News

News

Are your super and life insurance beneficiary nominations up to date?

May 5th, 2020

If you have finished (or are well and truly over) ‘Marie Kondo-ing’ your home, now is a good time to ensure that your superannuation and life insurance beneficiary nominations are in place and up to date.

What a lot of people don’t realise is that your superannuation and life insurance do not typically form part of your estate in the first instance to flow through your will.

In order to direct who your superannuation and life insurance is to go to, you should have beneficiary nominations in place with your superannuation funds and life insurance companies.

If you do not have a binding death benefit nomination in place (or your nomination has expired), the trustees of your superannuation fund have discretion to determine who they pay your superannuation death benefit to and in what amount, which may or may not be in accordance with your wishes.  Also, these nominations usually lapse every 3 years.

It is important that you read the beneficiary nominations carefully when completing as, while they may appear to be simple forms, they are still legal documents that require certain elements to be met in order to be binding and effective.

If you have any questions or would like assistance preparing your superannuation and life insurance beneficiary nominations, please do not hesitate to call our office on 4036 9700.

More

The truth about why you need an enduring power of attorney

February 25th, 2020

The importance of an enduring power of attorney is often overlooked because people believe that their spouse or next of kin will be able to look after their affairs if they were to lose capacity. The truth is, it would be very difficult for your loved ones to deal with your affairs if they are not appointed as your attorney.

Let’s use the example of Jane and Tom:
• Jane and Tom are in their mid 50’s.
• Tom works full-time and Jane works part-time.
• Jane and Tom own their family home jointly.  There is a mortgage over their property.
• Tom is involved in a car accident and suffers serious brain injuries. As a result, Tom is unable to make decisions for himself and requires care on a full time basis.
• Jane is unable to care for Tom on a full-time basis and cover the mortgage repayments.  Jane decides to sell the family home and move Tom into a care facility.
• Jane contacts a real estate agent to list the property, however the sale comes to a standstill when Jane encounters a problem; Jane and Tom do not have enduring powers of attorneys.
• As Jane is not appointed as Tom’s attorney, she is unable to sign the contract for sale or transfer documents on Tom’s behalf to effect the sale of the property.

The consequence of not having an enduring power of attorney in place means that an interested party (i.e. family member or friend) would need to make an application to the Queensland Civil and Administrative Tribunal (“QCAT”) to be appointed as the administrator for financial matters and/or guardian for personal and health matters. So in the scenario above, Jane would need to make this application to have the power to sell their property. This process is stressful and can be costly.

If no one is willing to take on this responsibility then the Public Trustee and the Public Guardian may be appointed to take control of your affairs. There is also the risk of these statutory offices being appointed if there is a dispute between family members about who is the most appropriate person(s) to act.

The reality is, any person can unforeseeably lose their capacity at any time during their life. Wouldn’t you prefer to appoint someone who you trust to look after your affairs if this situation were to arise?

If you would like to avoid this problem for relatively little time and money, please do not hesitate to contact us to set up your enduring power of attorney.

Get your affairs sorted today.  Contact our Mareeba wills and estate lawyers on 07 4092 3555.

More

BIG LIFE CHANGES: The effect of marriage, divorce and separation on your will

August 22nd, 2019

There seems to be a misunderstanding about divorce and the appropriate time to update your will or do a new will.   You should always have a current and up to date will in place.  Waiting for your divorce to be finalised is never a good reason to delay your estate planning.

What’s the effect of divorce on a will?

In Queensland when a person makes a will (“the willmaker”) and then later divorces, any provision appointing the willmaker’s former spouse as executor, trustee and/or guardian will be revoked and taken to have been omitted from the will.  Further, any gifts made in favour of the former spouse are automatically revoked upon divorce.  All other provisions in a will not relating to the former spouse, generally will remain valid and effective.

As divorce only revokes the provisions to your former spouse in your will and not your whole will,  you do not need to wait for your divorce to be finalised to prepare a new will (and I do not recommend that you wait). Whist this example may seem reasonable to many of you, it is important to bear in mind that only upon a formal divorce will those provisions to a former spouse be revoked.

What happens if I am separated but not divorced?

For married couples, separation alone will not revoke a will. In Australia married couples must be separated for a minimum period of twelve (12) months before making an application for a divorce.  During the period of separation (which is sometimes many years) if you have an old, outdated will in place gifting everything to your former spouse, he/she may get just that, everything.

What if I don’t have a will?

It is just as bad, if not worse, if you don’t have a will in place and you are recently separated but not divorced.  If you do not have a will in place and are legally married at the time of your passing, then under the rules of intestacy your former spouse will get a large portion, if not all, of your estate.

When should I do a new will or update my existing will?

A lot of clients prefer to hold off preparing a new will or reviewing their existing will until their divorce and/or property settlement has been finalised.  I do not recommend this.  Whist you might feel like you have 101 things to do and your life is chaotic, a new or revised estate plan should be at the top of your “To Do” list.

What other life changing events will affect my will?

The ending of a de facto relationship or civil partnership will also revoke the provisions to a former spouse in a will.  So even if you are not married, you should bear this in mind.

Marriage will automatically revoke a will*, unless the will is made “in contemplation of marriage”.    I often find, especially for younger clients, that they still wish to make provisions for their siblings or parents even if they are getting married.  Usually if their parents have gifted them a sum of money or have provided a guarantee to assist them in buying their first home.  If they prepare a will making these provisions for family members and then later get married, and their will has not been made in contemplation of marriage, then these special gifts to family members will be revoked.

*It is important to note that marriage will not revoke the following provisions in a will pre-dating marriage:

  1. a gift to the person to whom the willmaker is married to at the time of the willmaker’s death;
  2. an appointment as executor, trustee, advisory trustee or guardian of the person to whom the willmaker is married at the time of the willmaker’s death;
  3. a will, to the extent it exercises a power of appointment, if the property in relation to which the appointment is exercised would not pass to an executor under any other will of the willmaker or to an administrator of any estate of the willmaker if the power of appointment were not exercised.

Information contained in this article is of a general nature only and is applicable to the current law in Queensland.  It is not intended to address the circumstances of any particular individual or entity.  Please note that the law in each state and territory may differ.  We recommend that you contact one of our experienced wills and estates solicitors to obtain advice about your individual circumstances.

More

Yours, mine, and ours – The effect of marriage on a will and competing interests in a blended family

January 22nd, 2019

Being a member of a blended family can create some unique challenges.  There are very few families who conform to the “Brady Bunch” dynamic, where six children happily share two bedrooms and one bathroom and every problem is magically resolved within 30 minutes.

With sibling rivalry, competing needs for love and attention, and conflicting emotions being common themes in blended families, it is no surprise that these challenges often escalate when a spouse/parent (natural or step) passes away.  In the succession world, without a proper estate plan in place, the transition of wealth in a blended family environment can cause a myriad of problems.  The case Re Estate Grant, deceased [2018] NSWSC 1031 is a prime example of this.

Re Estate Grant, deceased 

The deceased, David William Grant (“Mr Grant”) died in December 2015, aged 55 years.

Mr Grant had been married twice at the time of his passing.  He was married to his first wife, Lisa, from October 1989 to November 2013.  Lisa had two children from an earlier relationship, Siegfried and Maximilian whom, for the most part, Mr Grant treated as his own, However, at the time of his passing, he was estranged from Siegfried.  Mr Grant and Lisa also had twin sons of their own, Jackson and Lewis.

Mr Grant’s second marriage to Katerina grew out of an extra marital affair which commenced in 2006 and continued until he and his wife Lisa separated in April 2012.  Mr Grant and Katerina commenced a de facto relationship in 2012.  He proposed to Katerina in June 2015 and they were married shortly after in September 2015.

Less than three months after they married, Mr Grant passed away from brain cancer.  Mr Grant and Katerina had no children of their own.

The will

Mr Grant made a will on or about 3 January 2014.  The will appointed Mr Grant’s brother Michael to be the executor of his estate and gifted the residue of his estate equally between Maximilian, Jackson and Lewis.

Mr Grant’s main reason for wanting to update his will, was to disinherit Siegfried and Lisa, and he wanted to reinforce their disinheritance with an express repudiation in the will.

The effect of marriage on a will

Section 12 of the Succession Act 2006 (NSW), similarly to section 14 of the Succession Act 1981 (Qld), provides that marriage of a testator (will maker) will revoke the testator’s will unless it is made in contemplation of marriage.

In the event that Mr Grant’s 2014 will was revoked by his marriage to Katerina in 2015, he would be considered to have died intestate (that is without a will) and the beneficiaries of his estate under the rules of intestacy would be:

  1. his wife, Katerina, who would be entitled to the deceased’s personal effects, a statutory legacy, and one-half of the remainder of the deceased’s estate; and
  2. Mr Grant’s twin sons Jackson and Lewis, who would be entitled to the other half of the remainder of the estate.

Maximilian would not benefit under the rules of intestacy because he is not a biological child.

Mr Grant’s estate was worth an estimated net value of approximately $4.4 million (not including personal effects) and a superannuation fund with an estimated value of $858,000.00.  Under the rules of intestacy set out above, Katerina’s share would be estimated to be approximately, $2.4 million and Jackson and Lewis’ shares were estimated to be approximately $990,000.00 each.

Competing claims

There were two competing claims brought before the court:

  1. Katerina claimed that the 2014 will was not made in contemplation of marriage and therefore their marriage in 2015 revoked the will and the rules of intestacy applied. Katerina also made a family provision claim to be considered in the event that the court determined that the 2014 will was in fact valid.
  2. Jackson, Lewis and Maximilian claimed that the will was made in contemplation of marriage, and requested that the court uphold the will as valid, so that they would receive their equal shares in the estate. Maximilian also made a family provision claim to be considered in the event that the court determined that the will was invalid.

Was the will made in contemplation of marriage?

The primary issue for the court to determine was whether the 2014 will was made in contemplation of marriage.

Maximilian, with the support of Jackson and Lewis, relied upon the following facts (and various others) in support of his contention that the 2014 will was made “in contemplation of marriage” to Katerina:

  1. Mr Grant and Katerina began their relationship as early as 2006, several years before the deceased gave instructions for the preparation of his will.
  2. When Mr Grant and Lisa first discussed separation in about 2010, Mr Grant started to discuss “long term plans” with Katerina, during which discussions on many occasions he told Katerina that he was going to marry her “one day”.
  3. When Mr Grant made such statements to Katerina in or about 2010, Katerina responded to the effect that she was willing to discuss marriage with him if and when he was in a position to marry her; meaning, that he first had to separate from Lisa, divorce Lisa and then ask Katerina to accept a marriage proposal.
  4. Via an exchange of text messages on 2 January 2011, Mr Grant sent Katerina a message to the effect “marry me”, to which she replied to the effect, “I will when you ask me properly one day”.
  5. In April 2012 Mr Grant and Lisa formally, and finally, separated, and Mr Grant and Katerina commenced their de facto relationship.
  6. At that time Mr Grant had a will that left his estate to Lisa and, if she predeceased him, favoured their four children (including Siegfried).
  7. In early 2013, on his own initiative, Mr Grant consulted a fertility clinic about reversal of a vasectomy procedure to which he had previously submitted.
  8. At about the same time, at the instigation of Mr Grant, Katerina also attended the fertility clinic to ascertain whether, if Mr Grant’s vasectomy were to be reversed, there was a prospect that she might conceive a child.
  9. On 26 October 2013, Mr Grant and Katerina attended the auction at which a property at McMahon’s Point was purchased in Mr Grant’s name (with a financial contribution by Katerina), an experience which she described in her evidence as a shared moment that signified the solidification of their future together.
  10. On 5 November 2013 the marriage between Mr Grant and Lisa ended in a divorce, preceded by a property settlement.
  11. In 2013 and 2014 (including on occasions before the McMahon’s Point property was purchased) discussions of marriage between the Mr Grant and Katerina took the form of “when we marry”, not “if we marry”.

Katerina argued that:

  1. The deceased did not make a formal proposal of marriage to Katerina until 6 June 2015.
  2. At no time before then, and particularly at no time in the early discussions of 2010, did Katerina commit herself to marriage in advance of a proposal capable of acceptance.
  3. In the 2010 discussions, Katerina said no more than that she was prepared to discuss marriage with Mr Grant if and when he was able to make, and he did make, a proposal of marriage capable of acceptance.
  4. At the time he executed his will on 3 January 2014, Mr Grant did not have in contemplation marriage to Katerina, only freeing himself from his marriage to Lisa.
  5. The will was prepared in haste and, after procrastination on the part of Mr Grant, executed in haste as a “stop gap” will to be reviewed at leisure later at an unspecified time.

The decision

The court concluded that at the time Mr Grant made his will he was living a compartmentalised life, a life in transition. When the will was drafted, he was in the process of divorcing his first wife.  By the time he executed it, he had divorced her. He had made no commitment to marry Katerina and Katerina had made no commitment to marry him, if ever he were to propose. Both were free agents, free to marry somebody else, or not to marry at all.

The court noted that although Mr Grant and Katerina had an on-again/off-again relationship over an eight year period, including a period of cohabitation in 2011, they were not cohabiting full time. Their relationship was a work-in-progress. Although marriage was from time to time discussed it remained a matter of speculation until such time as Mr Grant might bring himself to propose marriage, at which time Katerina (however hopeful she might have been) reserved a right of refusal.

Mr Grant was focused upon extricating himself from a spent marriage (severing all connection with his wife, but maintaining relationships with favoured children of that marriage), unconcerned with any prospective marriage or family obligations arising from such marriage.

The court concluded that Mr Grant’s will was not made in contemplation of his marriage to Katerina and accordingly it was revoked by and upon his marriage to Katerina being solemised.  Therefore Mr Grant was declared to have died intestate with his estate to be administered pursuant to the rules of intestacy subject to any family provision order made in favour of Maximilian.  

Conclusion

This case highlights the complexities of blended families in the context of estate planning.  Estate planning is more than just drafting a will.  The preparation of an estate plan involves a review of the state of your personal, family and business affairs with a view to determining how you want your assets to be dealt with after you pass away. Further, an estate plan should be reviewed regularly or, at the very least, in the event of any significant life changes, like marriage or divorce.  Seeking advice from an experienced wills and estate lawyer from the outset and reviewing your estate plan regularly is crucial to ensuring that your wishes are carried out and your family is not left in disarray.

More

The truth about why you need an Enduring Power of Attorney

May 15th, 2018

“I find that the importance of an enduring power of attorney is often overlooked by many simply because they believe that their spouse or next of kin will be able to look after their affairs if they were to lose capacity.  This is not entirely correct.  The truth is, it would be very difficult, if not impossible, for your spouse or other family members to deal with your affairs if they are not appointed as your attorney.

Let’s use the example of Jane and Tom:

  • Jane and Tom are in their mid‑50’s.
  • Tom works full-time as an engineer and Jane works part-time as a sales assistant.
  • Jane and Tom own their family home jointly, worth about $600,000.00.  There is a mortgage over their property for $250,000.00.
  • Tom is involved in a car accident and suffers serious brain injuries.  As a result, Tom is unable to make complex financial or legal decisions for himself and requires care on a full‑time basis.
  • Jane is physically unable to care for Tom on a full-time basis.  She is also unable to cover the mortgage repayments on her wage, and decides that it is best to move Tom into an aged care facility.
  • In order to pay for the facility, Jane has no other option but to sell their family home.
  • Jane contacts a real estate agent to list the property, however the sale of the property comes to a standstill when Jane encounters a problem; Jane and Tom do not have enduring powers of attorneys in place.
  • As Jane is not appointed as Tom’s power of attorney, she is unable to sign the contract for sale or land title transfer documents on Tom’s behalf to effect the sale of the property.

The consequence of not having an enduring power of attorney in place means that an interested party (i.e. family member or friend) would need to make an application to the Queensland Civil and Administrative Tribunal (“QCAT”) to be appointed as the administrator for financial matters and/or guardian for personal and health matters.  So in the scenario above, Jane would need to make this application to have the power to sell their property.  As you can imagine this process is stressful, especially if an urgent appointment is needed, and can be costly.

If no one is willing to take on this responsibility then the Public Trustee and the Public Guardian will be appointed to take control of your finances and personal and health matters.  There is also the risk of these statutory offices being appointed if there is a dispute between family members about who is the most appropriate person(s) to act.

I understand that the thought of losing capacity is a scary topic that no one likes to discuss.  However the reality is, any person can unforeseeably lose their capacity at any time during their life, either permanently or temporarily.  So wouldn’t you prefer to appoint someone who you choose and trust to look after you and your affairs if this situation were to arise?”

For more information, contact our wills and estates lawyer, Bianca Stafford.

More

What happens to my super when I die?

February 13th, 2018

As a wills and estates solicitor I often hear the statement “I don’t have any assets, so I don’t need a will”.

This couldn’t be further from the truth.  I often respond with the following questions.

Me: “Do you work?”

Friend: “Yes

Me: “Do you have super?”

Friend: “Yes

Me: “That’s an asset right there.

In fact, superannuation is often a person’s largest asset.

In the estate planning world, superannuation is an unusual type of asset.  This is because superannuation is not typically an asset of your estate which is covered by the provisions of your will.  Your will only covers assets owned by you personally.  On the other hand, your super is held for you on trust by the trustee of your superannuation fund.

In order to direct who gets your super in the event that you were to pass away, you need to complete a binding death benefit nomination form (“BDBN”) with your respective superannuation fund or if you have a self managed superannuation fund, in accordance with the terms of the trust deed.

I bet you’re still thinking, well in that case I don’t need a will.

What I often find in practice is that a lot of people do not fully understand who you can actually nominate on those binding death benefit forms for your nomination to be binding.

Under the superannuation law, the eligible beneficiaries (whom you can nominate on your BDBN form) include:

1. your dependants; or
2. your legal personal representative (i.e. executor of your will or administrator of your estate).

“Dependants” include:
1. your spouse (married, de facto or same sex partner);
2. your children (including step-children and adopted children);
3. anyone who is financially dependent on you when you die; and/or
4. anyone who is in an interdependency relationship with you when you die.

As part of my estate planning practice, I always ask this question “Do you have a binding death benefit nomination in place?” and 95% of younger people or people without dependants respond with:

Yes, I have nominated my sister and my brother

Or

No, what is that?”.

If your nomination is invalid (i.e. if you have nominated someone who does not fit within the criteria of eligible beneficiaries above) or you do not having a binding death benefit nomination in place, the trustee of your superannuation fund has discretion as to who they pay your superannuation death benefit to in the event of your demise.

If you don’t have any dependants, then in majority of cases the superannuation fund will pay your superannuation death benefit to your estate, to be distributed in accordance with the terms of your will.

What if I don’t have a will?

If your superannuation is paid into your estate and you don’t have a will, it will be distributed in accordance with the rules of intestacy, which are a legislative set of rules. The rules of intestacy do not take into account your circumstances at the time of your passing and therefore, the distribution of your estate under these rules, may not be in accordance with your wishes.

Let’s use the example of Ben’s estate.

• Ben was 30 years of age when he passed away suddenly.
• He did not have a spouse (married or de facto) and had no children.
• Ben’s main asset was his superannuation (including a life insurance component), worth approximately $400,000.00. Ben had completed a binding death benefit nomination, and had nominated his two siblings Jack and Jill (50% each).
• Ben did not have a will.
• Ben was close with his mother, Jane, however he was estranged from his father, Peter.
• Jane attempted to administer Ben’s estate as his next of kin. She contacted his superannuation fund to have the funds paid to Jack and Jill, however the superfund asked for a grant of letters of administration* before they could release the funds.
• Jane obtained the grant and the superannuation fund advised her that because Ben’s nomination was invalid, they would be making a distribution to Ben’s estate.
• As mentioned earlier, Ben died intestate (that is without a will), so that meant that the rules of intestacy apply.
• Under the rules of intestacy, as Ben was not survived by any dependants, his estate was distributed to his parents equally.
• This was clearly not in accordance with Ben’s wishes and there was very little his siblings (and his mother) could do.

If Ben had simply prepared a will, gifting his estate to Jack and Jill equally, then this situation could have been avoided.

If you would like assistance preparing a binding and effective estate plan, please do not hesitate to contact me.

*A grant of letters of administration is an official document issued by the Supreme Court of Queensland which declares the name of the person(s) who has the formal authority to handle the financial matters of a deceased person.

More