It is well-established in law that an executor cannot compel an individual to accept a gift of property against their wishes. A beneficiary under a will or intestacy can refuse or renounce a gift, commonly known as a ‘disclaimer.’
The principles governing disclaimers of gifts vary based on the type of gift and the nature of the property involved. A disclaimer can apply to an inter vivos gift, an interest in a family discretionary trust, or a testamentary gift that takes effect upon the donor’s death.
This article focuses on the principles of disclaimers specifically related to testamentary gifts.
How to make a disclaimer
There is no specific requirement for a disclaimer to be in a prescribed form or approved by a court to be considered valid. It can be made through a deed, in writing, orally, or inferred by conduct.
A disclaimer must be total; the beneficiary can retract a disclaimer before the estate’s legal personal representative deals with the beneficiary’s entitlement in the estate. However, withdrawal may not be allowed once the estate’s legal personal representative has acted in reliance on the disclaimer.
If a beneficiary has not expressed acceptance of a gift, a presumption of assent arises, meaning that the beneficiary is presumed to accept the gift unless they explicitly indicate otherwise.
Disclaiming a testamentary gift
A disclaimer has a retroactive effect on the deceased’s death. In cases where a will grants multiple gifts to a beneficiary, the beneficiary can disclaim one gift and accept another. A residuary beneficiary may disclaim their interest before probate and even during estate administration.
It is important to note that a disclaimer made by a beneficiary before the testator’s death is ineffective, as the testator can still revoke or modify the will until their death.
Background
Ellen Mary May McKean ( the deceased), who died on 22 April 1992, was survived by her only son, Peter (who was married to the respondent), and her four grandchildren (the respondent’s children). At the date of death, the deceased’s assets included a property at Proserpine and one at Dingo Beach. By her last will, the deceased left bequests of $5,000 to her brother and $40,000 to Peter, although the bequest of $40,000 was to be offset against a debt of $39,657 owed by Peter to the estate. The rest and the residue of the estate was to be distributed to the deceased’s surviving grandchildren (who include the applicant) as follows:
(a) $20,000 when each attained the age of 25 years; and
(b) the balance in equal shares when each attained the age of 30 years.
On 6 August 1992, probate of the will was granted to two solicitors, Graham Roberts and David Glasgow (the original executors). By 8 April 1993, all of the residuary beneficiaries, including the applicant, were aware of their gifts under the will – having received correspondence from the original executors around this time.
The letter
On 6 July 1993, the following letter was sent.
The instructions that we have received from each of the abovenamed are that they wish to relinquish and disclaim any benefit or entitlement they may have to the residual estate of E. M. M. McKean, deceased. We have also been instructed to advise you that each of the abovenamed wishes their share or entitlement in the estate to be transferred to their father, Raymond Peter McKean…We have also advised Kerri McKean, who is a minor, that she does not have the capacity at this time to direct yourselves as executors to transfer any of her entitlement to her father and that such property to which she is entitled will be required to remain held in trust until she attains the capacity to advise yourselves as executors otherwise. Would you please note our interest in this matter. Would you also please advise of your requirements to transfer the entitlement of the beneficiaries, Helen, Michael and Julia, to Raymond Peter McKean.”
Shaw v McKean as executor of the estate of the late Ellen Mary May McKean [2023] QSC 261 at 10
Between 7 July 1993 and September 1993, the original executors and their solicitors engaged in correspondence to address the transfer of the deceased’s estate to Peter. In September 1993, these solicitors employed counsel to provide an opinion concerning the “passing” of any interest the residuary beneficiaries may have had in the deceased’s estate to Peter.
In March 1994, the original executors purchased another block of land in Proserpine at the direction of the residuary beneficiaries.
On 20 April 1995, the residuary beneficiaries executed a deed which, amongst other things, appointed their parents as executors instead of the original executors. From this time, Peter treated the deceased’s assets (including the settlement proceeds from the sale of all three properties) as his own and applied them to his benefit. Peter died on 14 November 2020.
The matter
By an originating application filed in the Townsville Supreme Court on 10 March 2023, the applicant seeks various orders about the estate administration of the deceased, claiming she is a residuary beneficiary under the deceased’s last will, dated 6 November 1981.
The Court in Shaw v McKean as executor of the estate of the late Ellen Mary May McKean [2023] QSC 261 confirmed that an effective disclaimer may take any means effective for the purposes that is, by deed or other writing, such as a letter; by word of mouth or by conduct.
As stated earlier, the respondent’s case does not rely on conduct but on the letter of 6 July 1993.
The decision
In reaching this conclusion, the Court did not make any other findings about compliance with the requirements to assign or transfer an equitable chose in action and the effectiveness of such an assignment.
Regardless of this finding, the Court wanted more than three requirements to establish an effective gift disclaimer. Those requirements are as follows:
(a) first, the disclaimer must be timely in that it must occur before any act constituting assent to the gift;
(b) secondly, the disclaimer must be peremptory in that it must constitute an absolute rejection of the gift and
(c) thirdly, the disclaimer must be communicated to the donor or the donor’s agent..
The Court was not satisfied with the second requirement on the facts before it. The following principles are instructive to this issue
(a) first, a disclaimer must constitute an absolute rejection of the gift. It must evince a final and non-negotiable refusal to accept the property which the donor proffers;
(b) secondly, it must not purport to do anything other than disclaim. It must not purport to dispose of the property in some other way, such as by release; and
(c) thirdly, it is a necessary incident of an effective disclaimer that, being peremptory it cannot be retracted.
A disclaimer requires knowledge of the interest to be disclaimed. In the present case, the Court accepts that the applicant knew her entitlement as a residuary beneficiary under the will by 8 April 1993. Still, her case is that she never, in fact, disclaimed that gift.
What is evident from an ordinary and natural reading of the 6 July 1993 letter, when read as a whole and in context, is that the applicant (and indeed the other residuary beneficiaries – namely, her siblings) did not wish to relinquish their share in the estate of the deceased completely. On the contrary, to construe the letter, they wished to transfer their respective interests in the estate to their father. In this context, “wish” should be regarded as merely precatory. It follows that the letter of 6 July 1993 is not a disclaimer.
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