He was the father of seven children, however when John’s mother Sheila filed for probate, his Will, drafted in 1993 left everything to his eldest child, daughter Justice Singleton.

In 1993 Justice was his only child, however the Will didn’t expressly exclude his other children therefore they will be able to inherit under California law. Sheila was named the executrix of the Will and probate documents listed the estate assets as $3.8 million, with another $31 million reported to be in a trust.

A trust is a legal relationship where the trustee, holds property (money, real estate, stocks, bonds, collections, business interests, personal possessions and automobiles) for the benefit of the beneficiary.

A trust can be established for the beneficiary during their lifetime, in order to control the distribution of wealth by specifying when and to whom distributions may be made; then for the benefit of others according to the trust instructions. Unlike wills, trusts are private.

Importantly Assets in a trust usually don’t form part of a deceased estate and pass outside of probate, saving time, court fees, and potentially reducing estate taxes as well.

John was in a coma at a Los Angeles hospital after suffering a major stroke; as he had no existing medical directives in place before the stroke Shelia sought a court order to be appointed as temporary conservator in order to make medical and financial decisions for him.

John’s daughter Cleopatra challenged Shelia’s attempt to become conservator denying that her father was in a coma, and accusing her grandmother of trying to keep control of her father’s assets and block out the rest of the family, leading to reports of bickering between family members.

As I have posted before a Will is a planning document that enables you to direct how your assets will be distributed when you die. It is important to make a Will and update it regularly!

 

 

 

 

Signed Solicitors Notes a Codicil Does Not Make

Suzanne Prien died in February 2016 aged 64; her daughter, Sasha Prien, son Simon Prien, and her former spouse, Percival Kirk Prien (‘Kirk’) survive her.

Suzanne’s estate primarily consisting of a house in Marysville (‘the Marysville property’), compensation from the Murrindindi–Marysville Black Saturday Bushfire Class Action (‘the Class Action’), investment funds and chattels is valued at $927,285.

The Class Action against electricity company SP AusNet was settled in February 2014 for A$300 million.

In 1996, Suzanne was diagnosed with breast cancer; following treatment and remission, metastatic bone cancer was diagnosed in 2008. In late 2008, while in remission, the deceased instructed her solicitor, Mr David Davis, to draft her will, which was executed on 17 December 2008 (‘the 2008 Will’).

Around this time Suzanne and Kirk divorced, however they remained on good terms.

In February 2009, Suzanne lost all of her belongings, including the 2008 Will, when her home in Marysville was destroyed in the Black Saturday bushfires; the Marysville property was subsequently rebuilt. Following the fire, Suzanne instructed David in relation to ‘reinstating’ the 2008 Will; on 29 July 2009, Suzanne executed the Will appointing the Sasha executor.

In 2009, Suzanne and her son Simon became estranged; they have had no contact in the intervening years.

In February 2016, David, Suzanne’s solicitor attended her home to take instructions for a new Will; Suzanne was sitting in the living room and fully dressed, recognised and greeted David who spent one and a half hours obtaining instructions for the will. According to David, Suzanne stated that following careful consideration she had decided the distribution of her estate, in equal proportions between Sasha and Simon was no longer fair. Instead, she wanted to distribute her estate in three ways, leaving Sasha a greater share that included the Marysville property.

David took two pages of notes during the appointment and showed Suzanne the relevant clauses of the will as they were discussed. Both signed at the end of the notes beside a statement that

‘[t]hese notes form confirmation of my testamentary intentions Suzanne Rosalyn Prien 15/02/2016’. 

Mindful of Banks v Goodfellow, Mr Davis was of the opinion that Suzanne had testamentary capacity, and although she seemed tired, maintained her focus and clarity throughout.

Suzanne was admitted to hospital on the afternoon of 23 February 2016, following a stroke. Later that day At 4.52 pm the same day, David Davis & Associates emailed a draft will to Suzanne; however, she lapsed into unconsciousness and died the following day without seeing or being told about the draft Will.

Sasha sought a grant of probate of the Suzanne’s will dated 29 July 2009 including an informal codicil consisting of two pages of notes (‘the notes’) dated 15 February 2016 written by the David in the days before Suzanne’s death. The will was executed in accordance with s 7 of the Wills Act 1997 (‘the Act’). However, the Court had to decide whether the notes should be admitted to probate as an informal codicil to the will, pursuant to s 9 of the Act.

The Court ordered that probate of the Will dated 29 July 2009 be granted to Sasha, subject to any further requirements of the Registrar of Probates.

Sasha did not establish that upon signing, Suzanne intended the notes to have an immediate effect, without further explanation, as a document altering the Will. This conclusion is supported by the fact that the deceased signed the statement providing that the notes formed ‘confirmation’ of her ‘testamentary intentions’ only.

Section 9 of the Act is a remedial provision allowing the Court to dispense with the requirements for execution that are set out in s 7 and applies to both informal wills and informal codicils; however, care must be taken to ensure that the statutory formalities for execution of Wills set out in s 7 are not unduly relegated in importance.

Three criteria must be established for the Court to admit a document to probate in accordance with s 9:

(a) there must be a document;

(b) the document must express the testamentary intentions of the deceased; and

(c) the document must have been intended by the deceased to be a codicil to her or his last will.

The Court held that the notes comprise a document; expressed Suzanne’s testamentary intentions, however, the intention that the document is to be a final codicil and not intended to be changed is a matter of fact and each case depends on its own facts and circumstances

The Court was satisfied that Suzanne had testamentary capacity when she signed the notes on 15 February 2016; however, the Court was concerned that allowing probate of a document consisting of shorthand notes forming instructions, not signed by two witnesses and containing only the statement ‘these notes form confirmation of my testamentary intentions’, in circumstances where there was no pressing urgency, would unduly relegate the requirements for execution as set out in s 7 of the Act.

 

 

 

Oprah Winfrey & Cy-Pres (for a third time)

Paul Russell was named the executor and trustee by Euphemia (Mia) Polykarpou in her will of March 2004. Mia died on in March 2015, and probate of her will was granted to Paul in October 2015.

In previous posts about Mia’s estate; after appointing Paul as her executor and trustee, and making a number of minor bequests, Mia made the following gift:

  1. MY EXECUTORS shall hold the rest and residue of my Estate to divide as follows: –

    4.1 As to a 50% part or share thereof to be used for research into the causes of and cures for MULTIPLE SCLEROSIS, the distribution and use of such funds, whether to any hospital, medical practitioner, scientist or research facility to be at the discretion of the Executor;

    4.2 As to the remaining share thereof to ‘OPRAH ANGEL NETWORK’ 110N Carpenter Street, Chicago, Illinois 60607 United States of America.

The gift to Oprah Angel Network (OAN) failed as the OAN ceased to exist before Mia’s death.

In December 2015, Paul made an application to the Court for advice under s 63 of the Trustee Act 1925 (NSW) on the question of whether he would be justified in making an application for a cy-près scheme in relation to the gift in clause 4.2 of the will.

Where a specific gift within a Will fails, and there is no provision in the Will for dealing with the residue of the estate, that portion of the Will is treated as if it did not exist and would be distributed as if the deceased died “intestate”.

In most jurisdictions where this occurs, the court can step in and establish a scheme known as a cy près scheme by which a failed gift is constituted a valid charitable trust, and is distributed to an alternate charitable beneficiary that is as closely aligned to the deceased’s intentions as possible.

  • Cy-pres is a doctrine which is applied when the strict terms of a will cannot be carried out and is subject to certain conditions; the testator must exhibit in their will a general charitable intention.
  • there must be impracticability in the fulfilment of the charitable intention of the testator.
  • the condition of the gift that causes the impracticability must not be an essential term of the bequest.

There were two applications to the Attorney General with proposals for the use of the trust funds of $609,127.66.

  1. Oprah Winfrey Leadership Academy Foundation (“OWLAF”) is a not for profit organisation incorporated in Illinois United States. The Oprah Winfrey Leadership Academy was founded by Oprah Winfrey in South Africa to provide an independent residential boarding secondary school for disadvantaged girls.
  2. The Young Women’s Christian Association of NSW (“YWCA”) proposes to apply the trust funds to benefit women and children requiring post-crisis domestic violence services in South Western Sydney

The Attorney General felt that the OWLAF scheme would primarily benefit young women in South Africa predominantly students attending the Academy and its graduates as such OWLAF’s focus is narrower than the primary charitable purpose stated in the Will.

In considering the merits of OWLAF versus the YWCA the Attorney General ruled the YWCA better met the primary charitable purpose of the gift and ordered that the money will now be spent establishing and funding a post-crisis domestic violence centre in Campbelltown which provides services to women and children

The Court ordered that a cy-près scheme (pursuant to the Charitable Trusts Actsection 13(2)) be established that reflected the intended purpose of clause 4.2 of Mia’s will to provide for

 “…the betterment, support and enrichment of women and children in need or for educational purposes…”

under that order, the Young Women’s Christian Association of NSW (YWCA)

 “…is to hold the gift in clause 4.2 of the Will of the deceased on trust, to apply the capital and income for the purpose of establishing and funding a post-crisis domestic violence centre in Campbelltown which provides services to women and children as described in the YWCA’s application to the Crown Solicitor”.

Paul was of the opinion that the cy-près scheme did not reflect Mia’s wishes as she was a devotee of Oprah Winfrey for many years and that, if the gift failed, she would have wanted her estate to be applied for the purposes of an alternative charity associated with Ms Winfrey that had objects that were as close as possible to the OAN.

Case law has established that charitable trust proceedings may be settled by compromise. The Court has inherent jurisdiction to approve the terms of such a compromise; the consent of the Attorney General who represents the Crown as the protector of charities is a necessary condition to the Court’s approval. The Attorney General and Paul asked that the Court quash the orders made in October 2007 and $566,077.66, be applied cy-près as follows:

(a) 60% of the Charitable Trust to the Polykarpou Trust to be applied for such purposes of the Oprah Winfrey Leadership Academy Foundation (OWLAF) as are charitable purposes for the betterment of women and children who are in need or disadvantaged.

(b) 40% of the Charitable Trust to YWCA Australia to be applied for:

(i) the purpose of establishing and funding a post-crisis domestic violence centre in Campbelltown which provides direct services to women and children affected by domestic violence, within 12 months of the date of the establishment of the cy-près scheme;

and in the event that YWCA Australia is not able to apply towards that end within 12 months of the date of the establishment of the cy-près scheme,

(ii) the benefit of women who participate in the Ngalingah Mijung Dubais (Our Happy Women) programme in the Northern Rivers Region of New South Wales, led by a YWCA Australia Cultural Engagement Officer, which provides education, employment and pre-vocational courses to Aboriginal and Torres Strait Islander women in the Lismore area, many of whom have young children to develop skills necessary to enter the workforce opportunities.

 

 

 

 

 

 

 

 

 

Robert Johnson’s Intestate Estate mirrored his life

American blues singer, songwriter and musician Robert Johnson produced a series of recordings in 1936 and 1937 that owing to the combination of his singing, songwriting and guitar playing influenced generations of musicians. Robert died intestate in 1938 aged 27; his poorly documented life and mysterious death have given rise to many legends – notably that at a local crossroads, in exchange for his soul, the devil bestowed him with the talent required to achieve musical success. He was a progenitor of the Delta Blues and his talent is now widely recognized.

Robert died destitute, but his estate later made millions. A collection of his recordings entitled The Complete Recordings containing every recording known to have been made by Robert won a Grammy Award in 1991 for Best Historical Album, in 1992, the Blues Foundation inducted the album into the Blues Hall of Fame; in 2003 it was selected as  “culturally, historically, or aesthetically significant” by the National Recording Preservation Board in the Library of Congress’ National Recording Registry . The album cover featured one of the two known photos of Robert, sitting cross-legged on a stool wearing a pin-striped suit and a tie and holding his guitar.

The second image shows him in a button-down shirt, staring directly at the lens. A cigarette hangs from his lips and his long fingers rest on a guitar neck

Robert’s half-sister, Carrie Thompson filed as next of kin on Johnson’s small estate in 1974, allowing her to share in all royalties of Johnson’s works, photos, and miscellaneous items concerning Johnson.

In 1983, Carrie died leaving her stepsister Annye to manage her affairs. In 1989,  Annye was appointed administrator of both Carrie and Robert’s estates.

At the time, the court noted that Johnson’s estate consisted of “miscellaneous and unknown” items. However, everything changed the very next year when Columbia Records released “Robert L. Johnson – The Complete Recordings.”

The 1990 album release generated a considerable amount of revenue to the Robert Johnson estate. After the estate had mushroomed in size from royalties, an individual named Claud L. Johnson came before the court claiming that he was the illegitimate son of Robert L. Johnson.

At first, the courts dismissed Claud’s case on the basis that he did not file his petition within the allotted amount of time; Claud appealed and subsequently, the case was overturned by the Mississippi Supreme Court.

The Court ruled that not hearing Claud’s case would only benefit Annye who, as executor of the Johnson estate, had a fiduciary duty to locate any rightful heirs.

Robert was so unappreciated at the time of his death that no one is even really sure where he is buried. With the Court ruling that it was impossible to get DNA evidence from a body that did not exist.

Claud’s lawyers were able to prove his connection to Robert, through a number of alternate methods including, a deposition sworn by his mother Virgie Jane Smith Cain in 1992 that Robert Johnson had fathered her child; corroborated by her childhood friend, Eula Mae Williams, who testified that she had watched Robert and Virgie have sex in 1931!

In 1998  the Mississippi Supreme Court ruled that Claud a retired truck driver was Robert’s son and sole heir and was entitled to more than $1 million dollars in music royalties.

The Mississippi Supreme Court subsequently ruled in  2014 that Claud could keep the profits from the only two known photographs of his father.

 

 

 

 

 

 

 

 

Temporary Delusions & Testamentary Capacity

Neda Bilich died in March 2007 aged 90, her husband of 53 years, Ljubomir, predeceased her by several weeks. Their only child had died in 1958 as a young child.

Neda made a Will in November 1976 (“1976 Will”) appointing the Public Trustee as the executor and trustee of her will, and leaving her estate to her sisters, Slavka (Vida) and Anka, in equal shares; if they predeceased her their share would pass to those of their children who survived Neda.

Vida and Anka predeceased Neda; Vida left no children. Anka had three children who survived Neda. They are the First, Second and Fourth Defendants.

Neda made a will dated 19 December 1990 (“1990 Will”) appointing Millie Shroy as executor and left the whole of her estate to Anka’s youngest child Rudolf. In August 2007, Millie authorised the Public Trustee to obtain probate of the 1990 Will.

The Public Trustee claims that the 1990 Will is invalid because Neda did not have testamentary capacity when she executed that will. The Public Trustee instead claims that the 1976 Will is valid and that there should be a grant of probate to the Public Trustee in respect of that will. Anka’s oldest child Marijana supports that grant of probate.

Rudolf contends that at the time of executing the 1990 Will, Neda was of sound mind, memory and understanding, therefore, the 1990 Will is valid, and that there should be a grant of probate to him or to the Public Trustee in respect of that Will; however, if the 1990 Will was not validly made, the 1976 Will was validly made and there should be a grant of probate in respect of that Will.

Marijana believes that if Neda lacked capacity for both the 1976 Will, and the 1990 Will, died intestate and there should be a grant of letters of administration to the Public Trustee; in this case her surviving nieces and nephews, would be the beneficiaries of her intestate estate, pursuant to s 14 of the Administration Act 1903 (WA).

Around August 2007, Millie Shroy, the executor of the 1990 Will, authorised the Public Trustee to apply for an order that the Public Trustee administer Neda’s estate; that application was made, and granted, in 2008.

As a result, further information came to the attention of the Public Trustee, including the existence of the 1976 Will, and that Neda had been an inpatient at Royal Perth Hospital (RPH) at the time she made the 1990 Will. Observations made by her treating doctors regarding Neda’s testamentary capacity raised concerns regarding the validity of the 1990 Will.

Following an application to the Court in 2012, the Public Trustee was granted additional powers including the power to engage counsel to provide an opinion as to whether the Public Trustee should seek administration of the 1990 Will, the 1976 Will, or on Neda’s intestacy.

When making the 1990 Will, Neda

‘displayed symptoms of acute agitation and paranoid schizophrenia or paranoia for several years prior to, including and following the date of her admission to [RPH] on 18 December 1990…, including, on a sustained basis, accusing her husband of trying to poison her and having a girlfriend‘;

following her admission to RPH she experienced ‘an acute episode of psychosis’, and ‘suffered postoperative psychosis following surgery’, and that on 27 December 1990 she was transferred to Shenton Park Rehabilitation and was ‘noted to be suffering from paraphrenia (a mental disorder characterized by an organised system of paranoid delusions with or without hallucinations and without deterioration of intellect or personality)[and was] not orientated as to day, date, month or year.’

However, some aspects of the evidence support the conclusion that Neda had testamentary capacity; the delusional disorder she was suffering from did not cause complete impairment of all psychosocial and occupational functions.

Similarly, the witnesses made no indication in the hospital notes that they held any doubt as to Mrs Bilich’s capacity to make a will at the time. However, Neda had made repeated requests to make a will, as she was anxious that it should occur prior to surgery, therefore assistance was given to make a will, in order to put her mind at ease.  One of the witnesses noted that Neda had been advised that she should have another will made by a solicitor, after her discharge from hospital; the other witness held some reservations about Neda’s testamentary capacity.

Having regard to the totality of the circumstances, the Court wasn’t satisfied that Neda had testamentary capacity at the time she made the 1990 Will; primarily due to the nature of the delusional belief she held about her husband which affected her ability to rationally comprehend that he had a very strong claim to her estate. He was her husband of 37 years, they continued to reside together, he was an invalid pensioner, and required her financial support to pay the household bills, while she owned property from which she derived an income. Yet without any explanation, the 1990 Will left her entire estate to a nephew who lived overseas.

The Court concluded that the delusional disorder from which Neda was suffering

‘poison[ed] [her] affections [and] pervert[ed] [her] sense of right’.

Leaving substantial doubt that she was of sound mind and understanding at the time she made the 1990 Will.

Rudolph had not been able to establish that Neda had testamentary capacity when she made the 1990 Will. Consequently, the 1990 Will is invalid for want of testamentary capacity.

The Court ordered that probate should be granted on the 1976 Will as it was properly executed, and there was no evidence to displace the presumption that Neda had testamentary capacity when she made the 1976 Will.

Reg Grundy’s Estate Dramatic Twist

Reg Grundy died in Bermuda (his place of domicile) on 6 May 2016, aged 93 years, leaving a will dated 21 January 2011 and sufficient property in NSW  to admit the Will to probate in that jurisdiction. In 2015, Reg’s wealth was estimated as being $809 million, a figure largely stemming from the $320 million sale of Grundy’s company to Pearson Television in 1995.

An earlier post discussed the April 2017 claim for family provision relief in respect of the estate, or notional estate, by Reg’s child from his first marriage; who changed her name by deed poll in 2000, from Robyn Grundy to her present name, Viola La Valette.

Reg and Viola were estranged for some time before his death; a lifetime annuity of $US250000 was provided to Viola. Joy Chambers-Grundy, Reg’s widow, executor and, having survived him by 30 days, takes “the remainder” (the residue) of his estate.

Recently Simon Russell has come forward claiming to be Reg’s son; he is seeking a family provision order from the estate. The Court was told that DNA samples from both Reg and Simon were being held at a lab. Testing will not occur until an affidavit from Joy, (which has been sent from where she lives in Bermuda) is received by the lab.

Generally speaking, a Family Provision Claim is made in a jurisdiction where the deceased lived at the date of their death, owned assets in that jurisdiction, or both.

In most Jurisdictions, legislation governs who can bring a claim against an estate. Generally, this is:

  • The deceased’s spouse, a person living in a de facto relationship with the deceased at the time of death, a person living in a close personal relationship (such as a volunteer carer) with the deceased when the deceased died;
  • The deceased’s child;
  • The deceased’s former spouse;
  • A person who was:
  • Dependent (wholly or partly) on the deceased at a particular time (this may include a former de facto spouse, parent, sibling, or step-child; and
  • A grandchild of the deceased, or a member of the household of the deceased;

and

  • believe they have been left without adequate provision for the proper maintenance, education or advancement in life.

The Court takes a number of factors into account the applicant’s financial position, relationship with the deceased, the size of the estate and the deceased’s relationship with other persons who are eligible to make a claim.

Adequate provision is unique and therefore difficult to define.

The Court considers a broad range of factors, as the definition of adequate provision is unique to each circumstance brought before the court.

Notional estate orders are orders issued by the Court which are intended to make available for family provision orders assets that are no longer part of the estate of a deceased person because they have been distributed either before or after the deceased’s death (either with or without the intention of defeating applications for family provision).

Notional estate provisions brought to the forefront the distinction of ‘estate versus notional estate’ that had been implicit in the decisions on the legislation prior to the introduction of the Family Provision Act 1982(NSW). It made explicit in the legislation that ‘estate’ and ‘notional estate’ were different. Things subject to contracts (like mutual wills) were not within the definition of ‘estate’. To bring such property within the estate required the a broader definition to include a ‘notional estate’.

Even then it requires a particular kind of transaction, an absence of relevant consideration, a defined time frame in which the transaction took effect and a range of other matters to be considered before property can be designated as notional estate and made the subject of an order for family provision under the Act.

 

 

 

Frasier, Capacity: Crane v Crane

In the third season of Frasier, Niles is retained to testify in a capacity hearing of local millionaire timber baron Harlow Safford aged 78. Following several incidents including disposing of property cheaply, hopping a freight train across the country, and showing signs of senility, Safford’s son is concerned about his capacity.

Frasier is set in Seattle Washington; under Washington State Law in order to be found to be lacking capacity a person (referred to as the principal) must be informed that a request has been made; be examined personally by at least one mental health professional or health care provider prior to making that determination (who must be a psychiatrist, physician assistant working with a supervising psychiatrist, psychologist, or a psychiatric advanced registered nurse practitioner)and may request that the determination be made by a Court.

When making a determination the Court shall, at a minimum, be informed by the testimony of one mental health professional familiar with the principal and shall, except for good cause, give the principal an opportunity to appear before the Court prior to making its determination.

Niles believing Safford to be lucid for periods of time has agreed to speak as an expert witness for the son as to Safford’s mental capacity; as the case has a high profile it is to be broadcast on Court TV.

The following day Safford’s lawyer visits Frasier at work, asking him to meet Safford and appear on his behalf. Although Frasier is initially happy to accept Niles’ diagnosis, he accepts an invitation to meet Stafford; discovering that Safford’s mansion has a giant model railway in the grounds and a fireman’s pole in the living room. Frasier finds Safford, (who calls him Sparky) charming, coherent and stable, explaining that he sold a property cheaply in order to help out a young couple; Illegally riding a freight train across the country to indulge his sense of adventure.

Frasier feels Niles has made a misdiagnosis; however, his attempts to convince him to change his testimony outrages Niles, exacerbating their sibling rivalry; as Frasier believes that Niles desire to appear on Court TV is an attempt to garner some of the fame that Frasier has established as a radio psychiatrist and that this desire is clouding his professional opinion.

In Court Safford’s behaviour becomes increasingly erratic. As Frasier is appearing pro bono Safford expresses his wish to donate a sum equal to his fee to charity; this leads to an outburst that disrupts proceedings. Safford then puts on a railway engineers cap and believing that he is a locomotive engineer announcing the stops his train will be making; this behaviour leads to the dismissal of the application.

 

Trusts; what are they?

A trust is an arrangement where a person (“the trustee”) holds property or assets for the benefit of others (“the beneficiaries”).

Unlike a company, a trust is not a separate legal entity, although it is treated as a separate entity when it comes to registering for tax. That means the trustee is liable for any of the trust’s debts, which is why many people choose to have a company as trustee.

Trusts can be set up by deed during a person’s lifetime, or by Will to take effect after the person’s death. Trusts established by Will are known as testamentary trusts.

What’s the benefit of a trust?

To separate the beneficiary from control over an asset (the trustee), where the beneficiary is under age or suffers from a disability that affects their capacity to make decisions

To provide greater flexibility in tax planning

To protect assets from financial claims made against the beneficiary, and

To use as a business entity either for investing (for example, to purchase real estate or a share portfolio) or for trading.

What are the elements of a trust?

The settlor: The settlor is the person responsible for setting up the trust and naming the beneficiaries, the trustee and if there is one, the appointor. For tax reasons, the settlor should not be a beneficiary under the trust.

The trustee: The trustee (or trustees) administers the trust. The trustee owes a duty directly to the beneficiaries and must always act in their best interests. All transactions for the trust are carried out by and in the name of the trustee.

The beneficiary or beneficiaries: The beneficiaries are the people or companies for whose benefit the trust is created and administered. Beneficiaries can be either primary beneficiaries (who are named in the trust deed) or general beneficiaries (who often are not named individually); usually existing or future children, grandchildren and relatives of the primary beneficiaries.

The trust deed: The trust deed (or, in the case of a testamentary trust, the will) is the formal document setting out how the trust will run and what the trustee is allowed to do.

The appointor: Many, but not all, trusts also have an appointor who has the power to appoint and remove the trustee.

What kinds of trusts are there?

The two main types of trusts which are used in business and by individuals:

Discretionary trust:

A discretionary trust or family trust is the most common form used by families. The beneficiaries of the trust have no defined entitlement to the income or the assets of the trust.

Each year, the trustee decides which beneficiaries are entitled to receive the income and how much they should get.

Fixed or unit trust:

Unlike a discretionary trust, the beneficiaries of a fixed trust have a defined entitlement under the trust, similar to a shareholder in a company.

The trustee does not have any discretion as to how they distribute the trust’s capital and income.

A fixed or unit trust is often used for joint venture arrangements – for example, two families want to own an asset together.

Other Types of Trusts:

There are many different kinds of trust including superannuation funds, charitable trusts and special disability trusts.

How long does a trust last?

In NSW, a private trust can last for up to 80 years. The trust deed will set out how long it should last (known as the ‘vesting date’) – often based on a specific event happening, such as someone dying or reaching a certain age.

“[t]he common-law rule prohibiting a grant of an estate unless the interest must vest, if at all, no later than 21 years (plus a period of gestation to cover a posthumous birth) after the death of some person alive when the interest was created”

What happens on the vesting date?

When a trusts vests the beneficiaries become absolutely entitled to all of its assets and income. The trustee must distribute all assets and income to them in line with the trust deed. A trust deed will usually have a set of rules the trustee must follow when doing this.

Does a trust pay tax?

A trust has its own tax file number and is required to lodge tax returns annually. However, the trust generally is not subject to tax if all its annual income is distributed to beneficiaries, who pay the tax based on their marginal rate of tax.

 

 

 

 

Testamentary Capacity – Legal v Medical

Marija Jakopovic died in September 2015 at the age of 82. She married Josip, and they had two children, Branka and Boris. The family migrated to Australia in January 1965. Branka married and had one child, Anita Drivas.

In June 1998 Marija made a Will appointing Branka as executrix and leaving her estate to Branka and Boris in equal shares. If either Branka or Boris predeceased Marija but leaving children, then those children would take the share that their parent would have received had he or she survived the deceased.

In May 2007 Marija made a new Will with similar provisions regarding her grandchildren but altered the share leaving Branka sixty per cent and Boris forty per cent of her estate; appointing Branka executrix but, in the event of her refusal or inability to act, her granddaughter Anita was to act as executrix.  At this time Marija also executed a power of attorney in favour of Branka and appointed her enduring guardian, with Anita as alternative enduring guardian.

In June 2007 Marija approached her solicitor and revoked the power of attorney in favour of Branka and executed a general power of attorney in favour of Boris. In September 2007, Marija appointed Boris as her enduring guardian and had her solicitor prepare a Will appointing Boris as her executor, and in the event of his being unable or unwilling to act, named her solicitor Michael Taylor, executor. If he was unable to act, the partners of Michael’s firm of solicitors were to be executors.

The Will left the whole of the deceased’s estate to be divided equally between Branka and Boris. It provided that should Boris predecease the Marija, leaving children surviving him, then those children would take their father’s share, but it contained no comparable provision in favour of Branka’s children.

Michael Taylor followed his usual practice when he prepared the Will in September 2007. He interviewed Marija alone and his file notes made no reference to any concern that she lacked the capacity to make a Will.

In June 2011, Branka died suddenly. Marija died in September 2015. In February 2016 Boris obtained probate of the September 2007 Will.

Anita challenged the September 2007 Will on the basis that Marija lacked testamentary capacity. If the September 2007 Will was found to be invalid, Marija’s last will would become her May 2007 Will. Boris cross-claimed, contending that if the September 2007 Will is ruled invalid the May 2007 Will would also be invalid for want of testamentary capacity.

Thus, if the Court found that Marija lacked testamentary capacity when making the May and September 2007 Wills, her estate will be dealt with in accordance with the 1998 Will; as a result of the death of the named executrix, Branka, it would be necessary for an administrator to be appointed. There are competing applications by Anita and Boris for appointment as administrator.

Additionally, Anita sought an account of Boris’s dealings under the June 2007 power of attorney. Boris argued against the making of any such order.

As posted before the modern test of capacity to exercise testamentary power  is set out in the following passage from Banks v Goodfellow ((1870) LR 5 QB 549 at 565):

It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties – that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.

The Court was satisfied that the Marija knew that she was making a will and knew what the effect of doing so would be. Marija’s estate was simple; it consisted essentially of the family home. Marija knew she had a home, and where it was; operated her bank account and paid her bills without any assistance. There was nothing in the evidence to suggest that the deceased was unaware of the nature and extent of her property.

Therefore the Court relied on the third element of the Banks v Goodfellow test.

Medical opinions submitted to the Court stated Marija was unlikely to have been able to appreciate the merits of the claims on her estate. Importantly although she was likely to be able to appreciate their merits of Branka and Boris’s claim, but not those of her grandchildren.

The Court accepted the evidence of Michael Taylor, an experienced solicitor who detected no difficulties with Marija’s testamentary capacity when he prepared her Will stating

 That, in itself, is valuable evidence which favours a finding upholding the will: 

Similarly, the Court accepted that Marija must have taken the May 2007 will to Mr Taylor when she visited him in September of that year and requested to change the Will so that Boris’ children would take his share if he predeceased her but that Anita was not to receive Branka’s share if Branka pre-deceased her.

Anita’s challenge to the Will failed, and both Anita’s claim and as a consequence Boris’ cross-claim were dismissed.