Who Inherits your Digital Assets

Interestingly whilst we all die – our online presence can exist indefinitely. Importantly legal verification and storage of access to our online persona continue to evolve.

Google allows you to use a setting called Inactive Account Manager which allows you to decide what happens to your data and at what time your account is to be treated as inactive – no one ever really dies they just stop using their Google account.

Facebook gives you options for what you want to happen to your account when you die — you can select an ‘inheritor’(a sort of digital executor) for your Facebook profile, to accept new friend requests, update the profile and cover photo, and write memorial messages.

Germany’s Federal Court of Justice (BGH) recently said online data should be treated the same as private diaries or letters, and pass to heirs.

The case involved parents of a 15-year-old girl killed by a train in 2012. The parents were trying to establish if she had committed suicide. As a corollary if it was suicide the train driver was entitled to compensation.

The parents had sought access to her chat messages and posts in order to find out whether she had been bullied. Facebook argued that it would compromise the privacy of the teenager’s contacts.

A court in Berlin had ruled in favour of the family, saying that the contents of the girl’s account could be seen as similar to letters and diaries, which “can be inherited regardless of their content”.

In 2017 Facebook an appeals court agreed with Facebook that any contract between the girl and the company ended with her death and could not pass on to the parents.

The BGH, agreed with the lower court expressing the view that it was common to hand over private diaries and correspondence to legal heirs after death, and there was no reason to treat digital data any differently.

As the child was a minor the court believed the parents had a right to know who their child had spoken to online. The parents have reportedly taken over the account.

We have posted before about the need to protect your online or digital assets; not just your social media accounts, but your email address(es), cloud, and online financial details; and any hardware (laptop, desktop, hard drives) protected by passwords.

Just as it is prudent (and I would suggest necessary) to have a valid and up to date Will – you should have a digital inventory setting out which details all of your relevant usernames, passwords and secret questions, to enable simple access to your personal and financial information.

In the event that you are incapacitated (this is why a power of attorney is important) your appointed Attorney can control and deal with your digital assets.

This should be stored securely – but needs to be accessible to your Attorney or Executor should they need it – and remember your executor will need it. Importantly make sure that you update this information when you change your passwords.

The advent of blockchain technologies may provide an ability to securely store and verify documents. Importantly disputes regarding digital inheritance, particularly in relation to crypto currencies can be eliminated with blockchain secured documents.

 

 

 

 

 

 

Make a Will and Review it Regularly

A person’s last Will is an important document but it should be revisited on a regular basis throughout your life. I have created a list below of things to think about when you start making your will:

  • Have you been divorced or separated? In some jurisdictions except where (a) a contrary intention appears in the will, or (b) there is other evidence establishing such an intention, divorce will revoke a will.
  • Have you married or started a new relationship? Unless a Will is made specifically in contemplation of an impending marriage an existing Will is automatically revoked by marriage
  • Have you or your beneficiaries had a new baby?
  • Have you bought or sold an asset such as an investment property?
  • Have you or any of your beneficiaries developed a health problem?
  • Have you or your beneficiaries had a business failure?
  • Have you gifted an asset or made a loan, to a family member?
  • If you own a business has, a partner has retired, or a new partner been admitted?
  • Have you or your beneficiaries had a business failure?
  • Have you started a SMSF (self-managed superannuation fund)?
  • Have you transferred a major asset owned by you to a self-managed superannuation fund?

Bernard Sullivan Smith died in August 2016 leaving a handwritten will dated 4 February 1966 nominating his wife, Joan as his executrix.

“I GIVE DEVISE AND BEQUEATH to my wife, Joan Florence Smith, of 14 Cumberland Street, Parramatta, all my real estate and personal property. In the event of my wife’s death, I leave all my real estate and personal property to be divided in equal shares between my brothers and sister, namely Henry Denson Smith, Maxwell Smith and Patricia Maude Smith, and my wife’s brother and sister, namely John Joseph Blinstroub, and Helen June Davies”.

Bernard’s wife Joan predeceased him by 2 years they had no children. The only beneficiary named in the will that didn’t predecease Bernard was his brother, Maxwell Smith. Only his sister Patricia had children Michele and Diane (“the nieces”).

In November 2016 Maxwell was granted administration (with the will annexed) of the estate. He commenced  proceedings for judicial advice in July 2017.

(1) whether the gift of residue under the will is a class gift and does not partially lapse, or whether it is a gift to five individuals and therefore partially lapses in respect of those who predeceased the testator; and

(2) if the residuary gift partially lapses, what persons and in what proportions are then entitled upon the partial intestacy. These reasons deal with each of these questions in turn.

However Maxwell died in August 2017. Probate of his will was granted to his wife and his executrix and sole beneficiary, Dawn Smith, in November 2017. As executrix of Maxwell’s estate she became the administrator of Bernard’s estate and sought the opinion, advice and direction of the Court on the following grounds whether the gift of residue under the will should be construed:

(1) as a class gift –  it operates so that the whole of residue goes to the member of the class who survived the testator.

; or

(2) as a gift to five individuals – the valid gifts will operate according to their terms, and the invalid gifts will pass upon intestacy.

Courts construe wills if possible, on a fair and reasonable construction to preserve, rather than destroy, a gift:  in this case the court held that Bernard did not make a class gift meaning that the gifts to each of the beneficiaries named in the will, other than Maxwell, lapse and the shares that would otherwise have passed to them are subject to a partial intestacy; that is, a partial intestacy as to 80% of the testator’s estate. Half to the estate of the Bernard’s brother Maxwell, and the other half will pass upon intestacy to his nieces, the daughters of his sister Patricia, in equal shares.

In this case Bernard created a handwritten Will some 50 years before he died. In the intervening period the person he named as executrix and all but one of his beneficiaries had died.

We have discussed before cases where the Court concluded that in an age where people outlay significant amounts on a regular basis to update their phones –a small outlay to correctly execute a Will to secure potential benefits for loved ones and dependants should be an elevated priority.

Family Provision affirms that Time & Tide waits for no one

Family provision legislation imposes a legal obligation on the Will maker to make proper provision for the support and maintenance of certain defined dependents.

Legislation provides that the task of the court is to determine the extent of the provision made for the maintenance, education and advancement in life of the dependent if the Court believes it is inadequate, evaluate what provision, if any, would be adequate.

The purpose of Family provision Acts is not to provide for an equal share of an estate to an aggrieved party it is limited to the provision of adequate maintenance and support out of the deceased’s estate.

The Court’s role is to place itself in the position of the Will maker, and having taken the facts and circumstances into account decides if the Will maker has breached their moral duty toward their dependents. The moral duty of the Will maker has been defined as the actions society reasonably expects of a person in the circumstances, by reference to contemporary community standards.

Margaret Drake died in September 2014 her Will named her daughter Deborah as executor and left her house in Kewdale and contents and her car to her with the residue of the estate to be divided amongst her three children Deborah, Loraine and Andrew.

Probate of the Will was granted to Deborah in November 2014 shortly after the residue of the estate was distributed with the beneficiaries receiving about $18,700 each. At this time Andrew raised no concerns and made no suggestion that he intended to seek further provision from the deceased’s estate.

In October 2014, Deborah and Lorraine sought legal advice concerning the grant of probate. The solicitor advised them that as there was a six month time limit within which certain persons could seek further provision from the estate they should wait at least six months before they sold the Kewdale property.

Following this advice Deborah Lorraine and Andrew had a meeting where Loraine told Andrew the Kewdale property would not be sold for at least six months ‘in case anyone contested mum’s will’. Andrew later claimed that he did not understand from these discussions that a six month time limit applied to him.

Andrew lived in the Kewdale property for six months following Margaret’s death.

In July 2015, the Kewdale house was sold Deborah received about $638,000 the contents were distributed amongst the three children at the same time.

Following the sale of the Kewdale property Deborah spent $300,000 renovating her home, gave Loraine $110,000 leaving approximately $100,000 of the proceeds of the sale.

In February 2017 Andrew sought to file a family provision claim over 1 year 9 months after the expiry of the relevant time limit.

The application stating that Margaret’s Will had left Andrew without adequate provision for his proper education, maintenance, support and advancement in life, and he sought leave to file a claim under the Act after the time for bringing the claim had expired. Andrew argued the $100,000 was the ‘undistributed’ portion of the estate.

Andrew says the reason for the delay was that since his mother’s death he had fallen on hard times is homeless and prior to that, he was living out of his car until the car was stolen. In those circumstances seeking of legal advice was perhaps the furthest thing from his mind.

Weighing all factors in the balance, the court accepted that Andrew has an arguable case and there is some explanation for the delay. But the time limit is a substantive provision and not a mere procedural time limit. Essentially Andrew’s ignorance of the law combined with his difficult circumstances was a factor in proceedings not being commenced.

The Court disagreed the $100,000 was not in any way part of the deceased’s estate the estate of the deceased has been fully distributed. Had Deborah been aware of the prospect of a further claim by Andrew, she may not have spent the full $300,000 on renovations. Deborah spent money on house renovations and made a gift to her Loraine based upon her belief as to her entitlement from the estate.

The view of the Court was that the distribution of the estate was decisive and was largely the reason for the refusal of the grant of leave; The Executrix acted prudently and with the benefit of sound legal advice waiting six months from the grant of probate before taking any steps to distribute the estate. They then acted as they were entitled to do and it would not be in the interests of justice if the plaintiff were now granted leave to issue proceedings

The Court of Appeal agreed that the lower court should have given more weight to the strength of Andrew’s case, however even if there was a material error, the exercise of judicial discretion would have resulted in the same outcome.

 

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When a person relies on a Will makers promise

Mario Novick moved from Italy to Australia in 1947. In Australia he worked in various semi-skilled jobs until he retired in 1994 aged 67. At approximately this time, he encouraged his second cousin Lorena aged 25 to emigrate from Croatia to Australia.

In 1994, Lorena began work as a waitress and cashier in 1995 she began visiting Mario at his apartment. She would take cooked meals, fruit and groceries and other domestic items to him. Her husband Edi would also do maintenance work on Mario’s apartment.

From 1994 to 2016, Mario would stay at Lorena’s home in the Northern Beaches of Sydney for Christmas and Easter for a number of days; He would often visit Lorena’s home on weekends on a weekly or fortnightly basis to spend time with her family.

Mario enjoyed frequent contact with Lorena’s family, including babysitting or playing games with her two sons when they were young.

Lorena would take Mario to his doctor’s appointments in Potts Point, or specialists in Chatswood and Darlinghurst.

In 1998, Mario asked Lorena if she could provide further assistance by helping wash his clothes, cleaning, doing the shopping and errands. Mario told her

I want to repay you and your family for all the work you have done for me and the work you are going to do for me in the future. Instead of me paying you, I am just going to leave you everything I have in my Will.

From 1998 to 2016, every three to four months Mario would say:

Lorena you have been wonderful to me and I know you will be looking after me for some time. I want to repay you for all of your effort by leaving you everything I have in my Will.

In response to these representations, Lorena spent time and money giving and providing help and services to Mario. Lorena assisted by cleaning, cooking, shopping and washing clothes; Collecting and driving him to medical appointments from 2010 until his death.

Angela first met Mario in August 2013. It appears that Mario had become infatuated with Angela and told Edi that she was going to be his live-in carer, but that Lorena had done so much for him over the years and he was leaving his apartment to her.

In June 2014 and August 2014, Mario made two wills prepared by different solicitors instructed by Angela leaving his entire estate to her. Mario never told Lorena, her family or his friends about these Wills.

In 2015, Mario told Lorena:

Lorena I have made sure you will be repaid for all your help, my Will says that you get all of my Estate. Don’t worry you will get everything.

In July 2015, Mario entered into a reverse mortgage with an opening balance available for drawdown of $213,950. Mario wrote a note to the Angela, stating:

Dear Angela,

Please accept this gift as a token of my appreciation for all your devotion & care of me you are an angel.

Love Mario

In August 2015, Mario transferred two amounts of $50,000 to Angela’s bank account with ANZ Bank corresponding to two drawdowns of $50,000 from Mario’s reverse mortgage loan.

Angela had access to Mario’s personal bankcard and PIN and made withdrawals from his reverse mortgage loan.

In October 2015, Angela moved into Mario’s apartment in Potts Point. After Angela moved in Mario’s friends found it difficult to have a private conversation, as she would always make sure that she was sitting nearby when they spoke with Mario.

In November 2015, Mario allegedly composed a note outlining his dissatisfaction with the care offered to him by Lorena and Edi.

Angela moved into Mario’s unit but moved out following an argument in 2016.

In August 2016 until his death, Mario’s health deteriorated requiring frequent hospitalisation. During this time Angela made multiple withdrawals from Mario’s reverse mortgage account.

In May 2017, Mario made a further will naming Angela as executor and trustee leaving his entire estate to her.

Prior to Mario’s death Lorena was upset that Angela was not telling her anything about his treatment or his needs. Edi discovered Mario had died when Mario’s neighbour rang to tell the family that Mario had died.

Promissory Estoppel

Equitablepromissory estoppel, is, typically, focussed on the conscience of the defendant: it operates when the defendant has induced the plaintiff of an assumption that the defendant will not assert its strict legal rights, so to prevent unconscientious insistence by the defendant on them.

In this instance is necessary for Lorena to establish

(1) that she has adopted an assumption as to the terms of a legal relationship with Mario;

(2) that Mario has induced or acquiesced in Lorena adoption of that assumption;

(3) that Lorena has acted in reliance on its assumption;

(4) that Mario knew or intended that Lorena so act; and

(5) that it will occasion detriment to Lorena if the assumption is not fulfilled.

This case is about whether it would be unconscionable to allow Mario to avoid his lawful obligations.

The court held that as a result of Mario becoming enamoured of Angela, he was prepared to renege on his promises to the Lorena.

The court took the view that in the circumstances Mario should be held to those promises. The length of time over which the Lorena carried out the various activities as a result of his promises it would be unconscionable to permit him to resile from the promises made and the expectations which he created in Lorena’s mind and which caused her to expend the time and effort.

The court believed Money was insufficient to recognise that which Lorena has done in reliance upon Mario’s promises therefore in order to fulfil Mario’s promise and its performance a trust ought to be declared on what is left of the proceeds of his estate.

Posthumous Pregnancy

Ayla Cresswell met Joshua Davies in 2013 they began to live together in January 2016 and were saving for a house. They were discussing getting married and having a family at that time.

Joshua took his own life in August 2016. He died intestate with no indication either written or oral of his testamentary intentions. No administrator or executor was appointed to his estate.

On the day that he died Ayla informed Joshua’s father, John that she wished that she was pregnant. John rang the Toowoomba Base Hospital and was informed that if Ayla wanted to have a child with Joshua they would need a court order. Ayla was willing to file an urgent application seeking a Court order for the removal of Joshua’s sperm. Joshua’s parents agreed with Ayla. Joshua’s father telephoned the Toowoomba Base Hospital and informed the Hospital that they would be applying for a court order to remove Joshua’s sperm.

The Supreme Court heard the urgent application the day following Joshua’s death. Joshua’s immediate family, Ayla’s father and friends supported the application. An order was made that the testes and spermatozoa of Joshua Davies be removed and provided to an IVF clinic nominated by Ayla for storage, pending a further application for its use.

The removal was successful with the report stating

“…there would be a reasonable chance of isolating mature sperm, suitable for use in assisted reproductive procedures, if required in the future”. 

Ayla sought orders that she is entitled to possession and use of the sperm, subject to various conditions.

While there is a statutory regime in Queensland for removal of sperm from a deceased person, there is in the present case a question as to whether that applies and whether it was satisfied. There is no statutory regime in Queensland applying to the use of posthumous sperm.

As the removal of the sperm was pursuant to an order of the Court, and the relief sought is declaratory, discretionary factors also have to be considered in making any orders.

In the present case, one of those factors is whether the original order for removal was made when the statutory preconditions had not been met, and whether that affects any order that may now be made by this Court in this application.

The issues to be determined in this case in relation to the sperm that has been removed, is whether it is property capable of being possessed.

If Ayla does have such an entitlement, how is it affected by discretionary factors, which must be considered in determining whether any declaration may be made in her favour.

No one opposed the orders sought by Ayla. The Attorney General appeared as amicus curiae– someone not a party to the case who assists the court by offering information, expertise, or insight that has a bearing on the issues in the case

The Court held that Rights of property can exist in relation to samples of sperm removed posthumously and that such rights will generally be enjoyed by the person who caused the sperm to be extracted rather than the deceased, or the relevant medical personnel, or the administrator of the deceased estate.

Precedent dictates that once the sperm was separated from Joshua’s body it was property capable of permanent possession given that the removal, separation and preservation was the result of the lawful exercise of work and skill

Ayla sought declarations that she is entitled to possession and use of the sperm subject to conditions which include:

  • Any consent, whether express or inferred, given by the deceased;
  • The best interests of any child that may be conceived as a result of the use of the sperm;
  • Whether there are any generally held community standards in respect of the situation proposed and whether the proposed orders accord or do not accord with such standards;
  • Whether the applicant’s desire is a result of careful or rational deliberation as opposed to an emotional response to grief

The Court after balancing the above factors was satisfied that Ayla is acting with the support of Joshua’s family and her father and that it is not contrary to Joshua’s wishes if she has a child with his sperm. That she is acting responsibly and rationally and has taken appropriate steps to ensure that any child that may be conceived is financially and emotionally supported and that the extended family will support any child and Ayla and is not contrary to the best interests of any child that may be conceived.

The court was satisfied that Joshua was planning to have children with Ayla. The ultimate decision as to whether to proceed at all, of course, remains with Ayla and no one else.

The Court ordered that the sperm be transferred to a clinic for the sole purpose of the production of embryo(s) to be transplanted into Ayla.

The Court believed that as this is a complex and developing area of the law the Law Reform Commission may consider it appropriate for consideration, even though there are a number of issues – both Family Law and Succession that are likely to need to be resolved by Parliament.

Mama Cass didn’t choke on a Ham Sandwich – recent update

Ellen Naomi Cohen, who took the stage name Cass Elliot and was a member of the Mamas and the Papas, died in July 1974 aged 32 in London. The Mamas and the Papas had 11 top 40 singles and have sold around 100 million albums.

Cass was married to James Hendricks with whom she had a daughter, Owen, who was born in April 1967.

A widely reported untruth that Cass choked to death on a ham sandwich has persisted.

It has been attributed to the coroner who first examined the body who noticed a ham sandwich and a Coke on a table next to the bed where Cass’s body lay… and as the body, did not display symptoms of any other sort of trauma, Cass must have choked while eating and drinking lying down. He then told this to the waiting media.

He missed the fact that the sandwich was untouched, and a full autopsy showed that the actual cause of Elliot’s death was a heart attack.

It was also believed that she had died intestate but that too appears to have been incorrect.

Approximately 35 years after her death, it appears that Cass, made a Will, and its beneficiaries are suing the singer’s lawyers for malpractice, negligent misrepresentation, and fraud for not disclosing the Wills whereabouts.

Cass had a Will prepared in 1967, but the firm advised her heirs in 1974, when she died,

“that due search and inquiry have been made to ascertain if said deceased left any Will and testament, but none has been found, and according to the best knowledge, information and belief of your petitioner said deceased died intestate.”

Accordingly, Cass’s estate was distributed in accordance with California intestate law to her daughter.

In 2011 Cass’s sister, Leah came across information that led her to believe that a Will existed. She contacted the law firm who prepared the Will and it was located. Cass’s Will, provided a one-third share of her estate to her mother, Bess, who died in March 1994 leaving her estate to her son & daughter in equal shares;

as a corollary the one-third interest in Cass’s estate would have passed to her brother & sister.

Although Cass’s estate was insolvent when she died, as it includes royalties from her music, it has allegedly produced millions of dollars since that time.  Therefore their mother, and they through her will, lost the one-third share in Mama Cass’s estate due to the lawyer’s legal malpractice.

Early this year Jampol Artist Management Inc. (JAM), signed The Mamas & The Papas for representation. JAM will also represent the individual management of the group’s sole living member, Michelle Phillips, as well as the estates of John Phillips, who died in 2001, Denny Doherty who died in 2007 and  “Mama” Cass Elliot and Denny Doherty.

JAM will work on behalf of the group in exploring and accessing opportunities in feature and documentary films, commercial syncs, apparel and licensing, stage productions, museum exhibitions, digital products, books and more.

Michelle Phillips was enthusiastic that they were being represented by Jeff Jampol who runs JAM stating  “It’s incredibly important to me, the ‘last member standing’, as well as the Estates of John Phillips, Cass Elliot and Denny Doherty, that our story be told authentically and credibly, and that our music be handled lovingly, respectfully and artistically,”

Cass’s daughter Owen was equally excited that JAM would preserve and insure that the integrity of the group—and the integrity of my mother—will be treated with the same respect and care that I have accorded them for so long.”

Cass’s daughter Owen was equally excited that JAM would preserve and insure that the integrity of the group—and the integrity of my mother—will be treated with the same respect and care that I have accorded them for so long.” 

The Buckeridge Group of Companies v. Family provision

Len Buckeridge died with an estate estimated to be worth $2.5 billion. A self-made billionaire who created the Buckeridge Group of Companies (BGC) leaves his wife, six children, and eight grandchildren. Len built a vast empire in construction, manufacturing and civil contracting in the Pilbara.

Len’s will comprised a number of trusts including The Buckeridge Grandchildren Trust (the BGC Trust) and The Buckeridge Family Testamentary Trust (the BFT Trust).

A trust is an obligation imposed on a person or other entity – known as a trustee – to hold property –including assets- for the benefit of others – known as beneficiaries.

The trusts in Len’s will comprised of a share of the estate’s main asset the BGC Group. The beneficiaries of the BCG Trust are each entitled to 3.625% of the shares of the BGC Group estimated to be worth $90 million to be held in trust for them. Len’s children Sam and Julian are trustees of the BCG Trust and with their brother Andrew were running the BGC Group.

Esperance Stephen and her sister Alba (two beneficiaries of the BCG Trust) brought an application under the Family Provision Act 1972 (WA). They argue that their Grandfather’s Will does not make adequate provision for them because of the way the trusts are structured; importantly they do not believe they are entitled to more from the estate. Rather they argue that the current arrangement only entitles them to BGC shares, with no guarantee they could sell them or receive dividends as any dividend would be paid at the BGC board’s discretion and distributed at the trustees’ discretion.

As a general rule, a grandparent does not have a responsibility to make provision for a grandchild; that obligation rests on the parent of the grandchild. Nor is a grandchild, normally, regarded as a natural object of the deceased’s testamentary recognition.

However it is relevant to consider what inheritance, or financial support, a grandchild might fairly expect from his, or her, parents.

If a grandchild lost their parents at an early age, or the grandparent raises the child these factors would, give rise to a claim by a grandchild to be provided for out of the estate of the deceased grandparent. If a grandchild resided with one, or more, of his, or her, grandparents is a significant factor. Or it has been demonstrated that the grandparent, took responsibility for the grandchild’s support and welfare,or had a continuing and substantial responsibility to support the grandchild financially or emotionally.

A family relationship between grandparent and grandchild does not, of itself, establish any obligation to provide for the grandchild upon the death of the grandparent. A moral obligation may be created in a particular case by reason, for example, of the care and affection provided by a grandchild to his, or her, grandparent.

Generosity by the grandparent to the grandchild, including contribution to the education of the child, does not convert the grandparental relationship into one of obligation to provide for the grandchild upon the death of the grandparent. It has been said that a pattern of significant generosity by a grandparent, including contributions to education, does not convert the grandparental relationship into one of obligation to the recipients, as distinct from one of voluntary support, generosity and indulgence.

The fact that the deceased occasionally, or even frequently, made gifts to, or for, the benefit of the grandchild does not, in itself, make the grandchild wholly, or partially, dependent on the deceased for the purposes of the Act.

The Court agreed that Len provided a home in which the Esperance, Alba and their Mother lived, and that although owned by a company not directly owned was ultimately controlled by Len. As a consequence Len provided the property and  provide significant support of the three of them.

Following the protracted legal dispute the heirs recently decided to sell BGC. Similarly family members had agreed to changes in Len’s will to “provide for the individual expectations of all family members” including further provisions for his father’s partner Tootsie, the creation of a holding trust to help distribute the assets of the estate and the creation of individual testamentary trusts for certain family members.

Some have argued that to avoid disputes among family members BGC should have been sold shortly after Len’s death  “Because once you turn something into cash, you can distribute it fairly,”