Single, and think you don’t need a will..better rethink that.

It has been reported that the largest type of family unit in Australia is a single person living alone.

If you don’t have children or obvious heirs, documenting your wishes and making them accessible will help ensure those wishes are fulfilled should something happen to you.In some circumstances people without children need to plan more carefully as their will can easily be overlooked.

Regardless of what you intend to do with your estate be it leaving money to charity, a pet, or friends and relatives means you should prepare a Will, as a minimum. It is never too early to prepare documents such as; a health care directive (often referred to as a living will); organ donation authority; or to arrange insurance cover for loss of income or permanent disability.

It is important that you discuss your wishes with someone in order that they are able to act on your behalf in the event of an emergency. This requires you to identify the person in your life that you can trust to make medical decisions for you in the event that you lack the mental or physical capacity. (Remember that person may not seem the most obvious to be making decisions in the event of an emergency.)

Importantly regardless of what you wish to do with your estate it is important to formulate a plan and communicate it to those closest to you  in order that your wishes are met.

The Future is a lot like today – so plan for it now

Everyday when you go to work, meet a friend, or go to the shops you create a plan.

It could be rudimentary or require managing a number of interconnecting bus routes or several different road routes depending upon the traffic conditions.

I know that we don’t like thinking about it but you will die some day so it is important to take some time to plan about what happens to your assets when that happens and to formalise this by making a Will.

Unfortunately people seem not to plan for certainties like retirement or death as it often seems that they occur some time in the distant future. So we tend to meander through our days in in an oblivious haze.

Remember the future for good or ill happens whether we want it to or not.

We insure our physical assets such as a car or house but think little about protecting our future income through superannuation and insurance.

In Australia superannuation is compulsory however most of us are only vaguely aware about how it operates even though it will provide a large portion of our retirement income. In fact currently your superannuation death benefit could be the largest asset that you have.

Currently employers are required to pay a proportion on top of an employee’s salaries and wages into a superannuation fund, however you can further supplement this amount through voluntary contributions to your superannuation. You can also direct your superannuation to a fund that invests in products and services that reflect your values.

Similarly if you were to get sick how would you pay the monthly bills? These are some of the things to ask yourself when planning for your future.Income Protection usually provides up to 75% of your gross income if you are unable to work due to illness or injury. Income protection premiums are usually tax deductible.Life insurance pays a designated beneficiary a sum of money upon the death of the insured person.

Protecting your salary through income protection insurance and taking out life insurance to provide for your family in the event of sickness or death are important things to discuss as when planning for your future. So stop meandering through your days in  an oblivious haze and get planning.

No Witnesses no worries…..right?

Rupert Burge died in January 2013, aged 93. His widow Anne, son Conrad and daughter Susanne survived him. His wife applied for a grant of probate.

Most of the deceased’s estate comprised money in two offshore bank accounts. In March 1983 a will was drafted by solicitors in Victoria appointing his wife Anne sole executrix, and leaving his entire estate to her. In the event that his wife predeceased him the will appointed his son Conrad and daughter Susanne as executors leaving his estate to them in equal shares. That will was signed by the deceased, and witnessed by a solicitor and a secretary in Melbourne.

Rupert wrote two letters after the 1983 will: the first in 1994, and the second in 1999 outlining the disposition of family assets. These letters were kept in the same place as the Will in an envelope addressed: “Addendum to will attached hereto”. The Will was kept within the original envelope bearing the 21 March 1983 postmark from Toorak.

In late 2005 or early 2006, Rupert had a falling out with his daughter Susanne. In 2007 he amended a copy of the will prepared in 1983 making handwritten changes so that if Anne predeceased him Conrad became the sole executor and trustee. Importantly Conrad replaced Anne as the sole beneficiary of the estate. Rupert dated the will 10 June 2007 and signed it in the attestation clause. However it was not witnessed.

State Law provides that a Court can accept an informal Will. Conrad brought an action to have the 2007 document recognised. The Court held that it was a borderline case as while there was no doubt that Rupert contemplated the making of such a will the critical question, is whether he intended that document to form his will. Ultimately the Court considered it unlikely that Rupert, having made two previous Wills and being aware of the need for two attesting witnesses, would have considered that the 2007 document was itself capable of operating as a valid will. Secondly, had he intended the 2007 document to operate as his will, it is likely that he would have placed it with the 1983 will and the other documents in the envelope marked “WILLS”. Thirdly, even if he considered his wife to be financially comfortable, it would be a big step to entirely disinherit her, without explanation.

When considered in the light of all relevant circumstances, the Court was not persuaded that the 2007 document on its face contemplates legal effect, and the document was not intended to have present operation as a will. Ultimately it is important that any testamentary document that is made should follow the formalities of a Will.

What is Devastavit

In October 2007 PG died leaving a will dated 18 May 2006. At the time of his death, PG was the sole director and shareholder of, a company holding a parcel of 7,385,586 shares in A. At the date of PG’s death, the value of each share was $8.73 and the total value of the shareholding was $64.5 million.

PG received the shares in A as payment for work he did for them. The shares were held in escrow to be released in three tranches, in October 2007, September 2008 and September 2009. By September 2008, A’s share price had fallen to $0.13 per share, A went into administration prior to the release of the third tranche.

Probate was granted to the executors on 22 May 2008, at which time the value of A shares were $0.48. In September 2008 the executors sold approximately two million shares at a price of $0.13 per share. In November 2008 administrators were appointed to A, the shares were deemed to be valueless and the company was delisted on 31 August 2009.

The proceedings, brought against the executors, allege that from the death of the Deceased to the date of obtaining probate on 22 May 2008 they intermeddled in the estate, thereby becoming executors de son tort (a person who intermeddles in the estate without having obtained a grant. A creditor is entitled to rely on this fact and hold the intermeddler liable as if they were the executor) and becoming subject to duties which rendered them liable for not having sold the shares at an earlier time, and secondly, that after they obtained probate they did not sell the shares promptly. In this way they are said to have committed a devastavit on the estate of the Deceased.

The damages figure ranged from $731,000 & $17.5 million based upon a sale of available shares on or about 8 November 2007, well prior to the grant of probate. The lower figure was based on a failure to sell the remaining available shares in the week ending 4 October 2008, when the price had appreciated from $0.13 to $0.25 per share.

A person appointed as an executor, who takes steps in relation to the assets of the estate, is properly described as “intermeddling”. The Court held that advertising, conferring with the co-executors about the obtaining of a grant may in total be described as intermeddling, as it incurs liability to creditors or beneficiaries.

An executor would be liable for devastavit (that they failed to properly preserve protect, and administer estate assets which causes loss to the estate) only to the extent that he was liable to account for assets which he had “taken into his possession or dealt with” and obtaining valuations of assets for the purposes of an application for probate did not involve taking assets into possession or dealing with them.

However in the appointment of an executor as the director of PMG Holdings made by all of the executors took into their possession the estate asset constituted by the share in the holding company however this was not an act that amounted to a devastavit nor an act that rendered him liable to creditors or beneficiaries of the estate

The unwilling executor

An executor named in a Will does not have to apply for a grant of probate. An executor named in the will of a deceased person may renounce his or her executorship of the deceased’s will. Renunciation of an executorship is made in writing prior to a grant of probate to the executor.

In some jurisdictions this may occur regardless of whether he or she has “intermeddled” in the administration of the estate, so long as the executor renounces the executorship before the Court grants it to him or her. “Intermeddling” is a term used to describe the actions of an executor who acts without a grant in the administration of an estate.

Courts do not apply a strict test but rather look whether the actions of the intermeddler constitute an intention to accept, acceptance of the office of executor, or both. However Courts have decided that certain acts by a named executor do not constitute intermeddling, these include advertising an intention to apply for probate, making funeral arrangements, or preparing a property to make it ready for sale, prior to obtaining probate.

It should be noted that the actions taken before probate that do not amount to intermeddling make a named executor liable to creditors or beneficiaries of the estate.

James Brown’s estate ain’t on the good foot

When James Brown died in December 2006 his estate comprised copyrights to more than 800 songs and the rights to his image that some estimated to be worth more than $90million. 

 In a Will Brown had created six years prior to his death the major beneficiary was the “I Feel Good” Trust, to be established to benefit South Carolina and Georgia students in need.

 Although Brown was alleged to have fathered many illegitimate children his household goods were to be distributed among six children named in his Will with a stipulation that any heir who challenged the Will would be disinherited.  The Will also directed $2 million be set aside for an education trust for designated grandchildren.

 However many of Mr. Brown’s children and grandchildren were unhappy with the executors appointed under the Will and commenced legal action to have them removed.

Another complication was that in 2001, Brown married Tommi Rae Hynie, with whom he had a child. Hynie had signed a prenuptial agreement renouncing any claim to Brown’s estate, and a 2004 document stating she would never claim common-law status. Brown’s adult children went to court to have the marriage declared illegitimate as Hynie was married to another person at the time of the marriage ceremony to Brown.

 Even the state of South Carolina became involved in the estate dispute when it brokered a deal giving roughly half of the estate to the trust, a quarter to his widow, with the remainder to be split among his adult children. Later the state Supreme Court rejected the settlement, saying it ignored Brown’s wishes that the bulk of his estate be used to establish a trust to help poor children get an education.

 In the 9 years since Brown died, two sets of executors have been replaced. Millions of dollars have been paid in legal fees, but all other distributions from the estate are on hold until the disputes are solved. Brown’s body remains in a temporary resting place, in a mausoleum at the home of one of his daughters and not in the memorial modeled on Graceland planned for his home.

Early this year a Court ruled James Brown and Hynie were legally married when he died, meaning she could be entitled to 1/2 of his estate and could choose his final resting place. This series of events may not have occurred if the executors of the estate were more acceptable to the beneficiaries and Brown’s wishes could have been carried out.

Superannuation binding death benefit nomination versus Will

In July 2002 Francesca and Augusto Conti established a self managed superannuation fund (SMSF) they were its only trustees and members.

Following Francesca’s death in August 2010, Augusto retired as a trustee of the SMSF and appointed as trustee a corporation of which he was a director.

Francesca had made a will dated 13 January 2005 leaving her superannuation entitlements to her children expressly stating that she did not want any superannuation entitlement paid to Augusto. However she did not complete a binding written direction to the trustee of the SMSF that reflected these wishes.

The SMSF rules stated that unless there is a binding written direction from a deceased member, the trustees had the absolute discretion pay the death benefit to a spouse, or child of the member or any other person who in the opinion of the trustees was dependent on the member at the time of their death. As Francesca left no binding written direction the corporate trustee decided to pay Francesca’s death benefit of $648,586 to Augusto.

Francesca’s children (as executors of her estate) took action against Augusto and the corporate trustee arguing that they had not acted in good faith. The Court decided that as Augusto had taken specialist advice as to his rights and obligations the executors argument that the SMSF trustee had not acted in a bona fide manner was rejected. The Court also took the view that superannuation law allows the trustee to ignore the direction in Francesca’s will.

The Court noted that this case illustrates how problems can arise in the administration of a fund and that in this case lead to substantial financial and emotional cost to Francessca’s children.

trustees must act responsibly, reasonably and in good faith

As discussed before the payment of death benefits from a superannuation fund are made in accordance with the rules of the fund and not as set out in the deceased’s will.

The trustees of the fund must apply the rules of the fund in good faith, responsibly and reasonably.

Death benefits from a superannuation fund are paid at the discretion of the trustee of the fund. In most circumstances death benefits may only be paid to a member’s executor or one or more of the member’s dependants.

Nomination and the Ex-spouse 

For example you make a valid binding death benefit nomination according to the governing rules of the fund requiring the  trustee to pay the death benefit to your spouse. The funds rules stipulate this nomination remains valid for five years from the date received by the trustee.

If you were to divorce and remarry within 5 years without revoking or amending the nomination the super fund trustee is not required to follow the death benefit nomination.

Even though the death benefit nomination was made in accordance with the funds rules your ex spouse is no longer your dependant for the purposes of the Superannuation laws. The death benefit will be directed at the discretion of the super fund trustee in favour of either the executor of your deceased estate or any of your dependants.

Nomination and the non dependant relative

A further example of how this applies is if you provided the trustee with a written death benefit nomination made according to the fund rules directing the trustee to pay your death benefits to your niece.

You die survived by your spouse. At the time of your death your niece is financially independent and therefore not considered a dependant under superannuation law. In this case the nomination is not valid and is not binding on the trustee who must act in accordance with the governing rules of the fund and the requirements of superannuation law.

Superannuation Death Benefits for Same Sex Couples

Superannuation law recognises a ‘dependant’ of a deceased member of a superannuation fund as:

(1) a spouse of the deceased;

(2) a child of the deceased;

(3) a dependant of the deceased; and

(4) if an ‘interdependency relationship’ is established.

Enabling the beneficiary to directly inherit the contributor’s funds if they die, and avoiding higher taxes that would apply if the funds passed under a will or through the intestacy process.

Interdependent relationship

From June 2004, a surviving same-sex partner would be entitled to his or her partner’s super benefits if they could satisfy that they had an ‘interdependency relationship’. Which is defined as a cohabiting ‘close personal relationship’ where one or both parties provide the other with ‘financial support’ and ‘domestic support and personal care’

Definition of Spouse amended to include same sex relationships

Since 2008, same-sex couples have had their relationships recognised by their superannuation fund as the word ‘spouse’ includes same-sex partners who register their relationships, or who live on a genuine domestic basis in a relationship;

  • the definition of ‘de facto’ includes same-sex relationships, and;
  • the definition of ‘child’ includes adopted children, stepchildren and ex-nuptial children.

This ensures a member of a same-sex couple no longer has to satisfy the interdependency criteria to receive the deceased member’s superannuation benefits either continuing to take the deceased members pension, or as a tax free lump sum.

Superannuation – Binding Death Benefit Nomination

Mr & Mrs Katz were long term members and also acted as individual trustees of their self managed superannuation fund.

Mrs Katz died leaving Mr Katz as the sole member and trustee of the fund. Superannuation laws required the fund to have two individual trustees. Mr Katz appointed his daughter, Linda Grossman, as an additional trustee of the fund and completed a non-binding death benefit nomination stating he wanted his death benefit to be paid equally between his daughter Linda and his son Daniel Katz.

One month prior to Mr Katz death, Linda applied to become a member of the fund and used her position as trustee to accept herself as a member of the fund. Following the death Linda as surviving trustee appointed her husband as a trustee of the fund and subsequently paid the entire death benefit to herself.

Daniel took the decision to court, lost the case, and received no benefit from the fund. The trustees would have been bound to honour Mr Katz’ intentions if he had completed a binding death benefit nomination.

Benefits of a Binding Death Benefit Nomination

In the same way a Will allows you to direct who gets your estate, the benefit of a valid binding nomination is that you direct who benefits from your superannuation. For example you could direct it to your estate so that it is dealt with under the provisions of your Will, or to a named beneficiary.

Like your Will a binding death benefit nomination should be kept up to date so that it reflects your current circumstances. However unlike a Will a binding nomination provided to a super fund generally lapses after 3 years.