heirs & successes

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.

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.

Jim Morrison died on July 2 1971, from a heroin overdose with an estate worth $400,000. Some years before he died, Morrison created a will leaving everything to his common law wife, Pamela Courson, and if she failed to survive Morrison by three months, then his assets would pass to his brother and sister.

After Jim Morrison died, his estate was tied up in litigation in probate court. Women came forward claiming that Morrison was the father of their children. The other members of the Doors sued the estate claiming that there were outstanding cash advances that had been paid to Morrison.

In early 1974 the court recognised Courson as Morrison’s heir.  Courson died in April 1974 without a Will therefore under intestacy law Jim Morrison’s estate comprising a quarter of the Doors future royalty income, and rights in Morrison’s image passed to her parents.

Morrison’s parents litigation for a share of the estate ended several years later in an out-of-court settlement with the Morrison’s taking half of the royalties and the Courson’s controlling the rights to manage and control Morrison’s image, music, and royalties.

In the early 1970’s, things like a persons image and personality rights were not considered particularly important, at the time intellectual property law provided that royalties from Morrison’s lyrics would have ceased in the mid 1990’s however, this has been extended by legislation until at least 2041. Today there is a growing market for products the bear a celebrities likeness.

If Pamela Courson had made a Will she could have directed her estate in a manner that reflected Jim Morrison’s wishes. As it was Mr Courson who controlled Morrison’s image, music and royalties disliked him, however he did a lot to encourage the Morrison mystique by entering into commercial arrangements to exploit his likeness. Morrison’s parents did not have a close relationship with him before he died, with Morrison claiming that his parents were dead yet received half of his royalties.

The distribution of an intestate estate is governed by legislation therefore it is treated differently depending upon the jurisdiction where the intestate lived. A useful illustration of the differences is how the spouse of the intestate is treated in the different states and territories in Australia

Who is a Spouse?

A Spouse is defined in a similar manner across Australia as someone who is married to or in a civil union with the intestate or is an eligible partner (often referred to as a de facto partner) who has lived for 2 years continuously with the intestate.

If a Spouse survives the intestate with no children, or grand children (“issue”), or with only issue of their own they are entitled to take the whole of the intestate estate, however in some jurisdictions the spouse is entitled to the whole of the estate only if there is no surviving issue, parents, siblings, or issue of siblings of the intestate.

Multiple Spouses

If the intestate is survived by an ex spouse and a current de facto partner then depending upon the jurisdiction the division of the estate depends upon the length of the relationship between the eligible partner and the intestate. In some cases if the eligible partner has been living with the intestate for the minimum of two years and less than 5 years the estate is shared equally, however if the period has been greater than 5 years the eligible partner takes all of the estate.

Statutory Legacy

In certain circumstances each jurisdiction prescribes a statutory legacy. Depending upon the jurisdiction the amount of the estate that goes to the spouse ranges from as little as $50,000 to a maximum of $500,000. The Spouse is entitled to the prescribed amount if the intestate leaves an estate equal or greater than that amount with the balance above this amount being shared depending upon a legislated formula.

Calculating the spouses share is indicative of the complexities of the Administration of an intestate estate. The benefit of leaving a Will is that you can leave your estate in the manner that you wish and not via a legislated formula that could mean people you have little or nothing to do with could be entitled to benefit from your estate.

In March 2014 a 30-year-old man died unexpectedly leaving an estate valued at around $600,000. He did not have a will and although he had separated from his wife two years prior to his death, and reached a property settlement he had not signed his divorce papers. Therefore Intestacy law mandated his estate go to his estranged wife.

The intestate and his wife were together for a relatively short time. They got married and built a house, however they had a difficult relationship that further deteriorated after they married. The wife moved out of the marital home, commenced divorce proceedings, instigated a property settlement and signed the divorce papers.

Under the terms of the property settlement approved by the Family Court the wife received $35,000 in return for transferring her interest in the matrimonial home, plus goods and chattels valued at around $15,000.

In November 2013, the wife served divorce papers, in an act of petulance the intestate refused to sign them. When asked his father believed that he refused to do so in order to inconvenience his estranged wife.

The intestate died in March 2014; notwithstanding the property settlement his estranged wife was still his spouse. Intestacy law creates an order of entitlement, and in this case because the divorce hadn’t gone through his estate goes automatically to his spouse.

The intestate had been with his new partner for 15 months. Interestingly if they had been together for 24 months intestacy law would have recognized her as a de facto partner and she would be on an equal footing with the wife.

The important message to take from this is to make sure you have a will. And if you are party to any legal proceedings, make sure you take them seriously and finalise all the paperwork as soon as possible.

If you die intestate your assets will be distributed according to a legislated formula in the jurisdiction where you live, regardless of your wishes.

Under the laws of intestacy applying in NSW a beneficiary of those people who die without a valid Will must survive the intestate by 30 days to receive a benefit from the intestate estate.

The laws define a Spouse as a married person, or a domestic partner – which is someone of the same or opposite sex who has been in a de facto partnership of at least 2 years or a relationship that has resulted in the birth of a child. Multiple spouses are defined as any combination of a married person and/or domestic partner.

Issue are defined a person’s children, (and if the children are deceased) grandchildren and (if the grandchildren predecease the intestate) great-grandchildren.

Spouse and Issue

Therefore if you die intestate leaving a spouse and no children, or a spouse and children of one or more spouses the spouses inherit the whole of the intestate’s estate. However if there are children of an ex-spouse or ex-domestic partner – the estate is divided according to a formula between the spouse/s and children (this may include children of the intestate and current spouse/s as well as children of the ex-spouse or ex domestic partner)

If multiple spouses survive the intestate their entitlement to the deceased estate is shared either equally, according to a written agreement between them that has been submitted to the administrator of the estate, or in accordance with an order of the Supreme Court

Where the intestate is predeceased by a spouse and leaves issue, the issue share the estate base on the proximity of their family relationship. Therefore children of the deceased will all share in the estate equally, but if the intestate’s children are already dead, their children share the portion of the estate that their parent would have received. If any of those grandchildren had themselves predeceased leaving issue then their children will share what would have gone to their parent.

Other Relatives

 If the intestate does not have a spouse/s or issue then the Estate is distributed firstly to parents, then siblings, grandparents, aunts and uncles, then first cousins, if these have been exhausted the government has a right to the intestate’s estate however provisions enabling the petition to waive the governments right to the intestate have been expanded to include dependents, any persons who have a just or moral claim on the intestate, and any organisation (such as a charity, where the intestate did volunteer work or made regular donations) or person who believes that the intestate might reasonably have made provision for.

You are considered to have died Intestate if you die without a Will or leave a Will deemed by the courts to be ineffective because it: fails to properly dispose of all your assets, does not met the legal formalities of being correctly signed and witnessed, or was made by someone who lacks legal capacity. Where part of the Will is valid but part is invalid a person is considered to die partly intestate resulting in greater difficulty than administering a fully intestate estate.

If you die and your family does not know that you have left a will or cannot locate it they would need to check your personal papers, bank, solicitor, accountant or all of these. In some circumstances they may need to advertise in order to try and locate it.

If a Will cannot be found your relatives will have to apply to the Court for an administrator to be appointed to administer your Estate. Courts have a broad discretion to appoint an administrator, in most cases whoever has the largest share in the estate is considered the most suitable. Administration of your Estate includes making funeral arrangements, collecting assets, paying any debts and taxes owed by the Estate and then distributing any remaining funds. As your assets will be distributed according to legislation the administrator must establish the next of kin.

Although you may feel that the Laws of intestacy may be suitable in directing your estate you have no control as to who benefits, as the estate must be divided in specific fixed proportions depending upon the family, or domestic relationship between you and your family members. In many cases a person who can prove that they are the de facto or same-sex partner will be considered to be the spouse of an intestate partner and may displace the entitlements of a spouse. In certain circumstances “Children” include illegitimate children.

If the next of kin is a child or an incapable person the Court may require  an administration bond to guarantee any loss should the appointed administrator fail to properly administer the estate. The bond is usually equal to the value of the estate being administered.

It should be noted that the assets of the intestate, such as a specific piece of jewellery, may have to be sold in order for the estate to be distributed under administration. You cannot rely on the laws of intestacy to provide specific gifts for friends, charities or to leave provision for pets. Therefore it is important to make a Will in order to leave provision to those people, charities or pets, that you want to, instead of leaving it to a predetermined legislative formula.

Australian Artist Brett Whiteley died accidentally of a drug overdose in June 1992 with an Estate worth $13 million. Due to his anger toward lawyers following a protracted and bitter divorce settlement he drafted a series of informal Wills that led to expensive litigation in order to clarify and settle his testamentary intentions.

In May 1989, influenced by his acrimonious divorce proceedings, Whiteley instructed his solicitors to draft a Will he believed would protect his property from his ex-wife. In a later discussion with his sister Whiteley was disgusted that he had been charged $7000 for this Will, particularly when his sister had made her Will on a form she purchased from a Newsagent.

The January Will

In January 1991 Whiteley handwrote a Will leaving various gifts, establishing a travelling scholarship for young artists, and leaving the rest of his Estate to his daughter Arkie Whiteley. His Daughter and her boyfriend Christopher Kuhn were present when this was done and it was her recollection that the deceased had revoked his previous wills with this document. When Arkie asked if they should consult lawyers Whiteley said

‘No, it’s fine. I’m not going back to any bloody lawyer. No more bloody lawyers. They make a mess of everything.”

As his Daughter was a witness to the Will  the Witness-Beneficiary rule would preclude her from inheriting under that Will.

The Kitchen Drawer Will

His daughter’s then boyfriend Christopher Kuhn gave evidence that in April 1991 Whiteley could not remember where he put the January document so replicated  that document in front of Kuhn who then witnessed it. Whiteley then placed it in an envelope and taped it underneath the fourth drawer in the kitchen cabinet. Kuhn then made a note in an exercise book so he could remember where the Will was kept.

In November 1991 Whiteley told his accountant he had changed his Will, his accountant, (who was also named as an executor) expressed his concern as to the validity of the handwritten document and asked Whiteley to arrange for it to be checked by a solicitor. Whiteley said

‘I hate solicitors. They’re always ripping me off. If you think I should go I will.

However the Court accepted that following the execution of the Kitchen drawer document Whiteley’s intentions never changed and that he hadn’t made any other Will or destroyed or revoked the document which he had signed.

Following Whiteley’s death and funeral in June of 1992 Kuhn and Arkie Whiteley could not find the Will under the fourth drawer in the kitchen but there were remnants of the tape. Over the next few days the studio was thoroughly searched for the Will without success.

The litigation

The Court had to decide if the informal Wills were to be accepted for probate. As neither of the January Will or the Kitchen Drawer Will could be found and notwithstanding that Arkie Whiteley was the main beneficiary of the estate the court found that her evidence and that of Christopher Kuhn was compelling.

As the deceased was the cause of these proceedings the Court found that the cost of litigation for all parties was to be paid out of the Estate. Ironically the informal Wills mirrored the provisions of a Will that Whiteley instructed solicitors to draft and was executed in July 1988.

Creating a Will does not necessarily require a lawyer however there are formalities that must be met in order that the Will is accepted for probate. If these formalities are not met it may add to the difficulties your family face at an already stressful time.

Karter Yu took his own life on 2 September 2011. Shortly before he died, he created a series of documents on his iPhone, one of which was expressed to be his last Will, commencing with the words, “This is the last Will and Testament…” Yu formally identified himself, gave his address, and typed his name at the end of the document in a place where on a paper document a signature would appear, followed by the date, and a repetition of his address. The Supreme Court of Queensland was asked if the iPhone will satisfied the three conditions necessary before an order might be made under the Succession Act (the “Act”) to admit the Will to probate, and if it did, that probate be granted to his brother.

Although the iPhone document did not meet the requirements for a valid Will under the Act if the Court is satisfied that a person intended a document to form their Will, then the document forms a Will if in the Courts opinion it purports to state the testamentary intentions of the deceased person.

Does a document exist?

“Document” is broadly defined by law to include any disc, tape or other article, or any material from which writings are capable of being produced or reproduced, with or without the aid of another article or device.

The Court was satisfied that the record on the iPhone was a document for the purposes of the Act after accepting that the facts of the case were similar to those where a Microsoft Word document created on a laptop computer was considered to be a document by the New South Wales Supreme Court.

Does the iPhone Will express the statutory intention of the deceased?

The Court then had to decide whether the iPhone Will stated the intentions as to what should be done with a person’s property on that person’s death

On examination the Court found that iPhone Will did this. It dealt with the distribution of the whole of the deceased’s property, and named his brother as an executor (also nominating an alternative executor if his brother was unable to perform in that role) and gave authority to the executor to deal with the deceased’s affairs in the event of his death.

Did the deceased intend for the document to form his Will?

The Court then considered whether Yu intended the iPhone Will to form his Will, simply stating his testamentary wishes is not sufficient. In order to satisfy the provisions of the Act there must also be the intention that the Will be legally operative so as to dispose of the person’s property upon that person’s death. The Court held that the document satisfied that requirement.

Although in most Jurisdictions there are laws that enable a Court to consider an informal document as a Will. The  factors in this decision do not mean others can do something similar and expect it to be valid. Your Will should be prepared and executed in accordance with the formal requirements to save the time and expense of legal action not to mention the additional stress to your family and friends at an already difficult time.

Most jurisdictions have requirements that must be met in order to have a formally valid will. This is an attempt to prevent fraud, undue influence, substitution or mistake from occurring due to the fact that the person who created the document is not available to be questioned when an executor is applying for probate. I had an earlier post discussing formalities https://heirsandsuccesses.wordpress.com/2015/08/09/can-i-get-a-witness/

In some jurisdictions Courts can decide to admit into probate a document that does not meet the formalities required for a Will if it is satisfied that the deceased intended the document (or part of the document) to constitute, amend or revoke (whether fully or partially) their Will.

Courts have taken a broad definition of ‘document’ Including a tape recording, video recording, and recently a message created on the electronic notepad of an iphone by the deceased person being admitted as a will. However these are exceptional and usually,the court admits a written document that fails to meet the formal requirements of a Will (for example it is incorrectly witnessed).

To assist in making this decision the Court may take into account that at the time the document was created the deceased intended that it would constitute their Will including any actions or statements that were made by the deceased around the time that this document was created.