Tuesday, August 27, 2013

Court drafted wills

Canceled by court order

One of the more fundamental developments in relation to estate planning in recent years has been the introduction in most Australian states of government legislation empowering courts to make wills on behalf of people who otherwise lack the capacity.

There have been an increasing number of cases to go through the courts in this area. The recent Queensland case of Re Matsis; Charalambous v Charalambous & Others [2012] QSC 439 is particularly interesting as it appears to be the first case that allowed a court-ordered will where the primary objective was not because the relevant incapacitated person had no will at all. Rather the situation was that the pre-existing will did not achieve the appropriate asset protection and tax planning objectives of the ultimate beneficiaries.

For those interested in reading a full copy of the decision, a link to the judgment is as follows: http://www.austlii.edu.au/au/cases/qld/QSC/2012/349.html.

The case involved a businessman who had accumulated some millions of dollars of wealth and who had signed an 'interim' will, which did not incorporate any testamentary trusts, sometime before losing capacity to dementia.

On the application of the ultimate beneficiaries, the court allowed them to introduce comprehensive testamentary trust provisions into the will as if they were inserted before the will maker's death.

Next week's post will focus on some of the key aspects that the court took into account before allowing the variation to the will.

Until next week.

Tuesday, August 20, 2013

Delay in an attorney accepting their position

sign here
Photo Credit: Robin Hutton cc

Today’s post follows on from the recent post concerning signing of an enduring power of attorney (EPA) and considers the impact of an attorney not accepting their position immediately after the principal executes the document.

The leading case on this point is Whitney v National Australia Bank Ltd [2007] QSC 397. As usual, a full copy of the case is available here - http://www.austlii.edu.au/au/cases/qld/QSC/2007/397.html.

In this case, Mrs Murphy had executed an EPA in 2003 appointing Mr Whitney and Mr Walker as her attorneys. At some time between 2003 and 2007, Mrs Murphy developed dementia, although there was no question about her capacity at the time of her executing the EPA.

In 2007, the attorneys accepted their position by signing the EPA and shortly thereafter attempted to use it with a bank. The bank refused to accept the EPA, stating that it considered that Mrs Murphy did not have capacity at the time the attorneys signed the EPA.

Mr Whitney  applied to the Queensland Supreme Court for a declaration that the attorneys could exercise their powers under the EPA.

The Court confirmed that an attorney may accept their appointment at any time after a principal has validly executed an EPA, even if the principal has since lost capacity, primarily because an EPA is not revoked by a principal’s later loss of capacity.

In this case, the acceptance by the attorneys was therefore valid and the costs for the application were imposed on the bank, whose unequivocal refusal to accept the EPA was found to be unjustified.

Until next week.

Tuesday, August 13, 2013

Alternative RSS readers to Google Reader

With Google Reader shutting down last month, I thought it was a good time to remind followers about alternative RSS readers. The most popular Google Reader alternative is Feedly (iOS/Android/Web) as it is an easy way to follow all of your blog and other RSS feeds in one place.

Here is a good article for alternative RSS readers that you might find helpful: http://lifehacker.com/google-reader-is-shutting-down-here-are-the-best-alter-5990456

If you are not familiar with RSS Readers, you may prefer to subscribe to the blog via email. To subscribe to the blog, please enter your email address in the subscription box in the right hand column.

You can also follow me through social media on Twitter and other platforms which are all linked on my About Me page for your convenience.

Tuesday, August 6, 2013

A further reminder – read the deed

As regular readers are aware, there have been numerous posts highlighting the importance of reading trust deeds and recently we had (yet another) reminder.

Many advisers would be aware that, particularly for deeds established in New South Wales (due to the stamp duty rules there), there is often a prohibition on any trustee, and in some instances any former trustee, being a beneficiary of a trust.

The example that came up again recently (it seems to be one that comes up every few weeks) involved an individual trustee of a standard family discretionary trust. That individual trustee was also the sole primary beneficiary and sole appointor.

While there were potential issues from an asset protection perspective that we were reviewing, the more fundamental concern was that under the trust deed the trustee was specifically prohibited from ever receiving any income or capital distributions. A brief review of the balance sheet of the trust showed that substantial distributions had in fact been made to the trustee as primary beneficiary over a number of years.

There are now a myriad of issues that the trustee and his adviser are needing to work through, not least of which being how to address the enquiries of the lawyers for the trustee’s former spouse who are alleging a breach of trust and what steps will need to be taken from a tax perspective in relation to the various years in which invalid distributions have taken place.

Until next week.