Estate Planning

What is a EPOA and BDBM?

WILLS & ENDURING POWERS OF ATTORNEY FAQ’S

Why do I need a Will?

The main objective of a Will is firstly to make sure that everything that you have managed to gather around you during your lifetime (valuable and sentimental), goes where you want it to go; and secondly to ensure that your family are not left with a mess to sort out at a time of grief and heartache as this is also very expensive

What if person dies with no Will?

The assets go to the next-of-kin according to schedule set out in the Succession Act 1981. Court must appoint an executor which may be a family member or the Public Trustee.

Why can’t the Public Trustee prepare my Will?

If your Will is prepared by the Public Trustee, they will appoint themselves as Executor of your estate. If we prepare your Will you will nominate your chosen person or persons to act as executor of your estate.

Is my current Will valid?

Your current will may be invalid if:

 It is not prepared in accordance with the relevant legislation

 If you marry your will is revoked with certain exception

 If you divorce certain provisions of your Will may be revoked

How can I avoid a challenge to my Will?

By ensuring that your Will is valid, current and has been drawn up by a professional, such as Bennett Carroll. We will advise you on the most effective means of distributing your assets and ways in which assets can be protected.

Why do I need an EPOA?

If you lose mental capacity, without an Enduring Power Of Attorney in place, there may be no one with the legal authority to manage your financial affairs. Your family or advisers would then need to apply to the government in your State or Territory to have someone appointed. This can be expensive and a difficult process.

Who can be my attorney?

You may appoint up to four attorneys and they:

 Must be 18 years of age or over

 Must not be your health care provider (i.e. your doctor, nurse or carer)

 Must not be a bankrupt

 Must not be a paid carer

Why can’t the Public Trustee prepare my EPOA?

The Public Trustee will draw a Power of Attorney for free on the condition that they are appointed your attorney. They then charge fees on transactions carried out on your behalf. A solicitor will charge you a one-off fee for drawing the document and you can choose your attorney.

How does an Enduring Power Of Attorney differ from a General Power Of Attorney?

A General Power Of Attorney ceases to have effect after you lose the mental capacity to make financial decisions. An Enduring Power Of Attorney will continue to have effect whatever your mental capacity.

Do you need to register the Enduring Power Of Attorney?

If your attorney wants to use the Enduring Power Of Attorney to deal with any real estate, the Enduring Power Of Attorney may need to be registered with the Land Titles Office. Even if there is no requirement you may be able to do so voluntarily. By registering it, the Enduring Power Of Attorney

• will be on record as a public document

• will be kept safe from loss or destruction

• may be more easily accepted as evidence that your attorney has authority to deal with your property or financial affairs.

How do you revoke your Enduring Power Of Attorney?

You can revoke your Enduring Power Of Attorney at any time, provided you have mental capacity to understand what you are doing at the time you revoke it.

For assistance, please contact our office on 1300 334 566 or via email info@bcglaw.com.au 

Transfer of title by a non-owner

The general rule is that a seller of goods cannot obtain a better title to such goods than that of the person from whom they were bought.

The Sale of Goods Act (SOGA) says, in section 24 Sale by person not the owner

“when goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by the owner's conduct precluded from denying the seller's authority to sell.”

There are some notable exceptions to this rule;

Estoppel

“Where the owner of goods is by their conduct precluded from denying the seller’s authority to sell”, the buyer obtains good title.

An owner may be precluded from denying a seller’s authority by reason of their (deceitful, negligent, fraudulent) conduct which, expressly or impliedly, constitutes an unambiguous representation to the buyer that the seller has his authority to make the sale.

Sale under a voidable title

Where the seller of goods has a voidable title, for example a title gained through fraud, but the title has not been avoided at the time of the sale, the buyer acquires a good title to the goods provided they’re bought in good faith and without notice of the seller’s defect of title.

A person who obtains goods by way of fraud can pass good title because their title is voidable, not void. Therefore a person who obtains goods by way of fraud can pass a title to a bona fide recipient who acts in good faith and presents value for the property.  The original owner then only has rights against the fraudster and not the new “owner”.

Sale by a buyer in possession:

The bona fide purchaser of goods from a buyer who obtained possession of the goods with the consent of the original seller obtains a good title to them

The original seller must have been lawfully entitled to sell the goods.

A purchaser from a buyer in possession only acquires a good title under the statutory provision where the purchaser receives the goods in good faith and without notice of the rights of the original seller of the goods.

o          The onus of proving such is on the purchaser.

o          Notice may be actual or constructive.

o          It is insufficient for the original seller to contend that by making further inquiries the purchaser could have discovered that the buyer in possession of the goods who sold them had no right to do so, unless of course there was something obviously suspicious such as to put the purchaser on inquiry.

Where the goods being sold are a motor vehicle subject to a security interest, the legal position of the bona fide purchaser will depend on whether the security interest has been registered in the national Personal Property Securities Register established under the Personal Properties Securities Act 2009 (Cth).

For more information contact our office on 1300 334 566

Testamentary Capacity

Australians, in general, are growing older.

One of the side effects is that in the last five years, there has been a sharp rise in the incidence of attacks on Wills, based on the argument that the Testator (the person who signed the Will), did not have capacity to make a Will, at the time the document was signed.

There is hot debate even among the legal profession, as to how to deal with this issue.

Essentially, it is a medical issue.

The test for testamentary capacity (do you have enough marbles to make a Will), revolves around the question, “do you have sufficient capacity to understand the nature and effect of the document that you are about to sign?”

This might seem like and easy question to answer and medical assessments are commonly made in this situation.

Unfortunately, up until recently, Lawyers have attempted to make this assessment themselves.

Bennett Carroll was one of the first law firms to create a checklist and a regime to identify people at risk and then institute a medical assessment process to ensure that adequate expert evidence is available, rather than the vague observations and questions of a Lawyer who is not medically trained.

The Bennett Carroll system involves checking, in every case, for the presence of any risk factors that might identify a person whose capacity may be questioned in the future.

These triggers are:

1.     Significant age, that is, 70 years or more;

2.     Any prescription medication;

3.     Any medical operation which has occurred in the last six (6) weeks;

4.     Hospitalisation in the last six (6) weeks;

5.     Any “significant illness”, that is an illness which would have any possibility of affecting someone’s ability to make a decision;

6.     If the client is brought in by a relative in circumstances where there is some suggestion that the client’s capacity is impaired.

This is not about targeting people whose capacity is impaired.  The sole purpose of this process is to obtain evidence to prevent a successful attack, often made many years later where records are lost or recollections have faded.

It is a protection measure, rather than some sort of slight on the testator.

If the evidence is obtained at the time of the signing of the Will, there can be no allegation against the Will on the basis of capacity, which has any prospect of succeeding.

A medical practitioner is asked to indicate in writing an opinion as to whether or not the testator has sufficient capacity to understand the nature and effect of a Will, if one were prepared for them.

This necessitates a test process undertaken by the practitioner, who will then produce a short written report.  This should be all that is required to prevent a successful attack on the Will document.  This simple precaution ensures that the time and for the money spent on an estate plan is not wasted.

Undue Influence in Estate Planning

There is a growing area of dispute relating to Wills, which is centered upon undue influence.

This area involves claims by beneficiaries (or would-be beneficiaries) of Wills, that someone has influenced the person who signed the Will (the Testator) to make a distribution which shortchanges the complaining beneficiary.

The area is not well signposted by the law, and there is a lack of clarity regarding was is undue influence.

The most common scenario is this:-

A parent has several children.  One child either has remained to live with the parent, or performs a significantly higher proportion of the support services (shopping, trips to doctor, cleaning, companionship etc) than the others.

It is quite common to see this child appointed sole executor, and there is no issue with that, as the position of executor (apart from the very rarely used right to be paid for the job) is a set of responsibilities, not a set of benefits.

Very often, however, we receive instructions from the parent to make an additional distribution to this child, beyond that to the other children.

Again, of itself, that is not unusual, improper or unsupportable. 

Inherent in that kind of relationship, however, are the seeds of an argument for undue influence.

Obviously, those two parties are close and usually have a special relationship.

The child will often hold a Power of Attorney for the parent.  The child will undertake financial and transport obligations, and it is often this child that carries out an instruction to organise for a Will to be prepared.

The record will show that it is the child that rang the law firm and engaged the firm, on behalf of the parent, to prepare the Will which favours the child.  This is logical when you think about it but can be the beginning of the argument that undue influence exists

How do you stop a claim of undue influence being made?

You can’t.  Any person who fits the definition of next of kin, who has a right to bring a claim for provision before the Court, can make such a claim.

How do you crush the prospects of success of a claim for undue influence?

There is a whole range of activities which will limit the prospects of success of such a claim.

If this range of steps is done well, someone thinking of making a claim may well withdraw or not make that claim because it seems hopeless.  This is the outcome that a well drafted Will, following a clear and sensible preparation process, should achieve.

Indicators supporting possible undue influence

1.            Were we contacted by someone other than the testator?

2.            Who made the appointment?

3.            Does the person live with the testator?

4.            Do they live together alone?

5.            Is the person receiving more than other siblings?

6.            Who made that suggestion?

7.            Were the two together in the building at the time of instruction?

If any of these are present then:

A.           explain at the first opportunity the principal of undue influence to each of the two of them;

B.           exclude the third party (TP) from any further contact with us regarding the matter, including the possibility of intercepting drafts (as far as possible);

C.          bring the TP into the first part of the instructions interview and explain together, again, the undue influence process, making particular point to testator that the allegation of influence could complicate estate process;

D.          ask testator if other children/beneficiaries are aware of any skewing of distribution of assets;

E.           then remove the TP from the area and away from earshot;

F.           do not use TP as interpreter.  Hire an interpreter if necessary;

G.          ask the following questions:

(i)                 are you certain you want to leave more to TP than to others in that category of beneficiaries?

(ii)               Why?

(iii)             have you thought about how others will feel about this?

(iv)              is how they feel important?

(v)                what has TP done in addition to others to warrant this?

(vi)              what have others not done?

(vii)            can I put something to this effect in Will?

(viii)          if not why not?

(ix)              how did you come to this conclusion?

(x)                have you made this decision voluntarily?

(xi)              has TP been consulted?

(xii)            what was his/her involvement?

(xiii)          have you considered inter vivos gift instead?

(xiv)          has any threat/promise of any kind been made to you in relation to this distribution?

Ingredients for avoiding or crushing undue influence claims

1.      Communication. 

It is essential that the testator communicate to all beneficiaries that a Will has been prepared which favours one individual, that that Will has been made voluntarily, and that the testator wants his or her wishes honoured in full.  It is important that the message is communicated to all the beneficiaries that the decision has been taken after much thought, voluntarily, and without any threat or promise having been made by the favoured beneficiary.

2.      Medical evidence.

         If there is even the slightest indication of a possible argument that the testator did not have capacity to understand the nature and effect of the document, get a medical report disproving this.

3.      Choose a law firm with specific skills in dealing with Will preparation.

         Any law firm should be able to prepare a Will.  If your Will (or that of your parent) fits into the category described above, you need a firm with experience beyond the basic Will.

         The law firm should immediately recognise (and have triggers and processes for) any circumstances which might support a claim of undue influence.

         The firm should in fact beat you to pointing out the undue influence trigger, and explain its processes for assessing, dealing with and defeating the circumstances of undue influence.

         If you are aware of any of the circumstances outlined above, point them out to the lawyer in question and ask what is their process for dealing with and managing the circumstances.

How a law firm will/should deal with undue influence issues

1.            A joint explanation of the undue influence issue followed by exclusion of the beneficiary from the interview.

2.            A restatement of the potential issue, and explanation that some questions need to be asked in order to protect the enforceability of the Will, and then enquiring of the testator about why and in what circumstances the decision was made to favour one beneficiary.

THERE IS NOTHING WRONG WITH LEAVING YOUR ASSETS IN AN UNUSUAL, LOPSIDED

OR PARTICULAR WAY

.

It is important that, when you sign your Will, you feel as though it reflects your wishes, it gives you peace of mind, and you do not feel like you have been forced to compromise or do something that you would rather not.

If, however, you are in the circumstances described above, or something similar, and if you do wish to favour one person over others in a similar position, then it is essential that you say why in the document.  A short sentence explaining:

(a)               why you are favouring the beneficiary;

(b)               that you have done so voluntarily and after much thought;

(c)               that no threat or promise has been made to you to influence you to make such a decision;

may well make all the difference to the enforceability of the distribution, or prevent a wavering potential claimant from going ahead.

CONTESTING WILLS

There are three ways to contest a Will:-

1.             The Will was not executed properly.  Recently, Parliament has lowered the bar on what constitutes an enforceable Will.  Previously, there was a very rigid process and very strict requirements for how a Will was to appear, who could sign it, who could witness it, and how these signatures were to be attached.  Now, this is somewhat more relaxed and a document merely needs to show “testamentary intention”, that is, the document needs to show that the person who signed it (the testator) intended it to be a set of rules for distributing assets upon death.  If this is the case, the Court will often overlook non-compliance with format and execution.  Recently, the Queensland Supreme Court approved a suicide note as a Will, despite that fact that it had no witness signatures, and was not in any recognised format.  The Court ruled that the suicide note showed testamentary intention, and could be considered a set of directions for distributing assets.

2.             Lack of testamentary capacity or, simply, the testator did not have enough “marbles” to understand what he or she was doing when the document was signed.  These days, with strong medication and medical treatment prolonging the life (but not necessarily the quality of life) for people, Wills are being signed in circumstances where the mental capacity of the testator can be challenged.  Illness, medication and other variables, can all rob someone of the capacity to make rational decisions.  The question of whether this impairment is sufficient to prevent someone from understanding the nature and effect of a Will is a difficult and medically based question.  Expert evidence from the treating doctor, or other experts, will be required to show that it is likely that the person who signed the Will did not understand its nature and effect.

3.              Application for a provision (previously called testator’s family maintenance).  This, far more complex process will be covered in another blog.