Australia: Statutory will made in massive estate

A statutory Will is a Will ordered by a Judge to be made for a person who does not have the testamentary capacity to make a Will. The Court also has power to alter or revoke an existing Will.

Under Queensland law, two conditions must be satisfied to confer power on the Supreme Court to make, alter or revoke a Will:

  1. the person must be alive when the court order is made; and
  2. the person must lack testamentary capacity.Thynne + Macartney represented one of the parties in the very recent case of Re: APB, ex parte Sheehy [2017] QSC 201 in which Justice Applegarth ordered a statutory Will be made. In this case, the incapacitated person was quite elderly, had 3 children and an estate worth approx. $70 million. He had made four Wills over a period of 14 years and then three Wills in one year. Some 'new friends' including a Gold Coast Real estate agent, her husband, a solicitor and a doctor befriended him in 2012 and it was after this that the last three Wills were made.Later, he was in hospital and some of the 'new friends' removed him from hospital without telling the nursing staff or his attorney of their actions. The 'new friends' took him to a lawyer close to the hospital with the purpose of having a Will made. A Will was not made so they took him to another lawyer where a Will in their favour as to more than 50% of the estate was made.Some of the evidence at the trial dealt with the point in time when testamentary capacity was lost during the time the 'new friends' were active. The Court was not required to find when testamentary capacity was lost.

Costs orders are yet to be decided. However, Justice Applegarth did observe in his reasons that there should not be a presumption, even in large estates, that every affected party should have their costs paid out of the incapacitated person's assets. His Honour said, "The lack of provision made for ('new friends' – the Real Estate Agent, her husband and the solicitor) and the modest provision made for (the doctor) when compared to what was sought by those parties...does not dispose me to make an order that their costs be paid out of the assets of (the incapacitated person)..."

The Will Justice Applegarth ordered included pecuniary legacies to the adult children, an ex-nuptial grandchild, several old friends including a former brother-in-law and the balance of the estate into 2 trusts. On winding up of the trusts, the capital was divided between the adult children, a spouse of one of the children, the ex-nuptial grandchild and two charities.

The 'new friends' had each sought a legacy of $1.4m. His Honour referred to the conduct of some of the 'new friends' as "disgraceful". He made no gift for three out of the four – their conduct made them undeserving! The fourth received a gift of only $20,000. The Real Estate Agent and her husband took the incapacitated person to live with them, charging him to do so (although initially alleging they were doing it for nothing). They prevented his family and his lawyer, who was his attorney for both financial and personal health matters (a trusted solicitor of long standing), from having access to him. The 'new friends' had organised for him to make a Will and were surprised to find out, following a Tribunal hearing, that they were not, in fact, beneficiaries under that Will.

Leave must be sought to bring an application for a statutory Will and one of the matters with which the Court must be satisfied, before giving leave, is that 'the proposed Will, alteration or revocation is or may be a Will, alteration or revocation that the person would make if the person were to have testamentary capacity'. (S24(d) Succession Act 1981 (Qld))

Readers may recall the Victorian case of Maria Korp who, in February 2005, was found unconscious in the boot of her own car at the Shrine of Remembrance in Melbourne four days after she went missing. Her husband and his mistress were suspects in her disappearance. The mistress subsequently pleaded guilty to attempted murder and the husband committed suicide on the day of Maria Korp's funeral. Maria and her husband owned a property as joint tenants (that is, the property would automatically pass to the survivor on the death of the first joint owner).

If Maria had been able, it was presumed, given the actions of her husband, she would have taken steps to sever the joint tenancy and change her Will in favour of her 2 children. The Court in Victoria acted quickly and ordered a Will be made in those terms. Maria was still alive and had no testamentary capacity. She died in August 2005.

The above is just one scenario where a statutory Will might be necessary. Other examples are:

  1. A person has a serious accident resulting in them having no testamentary capacity but they receive a large compensation payment because of the accident. Whilst the moneys received will be managed for that person during their life, it is still their money and if a Will is not made the laws of intestacy will dictate who receives the estate of that person.
  2. Similarly, a child who has no testamentary capacity because of issues with medical treatment and receives compensation. Sometimes one parent is unable to cope with the child's disabilities resulting from that medical treatment, leaving the other to raise the child. On intestacy, the estate of that child will be shared equally by the child's parents. Some would consider that unfair in the circumstances. A statutory Will could be appropriate in the circumstances.
  3. If the child in scenario 2 grew up and survived both parents, and the persons supporting the child to the greatest extent were some but not all of the child's siblings. All of the siblings would be entitled equally to the estate on intestacy. A statutory Will could also be appropriate.
  4. A trust is set up for the benefit of a beneficiary who lacks capacity. The trust income exceeds the beneficiary's actual needs. However, all taxable income is for tax purposes distributed to that beneficiary. If the income was not distributed the trust would be paying tax on that income at the top marginal rate. As not all income has been actually paid to the beneficiary, a loan account is created in the trust to account for the unpaid income. That loan account is an asset of the beneficiary. The trustees may have put money into superannuation for the beneficiary as this would have tax benefits for the deduction available and once the beneficiary reached 60 years of age the income of the super fund would have been tax free to the beneficiary. Assuming the beneficiary has no spouse or children, the beneficiary will have the loan account and superannuation death benefits that would need to be dealt with as part of their estate. A statutory Will could be appropriate in the circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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