WILLS AND DECEASED ESTATES

• Wills

• Powers of Attorney

• Enduring Guardianship

• Living Wills

Making a Will

A will is a written document which sets out how a person wants their assets divided after their death. Everyone over eighteen years should consider having a will. It is the only way to ensure that your estate is distributed in the way you would like. A will makes it easier for the beneficiaries of an estate to gain access to funds in an estate particularly in small estates where probate may not be required.

A will must:

1. be in writing, either typed or handwritten;
2. give the appearance on its face that the will-maker (or "testator") intended by their signature to give effect to the will;
3. be signed by the will-maker in the presence of two witnesses present at the same time when witnessing the will.

It is recommended that a beneficiary or the spouse of a beneficiary under a will should not witness the will as they may lose their entitlement under the will if they do so.

Executors

When you give instructions to make a will you will need to decide whom you wish to be the executor of your estate. The person that you name to be your executor must be capable of taking the responsibility of finding your most recent will, instructing solicitors to obtain a grant of probate, liquidating the estate assets and distributing the assets of the estate to the beneficiaries. No special skills are required as the majority of the work is done by executors under advice from solicitors. Normally a husband and a wife will appoint one another as executors. Often people appoint their adult children as their executors if there are circumstances where their spouse is unable or unwilling to act.

Gifts to Beneficiaries

The second aspect of will making is for the will maker to decide which assets go to which beneficiaries. You may make any number of specific gifts. For example jewelry, valuables, antiques or collections may be left to particular people. There may be specific sums of money that you may wish to be given to particular people. In the alternative, wills are often drafted so that the entire estate is given to the executor to hold on trust to divide equally (or in specified proportions) to a class of beneficiaries or to a named group of people. Gifts can be given with conditions such that the beneficiary does not receive a gift until the condition is met. The most common condition is a minimum age.

In any case it is most important that you do not attempt to give through your will property that you don't own. For example jointly owned property such as real estate held by joint tenants, shares in joint names and joint bank accounts will automatically pass to the surviving owner regardless of the terms of the deceased will. Accordingly it is pointless to attempt to make new interest in jointly held assets the subject of testamentary gifts. Superannuation and life insurance commonly has nominated beneficiaries and those investments will not form part of your estate. Rather, on your passing the proceeds of the insurance or superannuation will pass directly to the nominated beneficiaries. Similarly assets held by your family trust or discretionary trust will not pass by way of your will. You may hold the shares of any company trustee, but otherwise your trust will continue to operate in accordance with the terms of the trust deed.

It is recommended that your will be drafted to include "substitution gifts" these are provisions which take into account that your "primary beneficiary" may predecease you. Wills often include a provision that if a primary beneficiary predeceases you then their gift is to be divided between those of their children who survive you. Some will makers like to name more distant friends and relatives and charities as substitute beneficiaries.

Vesting Age of Beneficiaries

If your will creates a potential of you having beneficiaries who have not yet attained the age of eighteen years then it will be necessary for you to specify a "vesting age". Many will makers prefer that their children not receive their gifts under the will until they have attained the age of twenty one (21) years, twenty five (25) years or sometimes older. If your will creates potential for minor beneficiaries then we would recommend that your will include a clause extending the executors powers in order to give the executors a discretion to advance part of the minor beneficiaries entitlement to them if the beneficiary falls on hard times. It is generally prudent to grant to your executor a range of additional powers above and beyond the powers that an executor has at common law.

Testamentary Guardians

You may wish to include a provision in your Will naming the person that you would wish to be the guardian of any of your children that have not attained the age of eighteen years at the date of your death. Please note that a provision naming guardians in a Will is only a "wish" and accordingly cannot be enforced at law. In Australia the Family Court of Australia ultimately decides questions of guardianship of children.

Disposal of your Body

You may wish to include in your will provisions relating to disposal of your body. You may wish to specify cremation or burial. You may wish to include an indication that you have a prepaid funeral plan. You may also wish to indicate a particular type of funeral ceremony or a particular cemetery.

Outstanding Loans

When making your will you should consider whether you wish to forgive any loans that are owed to you, otherwise all such loans will become assets of the estate. Will makers sometimes include terms in their will which have the effect of evening up their financial affairs with their children if some of those children have received significant gifts prior to the will makers death.

Special consideration should be given to your will if you or your spouse (or partner) have children from previous relationships.

Changing a Will

A will remains in force until the will-maker formally changes it by making a "codicil" or by making a new will. Handwritten amendments have no effect once a will has been signed. The will-maker may only make amendments to the will before signing. In such cases the will- maker and the witnesses must sign or initial in the margin or near the alteration. If this is not done the Court may assume that the alteration was made after the will was signed and the amendment may not be effective.

Revoking or Canceling a Will

Your will will be revoked by marriage, unless it was expressed to have been made in contemplation of that marriage. If you marry after making a will that was not made in anticipation of the marriage, you should make a new will.

A divorce will not revoke the will but it will invalidate any gift to your former spouse and the appointment of that spouse as an executor, trustee or guardian (unless the Court is satisfied that you did not intend the divorce to revoke the gift or appointments).

There are several ways of revoking your will which include:

1. making a new will;
2. destroying the will with the intention of revoking it;
3. writing on or amend the will in some way that will satisfy the Court that you intended to revoke it.

If any of these options are used the will-maker will die "intestate" unless a new will is made.

Challenging a Will

A will may be contested on the basis that the will maker did not intend the document in question to be their last will and testament. Normally wills can only be contested on the basis that they are invalid because the will maker made a later will, the will maker did not have the mental capacity to make a will, the will maker's signature was forged or parts of the will were changed after it was signed, the will maker was tricked or pressured into signing the will, or the will was revoked.

In any such cases it is necessary for the person contesting the will to have sufficient evidence in a form acceptable by the Court, and sufficient to persuade the Court to make relevant orders.

Prior to an application being lodged with the Court to contest a will it is almost invariably necessary to obtain a barrister's advice as to whether the evidence is sufficient.

Family Provision Act Claims

Dependents of a deceased person who feel that they were not properly provided for under the deceased's will may make application to the Court under the Family Provision Act. The agreed person can apply to the Court for provision from the will regardless of whether they were mentioned in it or not.

Such application must be made within eighteen (18) months at the date of death. In certain circumstances the Court will approve applications under the Act outside the eighteen (18) month period.

The Act specifies classes of persons who may bring an application. Eligible persons are generally specified family members or dependents.

In order to make a claim under the Family Provisions Act the applicant must provide evidence of their needs and that they were not properly provided for in the will. The Court may take into account many factors including the character and conduct of the applicant during the deceased's life, contributions that the applicant made to the deceased's property and well being during the deceased's life and any other factors that the Court regards as relevant.

In certain circumstances the Court may be prepared to make orders in respect of property of the deceased's that the deceased disposed of prior to their death. However to get those sorts of orders the applicant would have to provide sufficient evidence to show that the deceased disposed of that property specifically with the intention of defeating a Family Provision Act claim.

Generally claims under the Family Provision Act have to be made without delay in order to avoid the estate being distributed to beneficiaries who may deal with it in a way that makes it not recoverable.

Procedure following Death

If you are named as executor in a will then immediately after the death of the testator you will be responsible for organising the funeral, finding the deceased's will and determining whether it is necessary to apply for Probate.

You must do what ever you can to secure all of the deceased's assets to ensure that they are not taken by people who think they have the right to them.

Generally the funeral director will order a Death Certificate from the Registry of Birth Deaths & Marriages. The Death Certificate is normally sent to the executor within three (3) weeks of the funeral.

The question of whether Probate needs to be obtained is determined by considering the nature of the assets. If there is any real estate in the deceased's sole name then almost certainly Probate will be required. Essentially, the Grant of Probate is a declaration by the Supreme Court that the will is valid and that the executor is entitled to commence dealing with the estate assets.

An application for a Grant of Probate involves publication of a relevant notice in a newspaper circulated in the area in which the deceased lived, identification of all of the deceased's assets, preparation of the proper documents making the application for Probate and lodgment of the probate application at the Supreme Court together with the appropriate filing fee.

Estate assets must not be dealt with until Probate is granted, except that some banks may be prepared to release to the executor sufficient money to pay funeral expenses on production of the original death certificate.

Failure to Leave a Will

When a person dies without leaving a will they are said to have died "intestate".

If a person dies intestate then an interested person (normally the next of kin) will need to determine whether an application needs to be made in the Supreme Court for "Letters of Administration". The principals and procedures are similar to the process of applying for Probate.

However the identification of the beneficiary of the estate are determined by reference to the "rules of intestacy". The rules of intestacy are in effect a formula for determining who receives the estate. If application of the rules results in no living beneficiaries then the estate is said to be "bona vacantia" (or "for the good of no one"). In those circumstances the estate vests with the government.

Interpreting Wills

Occasionally a person will die leaving a will that contains ambiguities. If necessary the executor of any other interested party may make application to the Supreme Court for orders as to what the clauses mean. The applicant and other interested persons may provide the Court with evidence as to the interpretation to be given to the document. The evidence must be of a particular standard if it is to be admissible.

Procedure following a grant of probate

Once the executor of the will has obtained a Grant of Probate (or an interested person has obtained Letters of Administration) the executor (or the administrator as the case may be) has the task of putting into effect the will makers intentions as expressed in the will. Generally this means liquidating bank accounts, transferring shares and real estate and distributing chattels. In any case, beneficiaries don't have the right to have assets of the estate until the Court has granted Probate and an appropriate advertisement is published in the relevant newspaper. There is also argument that an executor should not distribute to beneficiaries until an "executor's year has passed".

The executor (or administrator) is responsible for applying estate monies to payment of the deceased's death and testamentary expenses. These payments must be made before any beneficiaries receive their gifts.

The executor or administrator is also responsible for ensuring that final tax returns are done, that the deceased's name is removed from the electoral role, that all estate debts are paid and all entitlements under the will transferred as appropriate.

An executor of a will may be entitled to payment for their pains and trouble in administering the estate.

You may wish to empower another person to assist you by granting to them powers of attorney. In that case you are referred to as the "principal" and the person to whom you granted the powers is referred to as your "attorney".

When a principal grant powers of attorney they are empowering their attorney to sign documents on the principal's behalf.

An attorney is in a special relationship of trust with the principal and accordingly must be chosen with great care. In accepting the powers the attorney is accepting an obligation to always act in the best interests of the principal. This means, among other things, that the attorney must give priority to the principal's interests where there is any question about a conflict between the interests of the attorney and those of the principal.

The scope of the power

The attorney is being given very broad powers to act in the name of the principal. The document empowering the attorney to act is called a power of attorney and is the written authority to do anything that the principal may lawfully authorise an attorney to do. If the attorney needs to know what they can or cannot do under the power of attorney, they should seek advice from the principal's solicitor. The attorney can apply to the Supreme Court or the Guardianship Tribunal for advice or directions about the scope of the appointment or the exercise of any function under the power.

Joint attorneys

If there is more than one attorney, and they are appointed to act jointly, then the attorneys must always act together. They cannot act independently of eachother. If attorneys are appointed "jointly and severally" then they may use the power without reference to oneanother.

The Principal's Capacity

Whilst ever the principal has mental capacity, the attorney must always obey the lawful instructions that the principal gives the attorney. The power to act can be taken from the attorney by the principal, even verbally. If the attorney is told to deliver up the copy of the power of attorney document, for its destruction, the attorney is obliged by law to do so.

A power of attorney may be given to the attorney in contemplation that a time may come when the principal loses mental capacity, perhaps because of illness or accident. In those cases the power endures and the attorney can use it to look after the financial affairs of the principal during the period of incapacity. The attorney cannot make health care or lifestyle decisions for the principal unless the attorney has also been appointed as an "enduring guardian", and formally accepted that role.

Duties of Attorneys

The attorney has many duties, including the duty to manage the finances of the principal prudently. The attorney must keep their own money and property separate from the principal's money and property (unless the attorney and the principal are joint owners, or operate joint accounts). The attorney must keep reasonable accounts and records of the principal's money and property. The attorney must take care of the principal's property and keep it safe against loss. The attorney must not abuse the position of trust. The attorney cannot profit at the expense of the principal. The attorney must avoid conflict between the duty to the principal and their own interests. The duty is to act to the standard of care that may reasonably be expected of the attorney in all the circumstances.

Remuneration

The attorney has no right to be remunerated for their services unless it is agreed, expressly or by implication that the attorney will be paid by the principal. However, when the attorney acts correctly, the attorney is entitled to be indemnified by the principal and reimbursed for all expenses that the attorney reasonably incurs in acting for the principal. A professional adviser who acts as an attorney has the right to be paid reasonable fees for services rendered. If the attorney volunteers their services as attorney, meaning that the attorney is not paid to act, then the law does not require the attorney to do anything under the power of attorney if the attorney decides not to act.

Registration

If the power of attorney is to be used to sign a document which is to be registered with the Department of Lands then the power of attorney itself must first be registered with the Department. This can be done at any time after it has been signed and accepted.

Termination of the Powers

The principal can terminate the power at any time so long as he or she has mental capacity. Equally, the attorney can end the attorneyship by renouncing it. An enduring power of attorney does not end when the principal loses mental capacity, as is the case with an ordinary power of attorney. If the power of attorney appoints two or more persons as "joint" attorneys, the power of attorney is terminated if the office of one or more of the attorneys becomes vacant. But if the principal appoints two or more persons as attorneys "jointly and severally", a vacancy in the office of one or more attorneys does not operate to terminate the power of attorney in relation to the other attorneys.

There is a vacancy in the office of an attorney if -

1. the appointment of the attorney is revoked or,
2. the attorney renounces the power, or
3. the attorney dies, or
4. the attorney becomes bankrupt, or
5. where the attorney is a corporation, the corporation is dissolved, or
6. the attorney by reason of any physical or mental incapacity, ceases to have the capacity to continue to act as an attorney, or
7. in such circumstances as the legislature may prescribe in the future.

If an attorney acts under a power of attorney knowing that it is suspended or terminated, the attorney is liable for a maximum penalty of 5 years' imprisonment.

The Supreme Court or the Guardianship Tribunal may review a power of attorney and can cancel it, remove an attorney from office, replace an attorney, order an attorney to furnish accounts or other information, order an audit, or require an attorney to submit a plan of financial management.

Execution Clauses

Documents signed by the attorney must include an "execution clause". There are various forms of executions clauses. An example of the most commonly used form might read:- "John Smith by his attorney Mary Smith pursuant to power of attorney dated 30 March 2004".

If you appoint someone to be your "enduring guardian" then the appointment only takes effect when you (called the "principal") are no longer capable of managing your own affairs and you are a person in need of a guardian. You may appoint more than one enduring guardian and enduring guardian's functions may include deciding where you live, what health care you receive, what kind of other personal services you receive and consent to the carrying out of medical and/or dental treatment on you, financial management and having access to medical records.

A person is not eligible to be appointed as an enduring guardian if they are under 18 years or directly or indirectly involved in or responsible for providing medical care or treatment to the principal.

Either the Guardianship Tribunal or the Supreme Court can review an enduring guardianship. The Tribunal can review the appointment of the enduring guardian on its own initiative or on the application of anyone who in the opinion of the Tribunal has a genuine concern for the welfare of the principal. The Tribunal may suspend, confirm, revoke or vary the appointment of the enduring guardian and they also make orders if an application has been made for financial management.

A person can make directions about their medical treatments if in the future they suffer an incapacitating illness that stops them from making their own decisions. Although such directions are not legally binding they are still an expression of your wishes. These directions are sometimes called Living Wills or Advance Directive.