A person making a Will must have testamentary capacity at the time that it is made (or at the time that the instructions are given) in order for the will to be valid. The test for establishing whether a testator has mental capacity to write a Will was established in Banks v Goodfellow.
John Banks, the Will maker had been confined to an asylum for some years. After discharge, he continued to suffer from delusions; notably, he was of the belief that a man called Featherstone Alexander was persecuting him.
Banks prepared a Will leaving his estate to his niece, Margaret Goodfellow. Margaret died intestate, two years after Banks and her estate passed to her half-brother, who was not related to the Will maker.
John Banks junior, the son of the Will maker’s half-brother, then contested the will. He argued that Banks senior did not have testamentary capacity. The Court found that Banks’s will was valid, and although he suffered from mental illness which caused delusions it did not influence his decision regarding who should benefit from his estate.
Under the Banks v Goodfellow test, the Will maker must:
- understand the nature and effect of a will
- understand the nature and extent of their property
- comprehend and appreciate who has a reasonable claim on their estate
- be suffering from no disorder of the mind or insane delusion that would result in a gift that would not have been made under normal circumstances
It is important to note that it is a low threshold test, as it is the belief of Courts and Governments that a person’s right to make a will should be upheld whenever possible. This is reflected in the idea that there may be a ‘lucid interval’ where a person suffering from a mental illness may have will-making capacity.
In last Fridays post we discussed a Court overturning a Will makers wishes under Family provision legislation. However, as a general rule, Courts are reluctant to deny a person’s testamentary wishes.
Patrick Carroll (“Mr. Carroll”) died on 16 April 2012. He made his will on 15 December 2011 (the “Will”). His children are Jehovah’s Witnesses, and he did not approve of their adherence to that faith. In his will made on 15 December 2001 Mr. Carroll made the gifts conditional upon them attending his funeral (the “Attendance Condition”) and, becoming a Roman Catholic within three months of his death (the “Baptism Condition”). Each of the Children attended his funeral. None of them has become a Roman Catholic.
The Children were the product of a “mixed marriage” between Mr. Carroll who was a Catholic and his ex wife Lillian who was Anglican. His oldest child Anthony was baptized as an Anglican but Mr. Carroll did not raise his children as Catholic, they did not attend Mass, and were not enrolled in Catholic schools.
Mr. Carroll and his wife separated in 1959. The Children continued to live with their mother. Around the time of the separation, Lillian became a Jehovah’s Witness. The children were all subsequently baptised as Jehovah’s Witnesses and continue to remain active members of their congregation. Apart from Anthony there is no evidence that any of the Children had undergone any form of baptism prior to becoming Jehovah’s Witnesses. Mr. Carroll was very unhappy with Lillian and the Children becoming Jehovah’s Witnesses.
Each of the Children attended Mr. Carroll’s funeral, however none of the Children has become baptised into the Catholic Church, either prior to the expiration of three months after Mr. Carroll’s death or since that date.
A Court will try to uphold conditions in the Will except where they are uncertain or impossible to satisfy, are contrary to public policy, or both. The Children argued that these conditions, particularly the Baptism Condition, were uncertain, impossible or contrary to public policy. The New South Wales Supreme Court concluded that the requirement for each of them to become a Roman Catholic is a condition precedent (where an event must occur before a beneficiary can receive a gift) which is not void for uncertainty, impossible or contrary to public policy.
None of the Children became a Roman Catholic within three months of Mr. Carroll’s death; therefore their respective shares in his estate shall be divided among the other beneficiaries in accordance with the terms of the Will.
A Witness is a person who observes the signing of a Will at the time and place that it occurs and affirms this by signing the document.
Who can be a witness
A witness must be able to form the intention “to attest and subscribe a will”, this means they have to be able to place their signature or other sufficient identifying mark representing their name on the will with the intention of attesting that the testator has signed the will in the presence of the Witness. The names and addresses of witnesses should be recorded on the Will.
Beneficiaries as Witnesses
In most jurisdictions a witness or a person married to a witness may not be a beneficiary under the will. In jurisdictions that have abolished this rule in order that doubts the Will was witnessed correctly are minimised a good rule of thumb is that a beneficiary not be a witness to a will.
The follow the following steps should be taken when the Will is being witnessed.
- The Will maker must be in the same room at the same time as both witnesses throughout the witnessing process.
- Neither witness, or the spouse or partner of a witness should be a beneficiary of the will
- The Will maker and both witnesses must use the same pen to sign and witness the will. It should be a blue pen.
- The date that the Will was signed and Witnessed must be inserted in the space provided.
- All pages in the Will must be numbered and in the correct order.
- The will maker should state in front of both Witnesses that they have read the will and agree with what it says
- The Will maker should sign above the word Testator (if male) or Testatrix (if female) on the base of each page and the end of the will using the same pen and in the presence of both witnesses.
- Then using the same pen the first witness in the presence of the will maker and another witness signs below the attestation clause. The witness then adds his or her name occupation and address. The second witness then signs alongside the signature of the first witness in the presence of the will maker and the first witness, and the second witness then adds their name occupation and address.
- Two copies of the will should be made.
In most jurisdictions there is legislation allowing certain relatives to take action against the estate in the event that they feel the Will has not left them with adequate provision for their maintenance, support, education, or advancement in life. In finding what is adequate the Court looks at the circumstances of the case including the size of the estate, the nature of the relationship between the claimant and the deceased, and the claimant’s present circumstances.
Michael Wright left a large estate when he died on 26 April 2012 aged 74. He was survived by his current wife, two earlier wives and by three adult children from an earlier marriage. Olivia Mead was born on 3 September 1995 as the result of a brief relationship that the deceased had with Elizabeth Anne Mead. Olivia was provided for in her Father’s Will by the establishment of a $3 Million dollar trust (“the Trust”) which Olivia would receive at age 30, as long as she met the conditions of the trust.
Recently the Western Australia Supreme Court accepted her claim that she had been left without adequate provision for her “maintenance, support, education or advancement in life” granting her $25 million as long as she does not make any further claims on her Faather’s estate.
The Court held that Michael Wright’s estate was “colossal” and may be in excess of $1 billion. In fact the other beneficiaries acknowledged that what they receive under the Will is so significant that any award to Olivia will make little difference to their position. In the view of the Court an award of $25 million would not fall outside the “reasonable expectation of most members of the community.”
The Court found the construction of the Trust troubling as Olivia was at the mercy of the trustee. The trustee in its sole discretion could decide to retain all of the earnings in the Trust until she turned 30. If Olivia wished to buy a house for example and sought money for that purpose the trustee would be within its rights to refuse. Similarly the Trust will only provide money for the purposes of education until Olivia was 23 years of age.
The Court held it was arguable that based on the construction of the Trust a minor conviction or involvement with someone who used drugs could exclude Olivia as a beneficiary. Similarly the clause restricting her freedom of religion was thought by the Court to be “extraordinary” as she could be excluded as a beneficiary if she were to convert, take a deep interest in, or associate with people who practiced a non-Christian faith.
A Will enables you to direct your estate as you see fit however it does not give you the unfettered ability to rule from the grave by providing conditional gifts (e.g. requiring religious conversion) or trust arrangements that may be construed by a Court as uncertain or impossible to satisfy.
An executor is the person appointed in a Will to execute, manage, administer, direct, and dispose of his or her estate. Depending on the complexity of the estate an executor may wish to engage an expert with experience in the legal tax and accounting requirements.
Many people when nominated as an executor are unsure of what is expected of them. An executor usually;
- assists in making funeral arrangements,
- locates the Will and applies for probate,
- determines who are the beneficiaries,
- collects the assets,
- settles debts,
- distributes assets according to the Will,
- prepares and manages accounts and tax returns.
In some cases an executor may have to defend the estate against litigation.
If you want to appoint an executor that you believe is capable and interested as acting as executor who is not a beneficiary of the estate (usually a friend or relative) you should discuss this with them prior to the Will being made.
The simple answer is that the executor is the person named in your will to administer your estate after you die. The executor is responsible for managing the estate, protecting its assets, and carrying out your wishes.
You can name as many executors in your will as you like, sometimes people name a solicitor as an executor, but this isn’t necessary. It should be noted that the executor can be held personally responsible for mistakes made in the administration of an estate and may consult as many experts as they believe is necessary.
The duty of the executor is to complete the administration of the estate so that the creditors can be paid and the remaining assets handed over to beneficiaries as soon as reasonably possible, whilst complying with the laws of the state that govern the administration of deceased estates.
In most cases the person appointed as an executor is beneficiary under the will. In certain circumstances there could be good reasons to appoint an executor who is not a beneficiary under the Will, either a friend or relative, or if the estate is large and/or complex a professional executor (who normally takes a percentage of the value of the estate.)
Bob Marley died intestate, at the age of 36, on May 11, 1981. Although he had known that he was terminally ill for some time before his death some say that due to Marley’s Rastafarian faith he did not create a will, meaning that he died intestate.
If Jamaican intestacy law applied his wife Rita would receive 10% of his assets, plus a life estate of 45% and his children would be entitled to equal shares in the remaining 45% of the estate. However the absence of a will meant that the family had no rights to Marley’s name, likeness, and image, which was the largest asset of the estate.
Instead of allowing the assets to pass under Jamaican law, two of Marley’s business advisors fraudulently prepared a series of documents, and convinced Rita Marley to forge her late husbands signature transferring to her the control of most of Marley’s corporate holdings, royalty rights and money. When this scheme was uncovered the estate administrator, Mutual Security Merchant Bank and Trust Company, sued the business advisors, and Rita Marley was removed as an administrator. It was also the beginning of decades long litigation against the estate.
In the early 90′s, the family sued the estate for the exclusive right to use Marley’s name, likeness and image for commercial purposes. As his widow Rita and all of Marley’s children could exploit (as well as stop others from profiting from) his name, likeness and image, Marley’s estate is now considered one of the most lucrative of any musician.
If Marley had a valid will not only could he have directed who would manage his estate and legacy it is less likely that his estate would have been open to fraud or decades of legal proceedings.
The lack of a will increases the time, expense, and stress of administering an estate at an already difficult time for the deceased’s family.
A beneficiary is a person who receives money or other benefits from a benefactor. In relation to deceased estates it is a person who has an interest in your Will.
A properly made and executed will creates a Trust at the time of the Will makers’ death. If you have properly made and executed a Will the assets in your estate go to your executor who holds the assets on trust for your beneficiaries.
The ‘Primary Beneficiary’ of each trust is the individual for whom the particular trust is created. Normally a Will is created leaving a spouse as the primary beneficiary. If the spouse has predeceased the will maker the estate will flow to the contingent beneficiaries who are usually children (or grandchildren) of the Will maker.
If all of the named beneficiaries pre decease the Will maker the estate usually passes according to legislation in each State or Territory. Therefore it is important that you clearly state in your Will your intentions in the event that the stated beneficiaries die before you.
Unless you specifically nominate that your death benefit is to be paid to your estate, then generally speaking your Superannuation does not form part of your estate. Normally Superannuation is directed to any beneficiaries under a valid binding nomination or at the direction of the trustees under a non-binding nomination.
In either case a Beneficiary under a Superannuation scheme is limited to the members legal personal representative and dependents, including a spouse, child (including adult children), financial dependent, and a person in an interdependent relationship with a scheme member at the time of the members death. If all of the beneficiaries predecease the member the Superannuation trustee takes the members Will or any other relevant evidence into account when deciding how to direct the benefit.
Your Estate consists of the assets that you are able to give to beneficiaries using a Will. Generally speaking these include assets that you own in your own name and those owned as “tenants in common”. (Where each owner has a separate interest that may be passed to specified beneficiaries. Property owned as a joint tenancy will pass automatically to the surviving owners.) The deceased estate is held in trust from your death until the transfer of the property and assets to the beneficiaries. This might include;
Bank (or Building Society/Credit union) Accounts in your name;
Insurance payouts (excluding life insurance as it is not payable to you); Shares in publicly listed companies or that you hold in a business;
Personal Possessions including tools, a record collection, jewelry, or clothing forms part of your estate.
Importantly as superannuation is left to a person under a form of nomination it is not part of your estate even though it may be referred to in the Will.