Sep 5, 2024 | Wills and Estates
When a person dies without a valid Will, they are considered to have died intestate. Dying intestate means a person has died without a Will or has left a Will that does not properly dispose of their property.
In NSW, intestacy laws will determine who administers the deceased’s estate and how the deceased’s assets are distributed. The rules of intestacy are legislated under Chapter 4 of the Succession Act 2006 (NSW).
Who is eligible to inherit from an intestate estate?
The Succession Act sets out which relatives are eligible to inherit from an intestate estate. Examples of eligible parties and their entitlements are outlined below:
| Relative category | Entitlement to the estate |
| The current spouse and children from the relationship. | The current spouse is entitled to the whole estate unless the deceased has children from previous relationships. |
| The current spouse, children from the relationship, and children of the deceased from previous relationships. | The current spouse is entitled to:
- All the deceased’s personal effects.
- A statutory legacy, which amount changes from year to year. If the estate does not cover this, the spouse inherits the whole of the estate.
- Half of whatever is left of the estate.
- The remaining half of the estate is shared equally between all of the surviving children. |
What is the order of inheritance when someone dies intestate?
The statutory order in which eligible relatives will inherit an intestate estate is outlined in the diagram below:
Each “category” of relatives entitled to an intestate estate must be exhausted before moving on to the next. Once an eligible relative is found, the process stops. Each relative in the category receives an equal share of the estate (although there are exceptions for first cousins).
What is included in an intestate estate?
An intestate estate includes real estate owned by the deceased and also extends to other assets including:
- Vehicles
- Bank accounts
- Stock or bonds
- Personal effects (e.g. Jewellery, art, antiques)
What are Letters of Administration and how are they used to administer an intestate estate?
Letters of Administration is an order made by the Supreme Court of NSW that appoints an eligible person to administer an intestate estate.
Only a person who is entitled to the whole, or share, of the estate may apply for Letters of Administration. The administrator of an estate is responsible for gathering the deceased’s assets, repaying their liabilities and distributing their estate.
If there is no spouse or next of kin, the Court will grant administration to the NSW Trustee & Guardian or any other person the Court deems fit.
Applications for Letters of Administration must occur within six months from the date of death.
Notice of intended application for the administration of an intestate estate
A Notice of intended application must be lodged with the Court at least 14 days prior to applying for Letters of Administration. This notice allows eligible persons to make a claim on the estate or come forward with knowledge of an existing Will.
How does the administrator distribute an intestate estate?
Once the Letters of Administration has been granted, the administrator will hold the estate as a ‘trustee’ for the relevant beneficiaries. It is the administrator’s responsibility to pay any debts owed by the deceased from funds of the estate.
A Notice of intended distribution may also be published by the administrator prior to distributing the intestate estate. This notice allows creditors to make claims on the estate within 30 days. Although this notice is not mandatory, it may offer the administrator protection from personal liability.
NB: Gifts of money (legacy) must be distributed to the beneficiaries within 12 months otherwise interest can be claimed by the beneficiary against the estate.
Contact Us
If you wish to draft a Will or apply for Letters of Administration, we recommend that you seek professional advice. To discuss your estate matter with an experienced Wills & Estates lawyer, please contact Etheringtons Solicitors in North Sydney on (02) 9963 9800 or via our online contact form.
Aug 27, 2024 | General Advice, Wills and Estates
A Self-Managed Super Fund (SMSF) is a private superannuation fund in which the SMSF trustee has control over retirement funds. The trustee manages the retirement benefits of its members by deciding:
- The amount of money invested into the SMSF;
- The way in which funds are invested;
- How and when members can receive their benefit; and
- Who receives a member’s fund balance when they die.
If you lose the capacity to be involved in your SMSF, the trustee may allocate your funds however they choose. To ensure your SMSF benefits are distributed in accordance with your wishes, you must have a valid succession plan.
What should be included in my SMSF succession plan?
1. A valid Will
You must have a legally valid Will that appoints your executor. The executor of your Will can ensure the SMSF trustee carries out your wishes for your super after you have died.
2. A valid Binding Death Benefit Nomination
A binding death benefit nomination will tell your trustee how and to whom you would like your super balance paid.
If you do not have a binding nomination, the trustee can use their discretion to decide which dependant to pay the death benefit. The trustee can also make a payment to your executor to distribute your funds according to the instructions in your Will.
To learn more about superannuation death benefits, please refer to the Australian Taxation Office website.
3. A General and Enduring Power of Attorney
While you have mental capacity, a general power of attorney will appoint someone to complete specific SMSF tasks on your behalf.
If you have lost mental capacity, an enduring power of attorney will appoint someone to make legal and financial decisions on your behalf. To know what you need to consider when choosing an attorney, please refer to our blog.
If you do not appoint an enduring attorney, your super can be allocated at the direction of the trustee when you lose mental capacity. This means that your super fund balance can be given to another beneficiary of the trustee’s choosing.
If you are the sole member of the SMSF and have not appointed an enduring attorney, the fund may freeze-up until a financial management application to the NSW Civil & Administrative Tribunal is successful.
4. A SMSF Deed
Your appointed attorneys should be recognised in your SMSF Deed in order to be authorised as your legal representatives.
If your SMSF does not authorise your attorneys, they will not be able to manage and protect your super on your behalf. This can result in unforeseen capital gains tax or stamp duty fees which can disrupt your investment and retirement planning.
Seek legal advice
Your SMSF should be carefully considered in your succession planning. If you do manage your super carefully, your death benefits will not be allocated according to your wishes. If you need assistance with creating a Will, creating a binding death benefit nomination, appointing an attorney or creating a SMSF Deed, we recommend seeking professional advice.
To discuss your SMSF and estate planning matter with an experienced Wills and Estates lawyer, please contact Etheringtons Solicitors in North Sydney on (02) 9963 9800 or via our contact form.
Jul 5, 2024 | Family Law, Wills and Estates
What is undue influence in Will making?
Undue influence in Will making refers to the coercion of a testator (Will maker) into making decisions that go against their wishes. This form of coercion will often occur when the testator is vulnerable and dependent on others for support. A person may exert undue influence to ensure the testator favours them to the detriment of others.
Whereas fraud is the act of misleading, undue influence occurs when the testator is coerced into doing what they do not desire.
How is undue influence established?
The doctrine of undue influence can be established in two ways; actual or presumed. These differ in the evidence provided by the parties, with the overall onus of proof lying with the person asserting undue influence.
Actual
Actual undue influence arises when it is proven as a fact, that the actions were to such a degree that the Will maker was unable to exercise their independent will.
When contesting the Will on this basis, proof of the accused party’s influence over the mind of the testator must be established in order for equity to intervene.
Presumed
Presumed undue influence arises from proof of the nature of the relationship between the relevant parties. This relationship must show one party exercised dominance over the other due to the testator’s trust and confidence in the dominant party.
If presumed undue influence is established, the dominant party must prove that decisions under the Will were voluntary and well understood by the testator.
How do I prove Will making under undue influence has occurred?
To prove undue influence, the complainant must contest the Will in Court after the testator’s death. The following factors must be evidenced:
- The Will bequeathed property in an unforeseen manner without obvious explanation.
- The testator was dependent on, or trusted, the person exerting influence.
- The testator was vulnerable due to illness or frailty.
- The influencer took advantage of the testator and benefitted from the asset distribution under the Will.
The process of undue influence relies upon credible witnesses who knew the testator and can testify to the relationship between the testator and the defendant (person benefitting from the Will).
Court rulings in cases of Will making under undue influence
A rule of ‘suspicious circumstances’ calls upon the Courts not to grant probate without being fully and entirely satisfied that the Will expresses the true intentions of the deceased.
This rule is also outlined in the Succession Act 2006 No 80 s96 (2)(b) wherein the Court is granted power to revoke approval of probate if the Will was obtained by fraud or undue influence.
If undue influence has been proven to have affected the entirety of the Will, the entire Will may will be invalid. If only part of the Will has been affected, the remainder is still valid.
Examples of undue influence in Will making: Case Law
Edwards v Edwards & Ors [2007] EWHC 1119 (Ch)
The son of the deceased alleged that his brother used undue influence to persuade the mother to exclude the plaintiff from the Will. The Court ruled that the child deliberately fed false information to sway the mother’s mind in his favour resulting in undue influence.
Hayward (As executor of Felton Estate) v Speedy & Felton (2021) NSWSC 943
A dispute between siblings concerning the father’s gift of money to the daughter as being procured through undue influence. The parents were both vulnerable to exploitation being frail, cognitively impaired and elderly with a large dependence on their daughter for daily activities. Furthermore, no independent legal advice was obtained regarding the gifts, which were so substantial as not to be reasonably accounted for on the ground of friendship and relationship. As a result, the father’s estate retained the gifts initially bequeathed to the daughter, as it would be unjust for her to receive benefit when she had exercised undue influence.
Contact Us
If you believe someone has exerted undue influence in the making of a Will, we recommend seeking independent legal advice.
If you would like to discuss your matter with a legal professional, please contact Etheringtons Solicitors on (02) 9963 9800 or via our online contact form.
Jun 17, 2024 | Wills and Estates
A Will sets out a person’s wishes for how they would like their estate to be distributed after their death. A person making a Will (the testator) must meet a cognitive standard when understanding the nature and effect of their Will. This legal standard is referred to as testamentary capacity.
What is testamentary capacity?
Testamentary capacity is the required legal and mental capacity a person must demonstrate in order to create a valid Will. If a testator does not demonstrate testamentary capacity, their Will is considered invalid and will not be admitted to probate.
The test for testamentary capacity
The case of Banks v Goodfellow [1870] established the principles of testamentary capacity that remain in place today. The case ruled that in order to possess testamentary capacity, the testator must:
- Understand the nature and extent of their estate
- Understand the nature and effect of making a Will
- Understand the potential beneficiaries of their estate; and
- Be free from ‘disorders of the mind’.
Though these principles were created long ago, they continue to serve as the legal benchmark for assessing testamentary capacity. Satisfying these principles is essential to ensuring a Will reflects the true intentions of the testator.
Understanding the nature and extent of the estate
The first component of testamentary capacity requires the testator to satisfy an understanding of the nature and extent of their estate. To understand the nature of one’s estate is to understand both the value and significance of the property. The testator should also be able to demonstrate a knowledge of what their assets are and how they are held.
The cognitive threshold for understanding the nature and extent of an estate can vary with complexity. For example, a Will with modest assets like a family home, savings account and superannuation only requires a basic level of understanding. However, for a more complicated estate using trusts or companies to hold assets, the required threshold for understanding is higher.
Understanding the nature and effect of making a Will
The testator must also demonstrate they understand what a Will is and the effect their Will has on their estate. It is essential for the testator to show they understand the binding nature of a Will and its legal significance. The testator must also affirm that the Will is an accurate reflection of their final wishes. It is also essential that the testator recognises the responsibility they are entrusting to their executor and trustees.
Understanding the potential beneficiaries
The testator must also comprehend who is entitled to a provision from their estate when they pass away. In NSW, as long as all assets are clearly outlined in the Will, a person can distribute their assets however they choose.
The testator should be aware of individuals that may make a claim against their estate for familial, caring, or dependency reasons. These persons may be eligible to challenging the testator’s Will to gain a greater portion of the estate. This can be achieved by lodging a Family Provision Claim. To learn more about filing a Family Provision Claim and preventing Will disputes between siblings, please refer to our blog.
Must not have a ‘disorder of the mind’
To satisfy testamentary capacity, the testator must be in a mentally sound condition. If the testator has a psychiatric condition or neurological disorder, they may not be able to accurately express their final wishes.
Common ‘disorders of the mind’ that may affect a person’s testamentary capacity include dementia, schizophrenia, bipolar disorder, depression, and alcohol or drug dependency.
When making a Will for someone with a psychiatric or neurological condition, a medical expert can provide an assessment of the person’s character and mental capacity. A medical assessment will assist in determining whether the testator possesses testamentary capacity.
Contact Us
If you require assistance with Will making and testamentary capacity, we recommend seeking professional advice. To discuss your estate planning matter with an experienced lawyer, please contact Etheringtons Solicitors on (02) 9963 9800 or via our online contact form.
Jun 5, 2024 | Wills and Estates
Following the death of a loved one, the time for mourning is shared with the process of finalising their estate. During this time, the deceased’s assets will be distributed in accordance with the terms of their Will.
After the distribution of assets, a person may feel they have not been adequately provided for in the deceased’s Will. In this case, a Family Provision Claim can be filed to request for a greater share of the inheritance. Alternatively, if there are suspicions that the deceased’s Will is invalid, a person may challenge the Will by filing a Probate Caveat.
To avoid legal complications in the distribution of an estate, it is important to understand the intricacies of an inheritance dispute.
What is a Family Provision Claim?
If an eligible person believes they have been unfairly left out the deceased’s Will, or deserve a larger portion of the estate, a Family Provision Claim can be filed with the Supreme Court of NSW (‘the Court’). If this application is successful, the Court will grant the applicant with a share, or greater share, of the deceased’s estate.
Before an application is considered however, the Court must first refer all applications to mediation.
How can mediation resolve my inheritance dispute?
Under section 98(2) of the Succession Act 2006 (NSW) (‘Succession Act’), the Court must refer all Family Provision Claim applications to mediation as the first step in resolving an inheritance dispute.
Mediation offers an opportunity for disputing parties to reach an agreement on an estate’s distribution outside of the Court. The parties in a mediation are usually the applicant contesting the Will and the executor or primary beneficiary as the defendant. Anyone who is directly affected by the decision of the mediation (i.e. other beneficiaries to the Will) are also entitled to attend.
Both parties are entitled to legal representation and an accredited mediator to conduct the negotiation.
Mediation is cost-friendly and provides a confidential space to resolve inheritance disputes. Unlike a Court order, mediation allows for a custom solution that is suitable to each parties’ needs and interests.
What if the mediation is unsuccessful?
If the mediation is unsuccessful, the Family Provision Claim will be considered by the Court.
Before making an order, the Court considers a range of factors set out under section 60 of the Succession Act. These factors include the relationship between the applicant and deceased, any obligations owed between them, the nature and size of the estate and the current financial situation of the applicant.
An order for Family Provision will be made if the Court is satisfied that the applicant deserves a share, or greater share, of the deceased’s estate. This order will alter the provision of the estate and ensure the applicant receives the appropriate inheritance. It is important to note that these orders may affect the inheritances of other beneficiaries.
What if I want to challenge a Will?
If a person challenges a Will, they are claiming the Will itself is invalid. A Will’s validity may be disputed on the grounds of undue influence, forgery, a lack of testamentary capacity, or improper execution.
A concerned party can challenge a Will by lodging a Probate Caveat with the Court within 6 months of the death of the deceased. For more information about probate caveats, we recommend reading our blog Contesting a Grant of Probate.
If the deceased does not have a Will, then they are considered to have died ‘intestate’ (without a Will). An eligible person may still challenge the deceased’s estate in the same process as if they had a Will.
Can I defend an invalid Will?
In specific circumstances, it may be possible to defend an invalid Will and maintain its provisions.
Section 27 of the Succession Act permits the Court to rectify a Will if a clerical error was made or the Will does not convey the deceased’s instructions.
Section 32 of the Succession Act permits the use of extrinsic evidence when interpreting an ambiguous Will. The Court may uphold a Will if evidence is provided that clarifies the intentions of the deceased. In doing so, the inheritances under the Will are protected from alterations to the estate’s distribution.
To learn more about challenging a Will, please refer to our free Guide to Family Provision Claims – Challenging A Will or read Paul Etherington’s interview with the Daily Telegraph about the intricacies of inheritance disputes.
Contact Us
If you are a beneficiary or executor to a Will that is being challenged or under a Family Provision Claim, we recommend seeking professional advice.
If you would like to discuss your inheritance dispute matter, please contact Etheringtons Solicitors on (02) 9963 9800 or via our online contact form.
Mar 15, 2024 | Wills and Estates
Unfortunately, in the wake of a loved one’s passing, the time for mourning is shared with the complicated process of finalising their estate. This process can cause tensions to arise between family members, especially children, in relation to shares of the inheritance.
As a parent, it is important to have a Will in place to ensure your wishes are met when you pass away. If you do not have a Will to protect your assets, your estate may be at risk of becoming the centre of a lengthy conflict between your children. Fortunately, there are a number of steps that can be taken to prevent a Will dispute between siblings.
Can siblings challenge their parent’s Will?
Yes. If a sibling feels they have not been appropriately provided for, they are allowed to challenge their parent’s Will by lodging an application with the Supreme Court of NSW. This process is called a Family Provision Claim. Any eligible person can lodge a Family Provision Claim to formally contest their share of the inheritance and request that the Court grant them a part, or greater portion, of the estate.
The Supreme Court recently revealed in their Provisional Statistics that 968 Family Provision Claims were filed in the 2023 calendar year. This 11% increase in claims from 2021 demonstrates the increased demand of family members for a share, or greater share, of a deceased person’s estate.
To accept a claim and make an order on a Will, the Court must consider the following factors:
- The relationship between the applicant and the deceased
- Any obligations owed between the deceased and the applicant
- The financial position of the applicant
- The value of the estate
- Other aspects the Court may deem relevant
There are a number of strategies a parent can use to prevent the lodgment of a Family Provision Claim.
Fair distribution of the estate
Whilst it may seem logical to split your estate equally amongst your children, parents may choose to split their estate unequally. For example, a parent can give a child who requires expensive healthcare a larger share of the estate to assist with medical costs.
As long as all of the assets are clearly outlined in the Will, a parent can allocate their estate however they choose. To avoid a dispute among family members, it is important that the distribution of the estate is fair rather than equal and that all assets are properly accounted for. An unexplained inequality in inheritance can be a source of anger or resentment between siblings.
Open communication
If your estate is going to be unequally distributed, an effective way to mitigate conflict is to communicate your wishes openly to your children before your passing. Expectation management can help avoid sibling disputes as it gives children insight into the reasoning behind your estate distribution. Openly communicating inheritance decisions made in a Will is crucial to avoiding confusion and distress upon the estate’s distribution.
Keep an updated Will
To avoid a dispute erupting over the contents of a Will, you should keep your Will as up-to-date as possible. A Will that is not current may not account for new circumstances that affect a parent’s estate before they die. An out-of-date Will would leave an executor with outstanding assets and no clear direction as to where they should be distributed. This has the potential to raise conflict between siblings as to who is entitled to the inheritance of outstanding assets.
Neutral third-party executor
Appointing a trusted third-party executor will prevent sibling disputes over the management and inheritance of an estate. Rather than appointing your children as both co-executors and beneficiaries, a third-party executor eliminates the chance for dispute as they do not directly benefit from the Will. This ensures the executor remains impartial when managing and distributing the estate according to the deceased’s wishes. A third-party executor can be a trusted friend, associate or a solicitor.
Alternative dispute resolution
Following the death of a parent, mediation is an effective way for siblings to resolve a dispute without having to involve the Court. Mediation involves the structured negotiation of the terms of the Will using a neutral third-party in order to reach a mutual agreement on inheritance shares. The Supreme Court will often refer parties in Will disputes to alternative dispute resolution as these means are more efficient and cost-effective.
The Supreme Court’s Provisional Statistics record that in 2023, of the 968 Family Provision Claim’s filed in the Court, only 5.6% were judicially determined. This means that the majority of claims were resolved outside of Court through alternative dispute resolution means such as mediation.
Contact Us
If you believe you have been inappropriately provided for in a Will and would like to file a Family Provision Claim, we recommend seeking professional advice. To discuss your Will dispute or estate planning matter with a lawyer experienced in this field, please contact Etheringtons Solicitors in North Sydney on (02) 9963 9800 or via our online contact form.
