Holmes à Court and the unsigned Will

Robert Holmes à Court, a lawyer, corporate raider, and the first Australian billionaire died following a heart attack in 1990 aged 53. Following his death extensive searches were undertaken but no executed Will was found. His estate was estimated to be worth over $800 million

Although Holmes à Court was described as a corporate raider he planned acquisitions meticulously. His strategy after acquiring significant voting rights in a corporation whose assets appeared to be undervalued would be to break up the conglomerate into its various pieces, which he knew would be worth more than the company as a whole.

It is interesting that as a lawyer who planned his business affairs so carefully he failed to similarly manage the distribution of his estate leaving it to be dispensed under the legislative formula of intestacy.

Under Western Australian law, an intestate estate worth more than $50,000 is divided so that the spouse will get the first $50,000 plus one third of the estate, and the remaining 2/3 of the estate will be divided equally among the children.

His widow Janet came to an arrangement with his children that they sign over their rights to the estate leading to protracted difficulties. It is ironic that if the reports that Holmes à Court had carried an unsigned will in his briefcase for 18 months before his death are true that the execution of this document would have avoided these problems.

Estate Management – It’s not just about a Will

Lawrence Inlow, 46, was killed instantly when struck in the head by the rotor blade of a helicopter. As is the central issue of many of my posts he died without a Will.

It is not uncommon for a person to die intestate but Inlow was the in house lawyer for a major United States insurance company and he was worth over $175 million.

You would think that a lawyer would have executed a Will!!!

The estate had to be distributed under the Indiana laws of intestacy – the Court appointed an administrator (the deceased would have appointed one under a Will); Due to the size of the estate and the fact that Inlow had been married twice and had children from both marriages there was protracted litigation.

Although we don’t like to think about it the chance of a person dying is 100%. Hopefully those of you reading this will live long, happy and healthy lives, but accidents occur and we owe it to our families and friends to manage our affairs as best as possible. Having a Will allows you to direct your estate in the way that you wish, instead of relying on the local intestacy laws.

However it is not just a Will that you need to think about when managing your affairs but things such as life insurance, disability, and income protection insurances – particularly if you are a small business owner.

Car registration requires compulsory third party insurance, a mandatory condition for membership of many professional bodies is public indemnity insurance. Sadly many of us don’t extend that same type of thinking as to what would happen to our businesses if we were to die or suffer from illness. It is time to start thinking about managing our affairs otherwise others will be left to do this for us.

Hoobin v Hoobin – Marriage revokes Will

The deceased married his second wife Margaret on 7 June 2000 three days before he died. They had known each other since 1994 and had lived in a domestic relationship since 1996.

She applied for the grant of probate of a will made by the deceased on 27 January 1999. The Will left the whole of his estate to Margaret who he described as “his de facto spouse”. He made no provision in the Will for his adult children.

The Court accepted evidence from a number of sources that the deceased did not want his children to benefit from his Will as he believed that they only wanted him when there was something to be got from him. He had taken steps to have no contact with his children; as a consequence his children had not visited him. As he loved Margaret he wanted her to inherit his entire estate.

As previously posted a person’s will is revoked by that person’s subsequent marriage unless it is made in contemplation of a marriage.http://heirsandsuccesses.com/2015/09/08/revocation-by-marriage/ The Court had to decide if the deceased’s will of 27 January 1999 was made in contemplation of a marriage to Margaret, on 7 June 2000.

If the will was not made in contemplation of such a marriage, the deceased died intestate. On Intestacy the deceased’s estate would be split according to a legislated formula between Margaret and the deceased’s children.

The Court did not accept Margret’s evidence that she accepted the deceased’s proposal of marriage in 1994. She gave several contradictory statements as to why they were not married until 2000. Evidence from the deceased’s solicitor indicated that Margaret had not agreed to marry the deceased at the time he made his will in January 1999. In his instructions the solicitor noted that the deceased told him that he was  “Not to marry so no will in contemplation of marriage. Will to her”.

The Court held that the deceased’s will was revoked by his marriage on 7 June 2000. Therefore the deceased died intestate and his estate was distributed according to the legislated formula with the Court finding that three of the children of the deceased may receive inadequate provision for their proper maintenance, education and advancement in life under this formula.

Revocation by Marriage

If you have a Will it is revoked if you marry someone after making it unless the Will was made in contemplation of that marriage.

Legislation in most jurisdictions provides that Wills made in contemplation of marriage generally or in contemplation of a particular marriage are not revoked by the marriage of the will maker.

Courts have held that the definition of contemplation of marriage depends upon the facts of the case. Importantly Courts have held that the will maker must hold the intention that the Will is to remain in effect after the marriage. Generally speaking a Will is made in contemplation of marriage if the will maker intends to propose or has marriage in mind when the Will is executed.

 In Western Australia a Will is revoked by Divorce except where the Courts find that there is evidence that the will maker didn’t intend this to occur. This provision seems harsh, as many of the provisions of a Will are not related to the spouse.

In other jurisdictions partial revocation occurs upon Divorce (and in Tasmania and the ACT these provisions include the termination of relationships other than Divorce). Where the former spouse is treated as if they had predeceased the will maker.

Importantly Divorce or annulment will not revoke the former spouse as trustee for the children of the will maker and former spouse.

In cases where a Will names no other beneficiaries apart from the former spouse the will maker is intestate upon divorce.

Voluntary Revocation of a Will

The revocation of a Will is simply the cancellation of a Will so that it no longer operates. A will can be revoked  in a number of different ways but importantly in order to revoke a will voluntarily the testator not only must act, but also have the intention, to revoke the will.

In Writing

In some instances a will can be revoked without creating a new will, for example creating a document signed by the testator in the presence of two witnesses, who witness his signature, is a properly executed intention to revoke a Will

Destroying the Will

A testator can revoke a Will by destroying it either by burning, tearing, or in some other manner, however the act must physically destroy the Will, and not simply be symbolic. The testator must show a clear intention to destroy the will as the act of destroying it is insufficient to prove revocation.

Execution of a new Will

The most common way that a Will is revoked is where a later Will is executed where that later will includes a revocation clause. Occasionally a new Will is executed without a revocation clause, however if the new Will is inconsistent with the former Will revocation to the extent of the inconsistency is implied by the Court

By Writing on or Dealing with the Will

In some jurisdictions a Will may be revoked by writing on, or dealing with the Will either by the testator or by some one else at the direction of the testator in his or her presence. In order for the Will to be revoked in this manner a Court must be satisfied that the intention of this act was to revoke the will.

Lost Wills

Where a Will is lost it is presumed that as it was last seen in the custody of the testator it has been revoked by her. In an earlier post regarding Brett Whiteley and the Kitchen Will http://heirsandsuccesses.com/2015/08/21/brett-whiteley-and-the-kitchen-will/ this presumption may be rebutted by evidence suggesting the testator could or would not have revoked the will

Mistake or Conditional Revocation

In proving that the testator intended to revoke a Will there could be either a revocation by Mistake for example where the testator destroys a Will thinking that it has already been revoked – which fails because there was no intention to revoke the Will; or a Conditional revocation where the testator revokes a Will on the basis of a condition that does not occur – for example if a Will was to be revoked on the remarriage of the testators daughter – where this does not occur the Will is not revoked.

Intestacy & the Sole Director Pt 2

Andrew Assim died suddenly on 12 March 2015 without executing a will. He was the sole director and shareholder of three proprietary companies, including Elizabeth Bay Real Estate Pty Limited. The deceased was licensed to conduct this real estate business, which managed rental properties for clients and collected rent on behalf of owners of those properties; importantly he was the sole signatory on the trust account of the real estate business.

Rent money is received monthly into the business trust account. After the deduction of the management fees the business ordinarily pays out the net rental to clients at the end of each month. The immediate problem was that there was no signatory to the trust account of the business to enable these monies to be paid out. Since the deceased’s death Mr Tayfun Demirezen, an employee of the business and a licensed real estate agent, had been managing the rent roll.

The plaintiffs, Ayleen and Elise Assim, the only daughters of Andrew Assim, urgently petitioned the Court on March 27 2015. They sought appointment as administrators of their father’s estate. His daughters were concerned that the goodwill of the business would be seriously damaged unless they were appointed administrators. As administrators the Daughters could appoint a director to Elizabeth Bay Real Estate, who could authorise a person to operate the trust account enabling monies to be paid out at the end of the month.

It is a legal requirement that the signatory to a trust account must be a licensed real estate agent. As neither of his daughters had a real estate agent’s licence they sought upon their appointment as administrators to appoint directors to the real estate business who would appoint Mr Demirezen as a signatory on the trust account and have him conduct the day-to-day affairs of the real estate business

The Court found that Ayleen and Elise Assim sufficiently demonstrated that their father died intestate, and that they should be appointed administrators. As the purpose of this proposed appointment was principally to preserve the value of the real estate business from the damage that would flow from an inability to operate the trust account, the court limited the appointment in order to achieve that objective.

Intestacy & The Sole Company Director

As has been discussed if you die without a Will distribution of your estate is made more difficult. An executor can begin to administer a deceased estate almost immediately but it takes time for letters of administration of an intestate estate to be granted by a Court. The situation is further compounded if a sole director of a company dies without a valid Will as the company does not have a person who is properly authorised to immediately take over the management of the company.

Multiple Directors

When one of the directors of a company dies the surviving directors continue to manage the company and may appoint a temporary director (pending the appointment of a new director by the company shareholders).

Sole shareholder

If a company has a sole shareholder who dies leaving a will, the directors can continue to manage the company until the shares are transferred to the beneficiaries of the estate.

Sole Director & Shareholder

If the sole director is also the sole shareholder, and dies without a valid Will it creates difficulty for the management of a company. The Corporations Act provides that, in the event of the death of a single director of a proprietary company, the executor or administrator of the deceased’s estate may appoint a new director. Therefore the company can keep running until shares are transferred to beneficiaries of the estate who may then appoint a new director.

Where there is no will a person needs to apply to the Supreme Court for letters of administration to manage the estate which may take months. In this time the company has no one who is properly authorised to act for it, and may be unable to trade. It may be difficult to operate bank accounts with the likelihood that the value of the business (an important estate asset), will be impaired. Equally if the business is to be sold for the benefit of the estate its value may erode if it cannot be sold quickly.

Aboriginal Australia & Intestacy

Indigenous Australia with a diverse spread of people from rural, urban, traditional and historical communities is not a homogenous entity. Which makes it difficult to formulate a general scheme that would be suitable to apply with regard to intestacy throughout all Indigenous communities in Australia.

Generally in Australia, the distribution of property on intestacy is based on family relationships based on lineal, bloodline relationships that have been transferred through English law and society. As such general intestacy rules may be inappropriate to members of Indigenous communities, who may have a broader concept of family relationships including to people who are not blood relations who are owed important obligations under customary law. This can apply regardless of whether the Aboriginal people live a traditional lifestyle.

Aboriginal customary law may recognise kinship without blood relationship, including adoption and by marriage. Aboriginal relationships such as mother, brother, sister and so on, may not necessarily be the same as those relationships in western society, and should be reflected in legislation and be interpreted more broadly than they would be at common law.

It has been found that it is common for Indigenous people to die intestate. There are a number of suggestions as to why this is the case, including literacy, mobility, and in some cases cultural attitudes towards death where people are unwilling to record their succession plans in a Will.

Currently a number of jurisdictions make intestacy provisions for Indigenous people. Generally speaking these fall into two categories. Firstly there are those that extend the definition of spouse under general intestacy rules to include customary marriage. Secondly, there are three jurisdictions that, depending on the circumstances, provide for a separate or additional distribution regime for Indigenous people.

In New Zealand property other than Maori freehold land devolves according to the legislated general rules of intestacy. Where the owner of any beneficial interest in Maori freehold land dies intestate, that interest devolves via rules that follow a lineal chain of title from the deceased. Interestingly if the intestate leaves a surviving spouse, generally that spouse is entitled to a life interest, or an interest until remarriage, in the intestate’s land.

Australian parliaments should be more active in promoting the benefits of Wills for all Australians. It is particularly concerning where Indigenous concepts of family in customary law often contradict the general law relating to intestacy. It is, therefore, not always appropriate, for the general law to apply without qualification in cases where an Indigenous person dies intestate.

Minister Waives States Right to Bona Vacantia

In yesterdays post I discussed the changes to the intestacy provisions regarding bona vacantia. Ian McDermott (also known as Ian Thompson) died without a Will leaving an estate, valued at about $166,000.

Ian was unmarried at the time of his death, had no children of his own and his parents and only brother has predeceased him. Under New South Wales intestacy laws the deceased’s estate passes to the State, subject to any Court orders that might be made by way of a grant of family provision relief

At some stage Ian was married but that marriage ended in divorce. His former wife made no claim against his estate, however her daughter who had lived with the deceased and her mother believing that the deceased was her natural father, made a claim. As her mother and the State of New South Wales elected not to appear in opposition to her claim the court could proceed to make a family provision order disregarding her mothers interest in the deceased’s estate.

The stepdaughter applied for and was granted letters of administration of the intestate estate, and submitted a claim for family provision showing that she had a familial claim on the estate of the deceased, and substantial need for assistance. As she was a single mother with three children, living in social housing, and dependent upon welfare for her income.

The Court agreed that the stepdaughter could take the entire estate to provide for her maintenance, education and advancement in life and that her legal costs for the Court proceedings be paid out of the estate of the deceased.

If Ian had left a Will he may have directed his estate in a different manner. As he did not make a Will it is only fair that  people like his stepdaughter have the ability to apply to the Crown Solicitor to ask the Minister to waive the State’s right to the estate in their favour; or alternatively to argue that they had a just or moral claim on the intestate estate when the alternative was that the proceeds of the estate would be paid into general revenue.

If I die Intestate does the Government get my Estate?

Bona vacantia is the Crown’s statutory right to the property of an intestate. If the legislated order for relatives has been exhausted then the State is entitled to the estate of the intestate. In modern society the reduction in the size of the average family and the higher incidence of single child families the possibility of an intestate estate passing to the state or territory is now more likely than it once was.

Currently all bona vacantia estates go to consolidated revenue, with some arguing that this benefits the general community and not some remote relative who had little or no contact with the deceased. While in some jurisdictions there are provisions recognising Aboriginal customary law, the argument that the estates be made available for charitable purposes has not been acted upon.

Legislatures have examined the various legislative schemes that directed bona vacantia estates and some have broadened who may claim under an intestate estate to cousins and made provision to allow other claimants the ability to petition the court to overturn bona vacantia

In most Australian jurisdictions there is a provision that where, where no statutory relatives are entitled, the Crown may, out of a bona vacantia estate, provide for dependents, whether kindred or not, of the intestate and any other persons for whom the intestate might reasonably have been expected to make provision.

In NSW for example the State is entitled to the whole of the intestate estate where the intestate dies leaving no person entitled to the estate. However a written application can be made to the Crown Solicitor for the waiver of the State’s rights to an intestate estate. If the application is granted the State may waive the it’s rights in whole or part to an Intestate estate in favour of:

  • dependents of the intestate, or
  • any persons who have, in the Minister’s opinion, a just or moral claim on the intestate, or
  • any person or organisation for whom the intestate might reasonably be expected to have made provision, or
  • the trustees for that person or organisation.

This may include charities or community organisations that had a sufficiently close association with the deceased to make an application for provision out of that deceased intestate’s estate.