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.
Feb 21, 2024 | Wills and Estates
What is a grant of probate?
A grant of probate is a legal document issued by the Supreme Court that validates a recently deceased person’s Will. The document certifies that the testator (the person who made the Will) has passed away and created a valid Will. It also authorises the named executor/s to distribute the deceased’s estate in accordance with the terms of the Will.
How do I file a grant of probate application?
Following the death of the testator, the named executor/s must apply for grant of probate with the Supreme Court. The application must contain supporting documentation to assist the Court in validating the Will. These documents include:
- The deceased’s original Will
- Any codicils (formal alterations to the original Will)
- The testator’s death certificate.
The application must also provide a summary of the deceased’s assets, liabilities, any other named executors, and a list of the beneficiaries to the Will.
Once granted, the executor/s to the Will can settle outstanding debts, compile the deceased’s assets and distribute the estate to beneficiaries.
A grant of probate application must be filed within 6 months of the testator’s death. If the application is filed beyond this deadline, there must be a reasonable explanation for the delay.
Can I contest a grant of probate?
Yes, a grant of probate can be contested before the Supreme Court grants probate to the executor. A grant of probate can be contested by lodging a probate caveat.
A probate caveat notifies the Supreme Court that the probate application is being contested. The caveat will prevent the Court from granting probate until the person contesting the grant (caveator) has demonstrated their interest in the estate.
In NSW, the rules surrounding caveats are found under division 10 of the Supreme Court Rules 1970. The rules permit any person with an interest in the estate to “file a caveat in respect of any grant of probate or administration.”
For a probate caveat to be successful, it must challenge the validity of the Will. The decision of Vea v Katalinic [2020] NSWSC 805 concludes that for a probate caveat to be successful, it must present the Court with circumstances that warrant investigation.
Scenarios that may warrant an investigation include:
- Whether the deceased lacked testamentary capacity.
- Whether the deceased was subject to undue influence or duress when creating the Will.
- If the Will has not complied with legal requirements and is unclear in its interpretation.
- If forgery or other fraudulent behavior was involved in the creation of the Will.
What if a probate caveat is successful?
If the Supreme Court determines the Will is invalid, the Court will give directions to adjust the Will for a just determination of proceedings, or authorise for the probate to be granted in solemn form.
As opposed to common form, where the grant of probate is authorised by a registrar, a grant of probate in solemn form is authorised by a judge in a formal court proceeding. This opens the matter to litigation and requires the caveator to file a statement of claim to initiate the proceedings.
What if probate has already been granted?
If probate has already been granted, it is still possible to file a family provision claim against the Will within 12 months of the death of the deceased. A family provision claim offers eligible persons the opportunity to contest a Will if they believe they have been left out of the Will or deserve a higher provision of the estate.
To learn more, please refer to our free Guide to Family Provision Claims or read an interview with our principal Paul Etherington about the intricacies of inheritance disputes.
Contact Us
If you are planning on contesting a Will or a Grant of Probate, we recommend seeking professional advice. If you would like to discuss a probate matter with an experienced Wills & Estates Lawyer in North Sydney, please contact us on (02) 9963 9800 or via our online contact form.
Aug 30, 2023 | Wills and Estates
What is an Enduring Power of Attorney?
An Enduring Power of Attorney (EPOA) appoints a person, or persons, to make legal and financial decisions on your behalf once you have lost the mental capacity to make these decisions on your own due to a serious illness or injury.
If your EPOA is not explicit in its instructions, it is possible for your attorney to authorise transactions which will result in a substantial reduction in your estate’s value. This may be demonstrated through an excessive withdrawal of funds or the closing of bank accounts. In other circumstances, an attorney may sell assets or transfer real estate to their own name.
How to protect your assets in your Enduring Power of Attorney
Misuse of an EPOA can be prevented by ensuring that you have written clear and comprehensive instructions on every legal, financial and personal matter that is significant to you.
Choosing a trustworthy attorney/s is paramount to protecting your interests. It is best to appoint someone who knows you well and can anticipate your needs. Your attorney/s should respect your decisions and be objective when needed. For more information on selecting the ideal attorney and the circumstances in which a Power of Attorney is important, please refer to our blog or the NSW Trustee & Guardian website.
In your EPOA, you may also elect to have regular third-party checks conducted through audits or annual reviews to ensure that your attorney is appropriately managing your assets.
What should you do if an attorney is misusing their position?
If you do not specify any conditions that your attorney must abide by before you have lost mental capacity, it is possible for your attorney to misuse their authority. Consequently, it is best to enlist a legal professional when preparing your EPOA so you may safeguard the management of your assets and personal wishes.
If you are concerned that an attorney is not acting in the best interests of the person who has lost their mental capacity, you may apply to the NSW Civil and Administrative Tribunal (NCAT) for a review. NCAT will review the operation and effect of an EPOA and can order that an attorney is removed, revoke all or part of the EPOA or appoint a substitute attorney. NCAT can also order an audit on financial records, transactions and accounts made under the EPOA as well as issue an inquiry and report on the conduct of the attorney.
Contact Us
A solicitor at Etheringtons Solicitors can assist you in the creation, amendment or revocation of a Power of Attorney. If you have any concerns regarding an existing EPOA, please contact one of our experienced solicitors on (02) 9963 9800 or via our online contact form.
Jul 30, 2022 | Wills and Estates
Wills and estates can be a confusing topic for many people. However, it is crucial to understand what a will is, how it works, and why you should have one. In this blog article, we cover the common questions related to wills and estates.
What is a Will?
A Will is a document that sets out what a person would like to happen with their assets when they die. Assets may include tangible property – such as houses or cars – or intangible property, such as superannuation or savings. When you pass away, the executor of your estate (someone you have appointed) distributes your will, and gives the assets you have allocated to each person.
Why should I have a Will?
- To ensure your family’s needs are met according to your wishes when you die
- To avoid leaving confusion behind
- To set out plans beyond the distribution of your wealth and assets. For example, a Will can include other requests such as:
- How children will be cared for
- The exclusion of particular family members
- The distribution of assets that do not form part of your estate (e.g. family trust assets)
- Charitable objectives (e.g. if there is any money left over after distributing to family members, you may donate the rest of your estate to a particular charity or cause)
- Who will be the executor of your estate. If you die without picking your executor, your closest family member will become the executor. You may also request that the public Trustee & Guardian (a government agency) administer your estate.
When should you review or update a Will?
Your Will should always reflect your current circumstances and intentions. It is therefore necessary to update your Will if you have any major life changes, such as:
- Marriage, separation, divorce or entering into a new relationship
- The birth or death of children, grandchildren or other close relatives
- Significant changes to the value of your assets
- Substantial changes in the way you own assets, such as the creation of a family trust or a self managed superannuation fund
- If you enter a new business or change the structure of your current business
- Changes in the residency status of you or your intended beneficiaries.
- Retirement from full time employment
- Significant changes to taxation, superannuation and social security laws which may impact upon your Will and estate
How can I challenge a Will?
If you believe you have been unfairly left out of someone’s Will, there are avenues to rectify this.
Family members, spouses, partners and anyone else who can show that they were financially dependent on the deceased person may be able to challenge a Will. However, there are strict time deadlines to challenge a Will, so it is crucial to seek legal advice immediately if you are contemplating this process.
There are different claims that can be made in relation to a Will. These include:
- Family maintenance
- Lack of testamentary capacity
- Undue influence
- Breach of trust
- Power of attorney
- Guardianship
- Administration
If you have been appointed or named as executor of a deceased person’s estate and you receive notice that someone is challenging the Will, it is necessary to receive prompt legal advice.
How to administer an estate?
An executor is responsible for protecting the assets of a deceased’s estate, dealing with any necessary administration (such as unpaid debts or incomplete business transactions) and distributing the estate according to the Will.
There are a number of things an executor should do upon being named:
- Notify government agencies and other institutions about the death so liabilities do not continue and any necessary income (such as pensions) is stopped
- Confirm all of the assets and liabilities of the estate. This involves writing to financial institutions, government agencies, relevant companies, searching records (Land Titles Office) and preparing an inventory of household furniture and personal effects.
- Apply for a Grant of Probate from the Supreme Court to administer the estate. This document legally authorises the executor to deal with all matters relating to the estate.
When probate has been granted, the executor must lodge a final tax return on the behalf of the deceased, redeem bank accounts and investments, sell or transfer any real estate and motor vehicles and pay any liabilities.
Once these matters have been finalised, the executor can distribute the estate to the beneficiaries as outlined in the Will.
Get Legal Advice
Wills and Estates can be a complex area of law. If you or someone you know wants more information or needs help or advice, please contact us on (02) 9963 9800 or contact us via our form. If you would like to prepare your will with us, please fill out the Will Instruction Form and we will contact you.
