Australian Intestacy Harmonisation thanks to WA Legislation

If you die without a Will or leave a Will deemed by the courts to be ineffective as it:

  • Fails to properly dispose of all your assets,
  • Does not meet the legal formalities of being correctly signed and witnessed, or was made by someone who lacks legal capacity.
  • Where part of the Will is valid but part is invalid a person is considered to die partly intestate resulting in greater difficulty than administering a fully intestate estate.

There is a belief that if you wish only for your spouse and children to receive your estate the Laws of intestacy may be suitable; however, under intestacy, the way your estate must be divided is directed in specifically fixed proportions depending upon the family, or domestic relationship between you and your family members.

If a person dies intestate their relatives will have to apply to the Court for an administrator to be appointed. An administrator arranges the funeral, collects assets, pay any debts and taxes the estate owes then distribute any funds remaining. As your assets will be distributed according to legislation the administrator must establish the next of kin. Courts have a broad discretion to appoint an administrator, in most cases whoever has the largest share in the estate is considered the most suitable.

In many cases, a person who can prove that they are the de facto partner may be considered to be the spouse of an intestate partner and in some cases will displace the entitlements of a spouse. In certain circumstances “Children” include illegitimate children

If the next of kin is a child or an incapable person the Court may require the administrator to obtain an administration bond (usually equal to the value of the estate being administered) to guarantee any loss suffered as a result of the appointed administrator failing to properly administer the estate

Importantly the assets of the intestate must be sold in order for the estate to be distributed under administration. You cannot rely on the laws of intestacy to provide specific gifts for friends, charities or to leave provision for pets.

In Western Australia each year, roughly one in four estates administered rely on the intestacy laws set out in the Administration Act 1903 (WA) (“the Act”).

As I have posted earlier Australia’s first Billionaire Robert Holmes à Court, died following a heart attack in 1990 aged 53. His estate was estimated to be worth over $800 million; however, following his death, extensive searches were undertaken but no executed Will was found.

Holmes à Court, a lawyer who planned his business affairs so carefully failed to manage his affairs leaving his estate to be dispensed under the legislative formula of intestacy.

Section 14 of the Act directs the distribution of a person’s estate if they die without a valid will:

  1. A surviving spouse or de facto partner is entitled to the household chattels, the first $50,000 of the estate and one-third of the balance of the estate and any children will equally share the remaining two-thirds of the estate;
  2. If a person dies without leaving children, a surviving partner will be entitled to the first $75,000 of the estate and one half of the balance, with the remaining half of the estate distributed amongst the parents and siblings of the deceased.

In June a bill was introduced into Western Australian Parliament to reform the intestacy laws set out in the Act because the current provisions do not adequately provide for a surviving spouse or partner. Additionally, they Harmonise Western Australia’s legislation with Australia’s other states and territories.

The Amendment Bill provides:

  1. A surviving partner is entitled to the household chattels, the first $435,000 of the estate and one-third of the balance of the estate and any children will share equally the remaining two-thirds of the estate;
  2. If a person dies without leaving children; a surviving partner will be entitled to the first $650,000 of the estate and one half of the balance, with the remaining half of the estate distributed amongst the parents and siblings of the deceased.

Even with these changes, it is important that you draft a Will that reflects your intentions and will distribute your estate upon your death — in the manner that you want, instead of in the way that is dictated by statutory provisions setting out the distribution of your estate.

AG the Protector of Charities

Lorna Backhouse lived not far from the Blue Mountains Botanic Garden at Mt Tomah (the “Mt Tomah Garden”), where she was a regular volunteer.

In January 1996, Lorna created a Will leaving money to the Royal Botanic Gardens and Domain Trust (“RBGDT”), on trust to establish “The Lorna and Clive Backhouse of Mt Tomah Scholarship” to be awarded every two years to a member of staff at the Mt Tomah Garden (the “Scholarship Trust”).

When Lorna died in May 2010. RBGDT received just over $1.1 million and with accumulated interest, the current value of the Scholarship fund is approximately $1.3 million.

RBGDT sought an order to amend the terms of the Will in order that it be able to award the scholarship annually and to more than one person in any year.

In earlier posts, I have explained that the Attorney General of New South Wales, has a legislated role as a protector of charities. In that role, the Attorney General and RBGDT have agreed that subject to the consent of the Court, an administrative scheme be ordered to give effect to RBGDT’s intention (the “Scheme”).

The RBGDT submitted what it believed to be a number of deficiencies in the Backhouse Scholarship including that it can only be awarded once every two years. Due to the limited number of staff at Mount Tomah Garden, and both their personal and professional commitments it is a challenge for the staff to be away from the Mount Tomah Garden for an extended period of time.

If the Scholarship could be awarded more often, it would enable more staff to take the scholarship advancing the collective knowledge in horticulture and/or plant physiology in the Mount Tomah Garden.

As the Scholarship is limited to one member of staff it cannot be used for group projects. RBGdT submitted that it would advance the knowledge in horticulture and/or physiology of plants of Mount Tomah Garden if the Scholarship Fund could be used to pay for a number of staff rather than one member of staff.”

The Court had no hesitation in approving the Scheme as although it alters the means it maintains the purpose of Lorna’s gift. The Court expressed it’s a belief that if Lorna’s views were able to be sought, she would be satisfied that her gift was to be used for the benefit of more people and more often to undertake the activities she wished to support. Approval of the Scheme permitted an annual award to be made and, where appropriate, to more than one person in any year.

The Court ordered that the property held subject to the charitable trust known as the “Lorna and Clive Backhouse of Mount Tomah Scholarship” (“the Scholarship Trust”) established pursuant to clause 5(f) of the Will of the late Lorna May Backhouse dated 4 January 1996 be administered in accordance with the administrative scheme, created by order of the Court pursuant to the Court’s inherent jurisdiction conferred under section 23 of the Supreme Court Act 1970 (NSW).

 

 

 

 

 

Testamentary Freedom v Family Provision – What is “Proper maintenance and advancement”

Josipa Sreckovic died in December 2015, aged 90 years. Josipa’s husband, Jezdimir predeceased her. There were two children of their marriage, Lillian, and Gina aged 65 and 59.

Josipa migrated to Australia, with her two children, in the late 1960s joining her husband (the children’s father) who had arrived from their native Serbia 12 months before.

In about 1979 Josipa and Jezdimir purchased the family home in Pagewood for about $64,000. In 1987, Lillian after commencing a relationship moved out of the family home; her son Benjamin was born in 1991. Lillian’s relationship with Benjamin’s father ended and she returned to live in the Pagewood property, with Benjamin, in about December 1997. They remained living there, with Josipa and Gina until February 2005.

In January 2005 Josipa made a Will appointing Gina executrix and sole beneficiary. The Will deliberately omits Lillian on two grounds

  • she owns sufficient property and has the financial resources to assist her and her son (“my grandson”) whilst Gina does not own any such property
  • Lillian and my grandson have caused me great distress and have not cared for me and assisted me the way my daughter Gina has done for many years.

Probate was granted on this Will in April 2016.

Lillian sought a family provision claim out of the estate and/or notional estate of Josipa pursuant to Chapter 3 of the Succession Act 2006 (NSW) (“the Act”).

The Court takes a number of factors into account including 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.

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

In the Inventory of Property of Josipa’s estate at Probate was estimated to be $1,500,000 made up solely of the family home. The Plaintiff filed a Summons on 12 May 2017, in which she sought an order that the time for the making of her application be extended to the date of the filing of the Summons, the family provision order, and an order for her costs to be paid out of the deceased’s estate.

The Court accepted that apart from a period of about 6 years of their joint lives, there was a reasonably close relationship between Lillian and Josipa, although, at times during their relationship, they did not always get on; the Court should take into account, and evaluate, the whole of the circumstances regarding the relationship. Including that in her previous Will Josipa made equal provision for both Lillian & Gina.

Similarly, the Court had to take into account that Josipa chose Gina as the recipient of the whole of the estate. Owing to the fact that Gina was a loving and dutiful daughter, who cared for and assisted her mother throughout their lives together to the best of her ability.

In taking all of the circumstances into account, the Court was satisfied that the will had not made adequate provision for Lillian’s proper maintenance and advancement in life.  Notwithstanding her conduct in the period between 2005 and about 2011, the Court found that Lillian’s conduct over their joint lives should not to disentitle her, completely, to provision out of Josipa’s estate.

The Court balanced the amount to be provided to Lillian from the estate with Josipa’s entitlement to testamentary freedom, including the fact that Josipa made a detailed statement setting out the reasons she had for making no provision for Lillian

The Court believed that provision for Lillian’s proper maintenance and advancement in life is by way of a lump sum of $100,000. In calculating this sum the Court took into account the value of the estate; Gail’s competing claim; and that the sum is within Gail’s financial reach without having to sell the Pagewood property equating to less than 10 per cent of it’s current agreed value.

 

 

Adverse Possession and the Intestate Estate

In New South Wales law it is pos­si­ble to become the own­er of land by ‘adverse pos­ses­sion’ often referred to as ‘squat­ters’ rights’, allowing some­one to legal­ly take own­er­ship of land they have occu­pied exclu­sive­ly for at least 12 years.

Henry Downie died in 1947, without leaving a will. One of the assets that Henry owned was a property at 6 Malleny Street, Ashbury (“the property”). The property was let to Mrs Grimes as a “protected tenant”, who periodically paid the small amount of rent to a real estate agent. Mrs Grimes remained in occupation of the property until shortly prior to her death in April 1998.

Following Mrs Grimes’ death, the property was vacant for a time. Bill Gertos an accountant came to notice the property when he went to the street to visit clients for whom he prepared tax returns. The property appeared to be unoccupied and falling into disrepair. Over the course of the following year, it appeared to him that the building was empty and that no one was maintaining it.

Bill took possession of the property in late 1998 and has maintained possession ever since. Bill gave evidence that he had heard about adverse possession in his professional dealings and  in 1998 had it in the back of his mind

“that this may be a case where it may be possible to obtain title to the property by possession of it over a sufficiently long period of time if nobody else was interested in it”.

Bill instructed a solicitor to ascertain the name of the owner, whether the owner was alive, and if not whether any grant of probate or administration had been made. The Solicitor advised Bill if he could prove to the Registrar General that he had occupied the property, paid the bills, and looked after it as if it was his own for at least 12 years, or perhaps 14 years he could request registration as the owner of the property.

In 2017, Bill made an application to be recorded as the owner of the land.

An applicant for a title on the grounds of possession must support the claim by a plan of a survey to establish the area of enclosure, and by statutory declarations from several uninterested persons testifying to the extent and nature of the occupancy relied on. The applicant should also demonstrate who, but for his possession, would be entitled to the land.

In October 2017, the Registrar-General gave notice of its intention to grant the application made by Bill.

In November 2017 Henry’s daughter and two grandchildren (“the plaintiffs”) commenced proceedings seeking a declaration that they were the beneficial owners of the property.

The plaintiffs accepted that they were not bringing their claim on behalf of Henry’s estate but on the basis that they were persons entitled to take on intestacy and thus had a chose in action to see that the estate was duly administered

Bill submitted that the plaintiffs lacked standing and that as he had been in adverse possession of the property since about late 1998 any claim to recover the land from him would be barred. The plaintiffs take issue with those contentions claiming that Bill did not form the necessary intention to possess the property either at all or until recent years.

The Court applied the principles that apply in adverse possession matters

Pos­ses­sion which will cause time to run under the Act is pos­ses­sion which is open, not secret; peace­ful, not by force; and adverse, not by con­sent of the true own­er…,

Bill open­ly adver­tised the Ash­bury prop­er­ty as being for rent, paid coun­cil rates and arranged for a real estate agent to man­age the property.

The Court was satisfied that Bill was in pos­ses­sion of the land since about late 1998 can be regard­ed as open, not secret; peace­ful, not by force; and adverse, not by con­sent of the true own­er. It has con­tin­ued with­out inter­rup­tion to the present day accepting;

  • in 1998 Bill concluded that the property was not occupied, and after carrying out an inspection, decided to take possession of it himself.
  • that he then took steps to secure the property, had the locks changed, and had some works carried out to make the property habitable.
  • that he then set about renting the property to tenants through an agent appointed for that purpose.
  • that over the years that followed the property was let by him, on a more or less continuous basis, to a series of tenants.
  • that he undertook the payment of the rates and charges, and land tax, in respect of the property, and further made payments for insurance and maintenance.
  • that he expended more than $100,000 in 2014 in effecting substantial works at the property.
  • that the income and expenses in relation to the property were included within his tax returns throughout.
  • that his entitlement to assert a possessory title was disclosed in the course of his Family Court proceedings.

In dismissing the plaintiffs claim the Court was unable to accept that they were the right­ful own­ers of the prop­er­ty. Accord­ing­ly, the plaintiffs appli­ca­tion for relief was refused and they were ordered to pay Bill’s court costs.

 

 

 

Is this the Smallest Will granted Administration?

In an earlier post, I discussed Privileged Wills which had extended from Roman Law from at the time of Julius Caesar, granting a special privilege initially to soldiers, and then seamen to grant the entitlement to make valid Wills without the usual formalities.

In June 1922 there were reports that a Curious Will had been admitted to probate. In some ways it was similar to the  “tractor fender Will” discussed earlier this week.

It is in the form of a Royal Navy identification disc, bearing on one side in deeply punched letters, the name, the number, rating and the religion of the man to whom it was issued. On the other side when viewed at a certain angle some neatly engraved words are clearly visible under a microscope.

“ Everything I possess and all moneys, property due to me by Wills Wages Bank or any other sources I bequeath to my Darling Wife Alice Maud Skinner signed this day 1st FBY 1916 HMS Indefatigable Wm H. T. Skinner. Witnessed by W.H Taylor, H.J.Way.

The disc was recovered from the sea, cleaned and the words of the Will were revealed.

William Skinner was killed aboard HMS Indefatigable at Jutland in 1916. HMS Indefatigable was battlecruiser built for the Royal Navy in 1909 and following service in the Mediterranean was sunk on 31 May 1916 during the Battle of Jutland, the largest naval battle of the first world war. Only three of the crew of 1,019 survived.

As no executor was named Arthur Skinner filed an affidavit seeking letters of administration declaring that the handwriting is Williams.  Alice had remarried and moved to Australia. Letters of administration were granted to Arthur for Alice’s benefit.

In granting letters of administration the Court accepted that the 40 words engraved on an identity disc measuring 3.8 cm in diameter were William’s last will and testament”. The total value of the property passing under the Will was 258 pounds

 

Scratched Message on a Fender considered a Holographic Will

A holographic will is a document that has been handwritten and signed by the Will maker – often created in emergency situations; whilst not meeting the requirements of a formal Will in some jurisdictions if the testator:

  • had the capacity to write the will, although there is a presumption that a testator had such capacity unless there is evidence to the contrary and;
  • expresses a wish to direct the distribution of their estate to beneficiaries

then the document may be admitted to probate.

The shortest valid will in the world was made in January 1967 by Karl Tausch in What was then West Germany written in Czech it stated “Vse zene” means “All to wife”.

In Perhaps the most peculiar Will in Canadian history is that of Cecil George Harris who set out on his tractor in his fields near Rosetown Saskatchewan on the morning of June 8 1948. He told his wife and two small children he’d be working until about 10 p.m. that night.

Later that morning Cecil accidentally put his tractor in reverse while making some adjustments trapping himself between the tractor and another piece of equipment, and pinning his left leg under the tractor’s rear wheel.

 Whilst trapped he etched on the tractor fender using his pocketknife.

“In case I die in this mess, I leave all to the wife. Cecil Geo Harris.”

At 10:30 that night he was found by his wife and taken to hospital where he later died from his injuries. Although conscious until the time of his death, Cecil made no mention of the Will

Neighbours discovered the message the following day. The fender was removed from the tractor and the court admitted it into probate as a valid holographic Will. Although the message was brief there was no doubt that it expressed Cecil’s wishes

The fender remained on file at the Kerrobert Courthouse until 1996. The knife and fender are now displayed on the main floor of the University of Saskatchewan College of Law library.

The High Court & the executrix’s costs

In an earlier post, we discussed the rather uncommon occurrence of appellate probate litigation in the Australian High Court. On 15 August this year, the Court unanimously held that Homayoun Nobarani had an interest in challenging the handwritten will made by the late Iris McLaren in 2013  (“the 2013 Will”) and was denied procedural fairness.  The denial of procedural fairness arose from altering the hearing, at short notice, from a hearing of the caveat motion to a trial of the claim for probate amounting to a “substantial wrong or miscarriage” because Homayoun was denied the possibility of a successful outcome.

The Court provided that the executrix Teresa Mariconte could apply within 14 days that the costs of

  • the trial,
  • the appeal to the Court of Appeal of the Supreme Court of New South Wales and
  • the appeal to the High Court be paid out of the estate and on a trustee basis.

On 29 August 2018, Teresa brought an application. The general rule is that costs (including litigation expenses) properly and reasonably incurred by the executor in connection with the administration of the estate are payable from the estate.

In this matter, the High Court held there was no suggestion that Teresa acted other than reasonably and properly in seeking and obtaining a grant of probate, and then resisted appeals seeking to set aside that grant of probate.  Notwithstanding that, on appeal to the High Court, the grant of probate was set aside due to a denial of procedural fairness at trial to Homayoun.

Homayoun objected to the order sought on the bases that

  • Teresa is the sole beneficiary of the estate according to the 2013 Will, and
  • Teresa failed to disclose that sometime between the trial and the appeal to the Court of Appeal, the estate was distributed to her; and that her solicitors pay the costs of the application on an indemnity basis.

Costs awarded on an indemnity basis are all costs, incurred by a party to litigation in undertaking proceedings provided they have not been unreasonably incurred or are not of an unreasonable amount and are usually awarded only in circumstances involving misconduct

The High Court believed that Teresa’s role as executrix and sole beneficiary under the 2013 Will does not detract from the reasonableness or the propriety of her actions, nor her defence of the appeal to the Court of Appeal and the appeal to the High Court as executrix; and  ordered that Teresa’s costs be paid from Iris’s estate.

Additionally, no order was made to restrain distribution of the estate by Teresa following the grant of probate after trial but while an appeal was pending.  That distribution was not improper. The High Court rejected Homayoun’s submission that it was a basis for an award of costs against Teresa’s solicitors personally.