Most people make Wills that specify how their estate should be distributed, including specifying where their monies, home, and personal items will go. Often however, many people do not give instructions as to how they want their remains to be dealt with after death. In that instance, the law provides some direction.
In Queensland, executors and administrators have a duty to arrange for the burial or cremation of the deceased as the body is considered an estate asset. The Succession Act 1981 (Qld) also allows for funeral expenses to have priority over all other expenses, so even if there is very little money in the estate, the deceased person can have the dignity of a cremation or burial.
However, family members may have deeply held opinions about burial or cremation, or the type of memorial service that should be held, which can cause further disputes about funeral arrangements.
In the most recent New South Wales case of Dayman v Dayman [2024], the deceased died with a 1992 Will that nominated his ex-wife as the executor of his estate and did not make directions for funeral arrangements. Funeral arrangements had been delayed due to disputes about the reported cause of death, and so the deceased’s daughter made applications to the Supreme Court of New South Wales for the executor to relinquish her role and release the deceased’s body from the coroner to a funeral director for immediate cremation.
A new dispute then arose about the distribution of ashes, and the Court ultimately ordered that they be distributed equally between his daughter, his sister, and his current partner. However, the Court did not order that the ex-wife step away as executor on account of the estate being small.
The takeaway from this was that the Court recognised that religious, cultural and spiritual considerations are an important aspect of burial rights, and executors should take into account any known wishes of the deceased and consult with family members and friends when making funeral arrangements.
Certainly, making your wishes known not only simplifies the task of administering an estate for your executors, but allows your loved ones to rest assured knowing they are doing the right thing.
Bader Pendergast-Lee is a Solicitor at Zande Law Solicitors, Suite 9, Norwinn Centre, 15 Discovery Drive, North Lakes, practicing in the areas of Wills, Estates and Family Law. If you need legal advice in relation to your Will or a deceased estate matter, we encourage you to make an enquiry with our office.
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.
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IT’S THE THOUGHT THAT COUNTS: MAKING WILLS WITH CONDITIONAL GIFTS
A person making a Will can distribute their estate to anyone they wish and, generally, on whatever terms they deem appropriate. However, a challenge arises when a testator intends to require a beneficiary to do or not do a particular thing before they can receive their inheritance. This is known as a conditional gift.
A common example of a conditional gift is gifting part of your estate to your child once they attain a certain age or only once they attend university. In those circumstances, it is clear that the condition must be met before the benefit is received. This is referred to as a condition precedent. However, a gift will fail entirely if the terms of the condition precedent are found by a Court to be void.
When determining the validity of a condition precedent, the Court will consider whether the condition:
1. Is sufficiently specific;
2. Is impossible to fulfill (not merely difficult or improbable); or
3. Offends public policy (for example, if the condition is illegal or discriminatory).
These considerations become especially relevant where a condition precedent requires something more significant than a beneficiary merely attaining a certain age. For example, in Re Solomon (1946) a gift requiring the beneficiary to marry a woman “of the Jewish faith” failed as it was not sufficiently specific. However in Hickin v Carroll (2014) the condition that the beneficiaries be baptised within 3 months of the testator’s death was held to be valid – despite the fact that the beneficiaries were practicing Jehovah’s witnesses.
It is important to note that the law on conditional gifts does not exist in the relevant succession legislation. Instead, the framework governing conditional gifts is based purely on the outcomes of previously decided cases. This means that the judicial approach to conditional gifts has the ability to change and adapt as societal ideals and norms continually evolve.
Certainly, there are clear risks associated with drafting Wills with conditional gifts. If you do intend to attach conditions to gifts in your Will, we encourage you to seek the assistance of an experienced Wills and Estates solicitor to ensure that any conditions in your Will have the desired effect.
Madeline Crnkovic, Law Student and Paralegal at Zande Law Solicitors, Suite 9, Norwinn Centre, 15 Discovery Drive, North Lakes, is the author of this article, training in the area of Wills and Estates.
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.
Making a Will Without Capacity – Queensland’s Statutory Will Scheme
Testamentary capacity refers to the mental state required to execute a valid Will, and extends to understanding the nature and effect of the document, being aware of the property that forms part of the estate, understanding potential claims against the estate, and being free of medical diagnoses that could affect capacity or cognition. Where these elements are not fulfilled, the Queensland Succession Act (1981) allows the court to authorise a Will to be made for a person without testamentary capacity. This is known as a Statutory Will.
To make a Statutory Will application, an applicant can apply on behalf of a person without testamentary capacity (referred to in the legislation as the ‘relevant person’) if they are deemed to be an appropriate person. Whilst the courts have accepted this to include a spouse or family member, there are cases that suggest that friends, carers, and lawyers may be successful applicants. It is the applicant who will present a proposed draft of the Will to the court for approval.
Critically, the court must be satisfied that the proposed Will is one that the relevant person would have made if they had capacity, and that adequate steps have been taken to allow representation of other persons with an interest in the application. The unique circumstances of each individual are considered, along with the relationships they may have already formed to determine who may have an interest, the correct beneficiaries, and consequently the correct entitlements to be given in the newly drafted Will.
Statutory Wills are a particularly unique area of succession law as the courts will intervene in the creation of a Will, which is usually a private event. However, it serves an incredibly practical purpose where the alternative may be dying without a Will. In that instance, the deceased’s estate would be distributed according to the rules of intestacy, and not according to a Will.
In cases where the relevant person is affected by cognitive disorder, lives with disability affecting capacity, or otherwise does not possess the required testamentary capacity to make a Will, Queensland’s Statutory Will scheme provides practical means to have a person’s wishes acknowledged.
Madeline Crnkovic, Law Student and Paralegal at Zande Law Solicitors, Suite 9, Norwinn Centre, 15 Discovery Drive, North Lakes, is the author of this article, training in the area of Wills and Estates.
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.
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How does Covid-19 impact on legal services and the law
Although undoubtedly, the present restrictions on human contact and movement are having an unpresented impact upon Australia’s economic prosperity and these same factors are undoubtedly impacting also on many people from a mental health perspective. For the most part, none of these restrictions should effect the way the law or the delivery of legal services have operated and/or apply.
Family Law Cases
The Chief Justice of the Family Court has issued a public announcement that unless a particular family is actually suffering a Covid-19 infection, the Court expects that pre-existing arrangements for the share of care and decisions making for the children should continue on unaffected. The existing family law principles already are flexible enough to adapt to a world where the value of businesses, stock market investments, superannuation and/or Real Estate are undergoing dramatic fluctuations as a consequence of broad base external factors as was previously seen with events such as the property boom in the late 90’s early 2000’s and the consequent global financial crisis of 2008. Otherwise, the Family Court itself is still very much open for business and is presently running all of its cases via telephone and video link. All court documents are now being filed via the Court’s online portal, a system which has been up and running now for several years. There are some disruptions and delays, but by enlarge the court is still functioning as normal.
Buying and Selling Real Estate
Although worries over job security and the potential for a dramatic drop in real estate prices are undoubtedly impacting on confidence and the consequent willingness of parties to enter into and/or proceed to complete real estate deals, the terms of the standard REIQ real estate contracts and the overall structure of the conveyancing process are both well capable of adapting to Covid-19 issues. Under the standard REIQ contract, there are already specific clauses that will suspend the operation of a contract should events such as a Covid lockdown occur. Under those same terms, the seller is also given the right to terminate the arrangement if government restrictions are to continue for an extended period. House inspections can still legally occur and the only events which are currently not possible are the group gatherings associated with auctions and open houses. In terms of the conveyancing process, the innovation of e conveyancing which has now been in operation for some time, now permits every task of the conveyancing exercise to be conducted online with the one exception of witnessing of signatures but this task can still be easily completed in face to face meetings provided social distancing is used.
Preparation of Wills and Enduring Powers of Attorney and the administration of Deceased Estates
Although much of these tasks have historically been conducted through face to face meetings, all of the required tasks to prepare and sign a will, an enduring power of attorney or attend to the administration of a deceased estate, can be conducted via use of telephone or video conferencing and in extreme cases this too can extend the execution of wills and enduring power of attorneys documents although most law firms preference is to continue to have these documents executed in face to face meeting which are all still perfectly doable provided everybody respects social distancing and hand sanitising.
General Legal Business and Consultations
Again with the ability to conduct business via telephone or video conferencing and also via the use of email and online document sharing platforms such as drop box, the business of providing and receiving general legal services is well capable of continuing to be conducted amidst a Covid lockdown environment.
So, the message generally from Zande Law and indeed the legal industry at large is that we are still open for business and do not foresee that any developments associated with Covid-19 will impact on our ability to provide services for you.
On the 7th of August Zande Law ran a seminar on ‘Executors Questions Answered’. A big thank you to all of our guests. Judging from feedback, all information was well received.
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Testamentary Trusts – Are they a good idea?
A Testator’s Testamentary Trust is a special type of Will. Financial planners often recommend them but what are they and are they a good idea?
Normally, the Will appoints an executor and gives to that executor the power to gather in the deceased’s entire estate and distribute out to named beneficiaries. Those beneficiaries will receive the entire capital of the estate and any interest/income which has been earned on those assets in the time between the date of the deceased’s death and the ultimate distribution of the capital assets. The executor has no discretion as to the distribution of the assets, nor the income; they will pass in strict compliance with the relevant proportions which have been allocated to each of the beneficiaries in the Will.
In a Testamentary Trust, what happens instead is that the Will-maker leaves the estate to a successive line of family members usually starting with the first beneficiary being that person’s spouse and then going onto the children, grandchildren, great-grandchildren etc. Each of the lines of beneficiaries are entitled to receive the income which is generated from the assets made up in the Trust and (usually) can even receive direct distributions of the assets/capital itself. Under the law against perpetuity, the Trust can’t be expressed to have a life span beyond 80 years and therefore at the expiration of this period, the Trust will automatically cease and the beneficiaries who are in existence at that time will receive the capital (sometimes called the corpus) of the estate. Typically, the Trust arrangement will also give to the executor the power to terminate the Trust early that is inside the 80 year period at the Trustee’s discretion.
Generally, there are three main reasons why people are attracted to the idea of Testamentary Trusts, and each will be discussed in turn below:
Tax Benefits
For nearly 30 or more years now, the establishment of Trusts have been considered a very effective means of minimising tax by distributing a core source of income out into the hands of multiple beneficiaries who might all have lower tax thresholds. For example, a single individual who earns $180,000.00 a year would pay tax of approximately $57,000. Whereas if that same income was distributed out amongst three beneficiaries, all of whom had not received any income from any other source, then the tax payable would be approximately $12,000. Collectively, this totals $36,000 in tax, which is $21,000 cheaper than tax being paid in the hands of one person.
These tax savings however come with a catch! Where any distribution is made to persons under the age of 18 years (minors), only the first $400* is tax free. Any income over $400 is taxed at the top marginal rate of 47% (and can be as high as the penalty rate of 66%). If however, a special Testamentary Trust has been established and the income distributions are made out to minors under this Testamentary Trust then these tax penalty rules do not apply. The minor would receive the first $20,500* of income tax free, and any income above $20,500* would be taxed at the standard marginal rates for an adult. This could result is substantial tax savings.
Further tax benefits may also be available to beneficiaries of Testamentary Trusts, in particular with regards to the payment of capital gains tax. If correctly drafted, the Testamentary Trust may provide relief against the payment of capital gains tax, so that tax is not payable until the CGT asset is sold by the beneficiary at a much later date.
Protection from Family Law Claims (Divorce Proofing)
Often the worry for the Will-maker is that the marriage or de facto relationship between any of his/her adult children and that child’s spouse/partner might break down at some future time, with the result then that the deceased Will-maker’s assets might then be claimed as part of the property settlement entitlements of the ex-spouse or partner.
To some extent, this worry is well founded. Unless the couple have already been separated for at least two years (and in the case of married couples, have already been divorced for at least one whole year), the inheritance will form part of the asset pool and will be available for division between the adult child (the family spouse) and his/her ex-spouse (the non-family spouse). It is important here though to note that just because money received under a direct inheritance will be treated by a Family Court Judge as divisible with the non-family spouse, it does not automatically follow that they will receive a share of it. Where the non-family spouse was not specifically named in the Will, had not made any special (above and beyond) contribution to the welfare of the deceased during their life time, there are no young children to the relationship and the non-family spouse has reasonable income from independent employment, Family Courts would normally be expected to wholly quarantine the estate proceeds away from the non-family spouse if separation happened shortly after the inheritance monies were received. In a situation however where the inheriting spouse and his/her partner stay together for another 10+years after receipt of the inheritance or they separate sooner but with young children who are primarily in the care of the non-family spouse and/or that spouse has a much lower earning capacity, any of these factors can give rise to a claim on the inheritance money in proportions potentially ranging anywhere from 30%-70%.
For parent Will-makers who are concerned for child(ren) in rocky marriages/relationships to spouses or partners who fit into some or all of the categories above, establishing a Testamentary Trust may be the answer. With such a Trust, the adult child could argue in any future separation with his/her partner that the assets bequeathed under the Will should be excluded from the assets available for division because those assets are locked up under the Trust for 80 years with limited to no power to demand distributions of either the income or the capital. In adjudicating on such an issue however, Family Courts will closely analyse the Trust structure, and in particular look at who occupies key positions of control within the Trust such as appointor, trustee and beneficiary. Any option given to distribute capital as well as income and/or options given for an early voluntary termination (ie before 80 years) of the Trust will also be carefully considered. Where the adult child or a close relative is nominated to all of the key positions (and this is typical) and the Trust contains capital payment and/or early termination powers (also typical) the Trust might be found to be the “alter ego” of the adult child and if so, the Trust property will be put into the pool of assets available for division; in other words the Trust will fail to have achieved its defence objective. A Testamentary Trust where someone other than the adult child occupies all key control positions and has no early termination clause does stand a much better chance of holding up against a family law attack but at what price? If the money is locked up under such a restrictive Trust and the adult child falls into hard financial times (for example where they or one of their children become very sick) the relief that might have come from full access to the inheritance money might be denied and so the question begs which is the greater threat or lesser evil! Also even where the Trust property has been successfully excluded from the pool of divisible assets, the income or capital which might potentially come out from the Trust can still be taken into account by the Court as a “financial resource” in the hands of the relevant adult child. In this way the non-family/non-receiving now ex-spouse can argue for a greater share of the other assets which are available for division between he/she (for example their own former matrimonial home) and so again by this indirect means, moving the assets into a Testamentary Trust has not achieved a full and complete protection from family law attack.
In situations where the worry relates to the Will-maker’s own spouse or de facto partner, ie that the surviving spouse/partner might go on to remarry or repartner a “gold digger”, the principles and potential protections set out above are the same.
If “divorce proofing” an inheritance is the real goal, then the better protection by far is to have the adult child and his/her partner sign up a special agreement known as a “Binding Financial Agreement” (BFA) which can be recognised as a complete bar to any family law claim against inheritance money. Where a BFA is not an option then a Testamentary Trust might be worth a go but as said, they have their weaknesses.
Bankruptcy Proofing
The worry here is probably best described with a scenario. Take a young adult male child in their mid to late 20’s. His parent dies unexpectedly and leaves the estate to the son. If by chance at the time however, the son is in desperate financial straits and possibly already tipped into bankruptcy then the Trustee in Bankruptcy will take the parent’s estate money and use it to pay the creditors.
Most case law suggests that under a Testamentary Trust, even if the Trust gives power to take out capital or end the Trust early, the Trustee in Bankruptcy would not be able to take the capital or intercept income to pay down/off the creditors for the duration of the bankruptcy which would be 3 to 5 years.
In saying that, there is a fairly recent Federal Court decision which suggests that the capital of the Trust may be available to the Bankruptcy Trustee if the Court finds that the beneficiary has effective ownership of the Trust property, for example, by being the sole trustee and/or the sole appointor. This Federal Court case analysed the “alter ego” approach adopted by the Family Courts when making property settlement orders. Any threat from this decision however may be overcome by careful consideration when appointing the trustee/s and appointor/s.
Cost of a Testamentary Trust
As can be seen, Testamentary Trusts, if correctly drafted, can provide protection against the possibility of bankruptcy and potential family law claims. The Trusts can also provide tax benefits, in particular to beneficiaries who are minors. However, before setting up a Testamentary Trust, the cost of the Trust should be considered. Firstly, to draft a Testamentary Trust, the legal fees would be anywhere between $2,000.00 to $5,000.00 or above per Will. Next, are the annual costs of maintaining the Trust. Once the Trust is established on the death of the testator, Trust tax returns will need to be prepared and this will usually involve a cost each year in the range of $2,500.00 – $5,000.00 or above. Next, because tax laws are always changing, the need to review the Testamentary Trust is much greater than it would be with a standard Will, therefore meaning regular trips back to the lawyers and the accountants possibly once a year or at least once every three years to make sure that the existing Will is still compliant with current laws.
In circumstances where the creation of the Trust achieves significant tax savings or indeed divorce or bankruptcy proofing is an important consideration, these costs of preparing the Trust are potentially miniscule compared to the financial benefits that they create, but in each case, careful considerations of the cost versus the benefit must always be made.
Michael Zande is the Principal of Zande Law, Solicitors with over 25 years’ experience in practice. Michael and his team have had extensive experience in drafting of Wills and Administration of Deceased Estates. Please feel free to review our firm and staff profiles at www.zandelaw.com.au
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.
*These figures are periodically adjusted by the Australian Taxation Office and so have been rounded off for the purposes of this article.
We regularly receive questions from clients about Wills.
Why should I make a Will?
If you don’t make a Will, your assets will be distributed to your surviving relatives according to a fixed priority ranking and none of your assets can even be distributed until one of your relatives obtains authority to do so via a special (and often expensive) court application.
What are the requirements for a valid Will?
The Will must be in writing, signed by the Will maker and witnessed by two persons who must also sign the Will. If either witness is named as a beneficiary in the Will, they will loose their entitlement and the Will maker and both witnesses must be over the age of 18 and of full mental capacity.
When might a person be considered to lack sufficient mental capacity to make a Will?
The test for mental (called testamentary) capacity is pulled from a variety of past court cases. In short it must be shown that the Will maker:
understood what a Will does and the effect of signing it;
understood the nature and extent and value of his/her assets;
was aware of those persons who might reasonably have expected to benefit from the estate; and
possessed the ability to evaluate and discriminate between those more or less deserving.
Having the Will signed in the presence of a solicitor who has accepted instructions to draft the Will certainly lends significant credence to the contention that the Will maker had full testamentary capacity.
Can I leave my assets to whoever I wish?
Yes, but disinheriting a spouse, de facto spouse (of more than five years standing) or a child/stepchild may leave your estate open to legal challenge from the disinherited person. These challenges can be very expensive to sort out and may result in a Judge effectively rewriting your Will to re-inherit the disinherited person.
What impact does marriage have on a Will?
The Act of marriage triggers certain provisions in Succession Law that automatically revoke any provisions in the Will that do not favour the person who the Willmaker has married. So for example, if Jane marries Peter and at that time has an existing Will in which she leaves some assets to Peter and some assets to other persons and has also decided to appoint another person as the Executor, then Jane’s marriage to Peter will revoke everything in the Will except those provisions bequeathing assets specifically to Peter.
If you intend to get married it is therefore usually critical that you either redo your Will after the date of your marriage or, if you prefer, have your Will signed before the date of the marriage with a special clause inserted stating that it has been prepared in contemplation of that marriage.
What impact does separation and divorce have upon a Will?
Separating from your spouse has no impact on the Will whatsoever. If your spouse is the named beneficiary he/she will still inherit all of your assets unless your death was intentionally caused by that spouse. A formal divorce can be obtained one year after separation and obtaining a divorce order does have the effect of disqualifying your former spouse as a beneficiary under the Will but the Will is otherwise preserved as valid.
Does a Will cover all of my assets?
If you have an interest in a particular type of asset that is irregular you should always get specific legal advice about the asset when you make your Will. In general a Will covers all of your assets except:
(a) any money held in a Superannuation scheme – for these assets generally you need to give a specific nomination to the Trustee of the Super Fund on how that money is to be paid and this nomination stands outside your Will;
(b) jointly owned real property (ie. land and buildings) and all bank accounts – generally these assets will automatically pass to the surviving joint owner regardless of what is said in your Will about them; and
(c) assets held under a formally created Trust – generally these assets are incapable of being given away under your Will because the terms of the Trust Deed have already identified those persons who are to benefit from the Trust assets.
Can I prepare a Will in Queensland that deals with assets in some other State of Australia or foreign country?
A Will in Queensland properly prepared can deal with assets located elsewhere in Australia so long as it is first proved as valid (called Probate) in the Queensland Supreme Court. Generally the same principle applies for assets in foreign jurisdictions such as New Zealand and the United Kingdom, but it is always prudent for your local Lawyer to first confirm this to be correct with a Lawyer practicing in that foreign jurisdiction.
Michael Zande is the Principal of Zande Law, Solicitors with 25 years experience in practice. Michael and his team have had extensive experience in drafting of Wills and Administration of Deceased Estates. Please feel free to review our firm and staff profiles at www.zandelaw.com.au
The information in this article is merely a guide and is not a full explanation of the law. Zande Law cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.