Under s 65 the court seeks to protect a beneficiary who lacks capacity by directing the administrator to convey the beneficiaries property to the Public Trustee.
Clayton Lang (”the deceased”) died in the Kangaroo Island bushfires on 3 January 2020 survived by his two children.
The deceased left a will dated 26 August 2010 appointing his wife and mother of the children, as executor and trustee. If she was unable or unwilling to act, the deceased named his parents Richard and Helen as substitute executors if they were willing and able to act.
At the date of his death, the deceased and his spouse were divorced; under s 20A(1)(b) of the Wills Act 1936 if the testator’s marriage ends after making a will the appointment of a former spouse as executor, trustee or guardian is revoked.
The deceased’s father Richard also died in the Kangaroo Island bushfires on 3 January 2020. The circumstances of the death of both the deceased and his father make it impossible to determine the order of death between them.
The deceased’s mother Helen was granted letters of administration with the will annexed on 15 September 2020 (the administratrix).
On 4 April 2022, the administratrix brought an application under s 67 of the Administration and Probate Act 1919 that she not be bound by the requirements of s 65 of the Act to pay the benefit share and interest of the children in the deceased’s estate to the Public Trustee.
On 5 April 2022, following the Court’s direction under s 69 of the Act the administratrix engaged in and concluded litigation on behalf of the estate in both the Supreme Court of South Australia and the Federal Circuit and Family Court of Australia reducing the net estate available for the benefit of the children of approximately $800,000 of which half is retained by a company.
The administratrix is the sole director and secretary of the company and holds the shares in the company on trust for the children.
Subsequently, the brother of the deceased’s former spouse and the uncle of the children, applied to the Court that the children be joined to the proceedings and that he be appointed the children’s litigation guardian. The administratrix opposed the application.
Following communication from the Public Trustee, the Court granted the administratrix an order that the Public Trustee be joined to the interlocutory application brought by the uncle and the application under s67 of the Act.
The Court didn’t doubt the uncle’s sincerity and selflessness in making the application, however, stressed the matter concerned an application under s 67 of the Act that the administratix be relieved of the obligation to comply with s 65 of the Act.
Similarly, the Public Trustee submitted that there was no basis to justify the joinder of the children to the application under s 67 of the Act.
The administratrix submitted after taking the advice of a suitably qualified advisor that the anticipated charges of the accounting and financial advice are likely to be substantially less than those charged by the Public Trustee.
The Court accepted that these factors supported making an order relieving the administratrix of the obligation to pay the children’s interest in the estate to the Public Trustee.
Notably the Public Trustee did not oppose the Court making the order sought under s 67 of the Act.
Trustees fiduciary duties
The Court was satisfied it would be beneficial to the children to have the funds from the deceased estate managed by the administratrix avoiding charges being incurred by the Public Trustee that it would be beneficial that the administratrix not be bound by s 65 of the Act.
Additionally, the Public Trustee continues to exercise oversight of the interests of beneficiaries lacking capacity following an order under s 67 of the Act. The Administratrix has advised the Court that in the future, she is prepared to provide information to address those concerns to protect the children’s interests.
In the future, the children have remedies under the Trustee Act 1936 (SA) and at common law, if they are concerned that as trustee the administratrix is failing to discharge her fiduciary duties
The administratrix seeks an order for costs incurred in dealing with the applications for the children to be joined to the proceedings to prevent the value of the estate from being depleted by those costs.
Attempts made by the uncle to ascertain information involving the administration of the estate were not addressed satisfactorily by the administratrix.
The Court accepts that the uncle’s application was motivated by a genuine concern for protecting the interests of the children. It is unlikely the depletion of the estate would be modest as a result of his application.
In these particular circumstances the Court declined to make an order that the uncle meet the administratrix’s costs.