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Undue influence, Coercion and Wills

In a recent article we outlined legal issues regarding capacity to make a Will.

A different but related question that is arising more frequently is whether a deceased person who has legal capacity has been coerced into changing his or her Will late in life.

Some older people, whilst still having legal capacity, find it harder to make decisions and become more easily influenced by those around them. Instances of greater pressure being applied to older people by potential beneficiaries seem to be increasing.

In a case of Dickman v Holley, a will containing bequest in favour of the Salvation Army where a person from that organisation was involved in the will making process was rejected for a number of reasons including undue influence. Undue influence is more easily inferred if a bequest is in favour of a party in a special relationship, such as the Salvation Army may have been in this case, or person’s trusted adviser such as their doctor or lawyer.
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Capacity Issues In Estate Planning

What is legal capacity and how do you establish it? It is not always as straight forward as it sounds.

The Supreme Court held in the case of d’Apice v Gutkovich that Irene Abrahams (a deceased person) had capacity to make a Will even though six months prior to her making her last Will the Guardianship Tribunal found she was not capable of managing her affairs!

Generally, legal capacity requires a person to:

  • understand the facts involved regarding the decision to be made;
  • understand what choices are available;
  • be able to evaluate the choices and the likely effect of such choices;
  • be able to communicate the decision.

Legal capacity requirements vary in different situations.

For Wills, the basic principles were established in 1870 in the case of Banks v Goodfellow. The case has withstood the test of time.

Its language is descriptive:

A person making a Will must “…understand the nature of the act and its effects; … understand the extent of the property of which he is disposing; … be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right or prevent the exercise of his natural facilities…”
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Estate Planning – Residential Aged Care Agreement

Residential Aged Care Agreements

Residential Aged Care Agreements contain mandatory provisions to the requirements of relevant legislation including Retirement Village legislation. Most agreements do not however give “ownership rights” as one has with a house purchase. There are also necessarily provisions dealing with issues that could arise the if there are future health issues making it unsustainable for a person to remain in a particular type of accommodation. These have implications for estate planning

Legislation has been found to restrict the right of village operators the to make some charges of a capital nature..

In the case of Regis Aged Care Pty Ltd v Secretary, Department of Health [2018] FCA117, Regis, a Retirement Village residence agreement included a charge for  “asset replacement”to fund maintenance, reinstatement and building of infrastructure in the retirement village.

The Department of Health contended this was not lawful under the Aged Care Act. Regis sought a declaration from the Court to overcome any uncertainty. The Court held that the charge was not lawful as it did not specifically relate to the cost of providing accommodation to the residents in question.

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Literary Executor

Appointment of a Literary Executor

The appointment of an executor within a Will can be assigned to a specific property or a certain type of property. However, the specified executor must fall within the meaning of ‘executor’ under the Probate and Administration Act 1898(the Act), section 41 to be granted probate which states:

“41 The Court may, if it thinks fit, grant probate to one or more of the executors named in any will, reserving leave to the other or others who have not renounced to come in and apply for probate at some future date.

This is evident in the NSW Supreme Court case The Estate of Nicholas Paul Enright [2017]. Nicholas Enright within his Will appointed two executor’s of his estate and a third ‘Literary Executor’. It was brought to the Court to determine whether the appointment of the third executor fell within the meaning of executor under section 41 of the Act as they weren’t granted probate alongside the other executors, and if so, whether the property was inclusive of “the copyright and other intellectual property in the deceased’s works”. It was noted that the term ‘Literary Executor’ had appeared in other cases.
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Intestacy rules of the Succession

Order of death can be important where it is relevant to the determination of the destination of the estates of the deceased. This was demonstrated in NSW Trustee and Guardian v State of New South Wales [2015] and demonstrates the need to have a Will Lawyer prepare a Will for you.

In this case a mother and son were found dead in their shared home. Both the mother and son died without a Will, so the destination of the estates and the persons entitled on intestacy would be determined by the sequence of death. The mother was a widow, with one child and there was no evidence that the mother had remarried, entered into a de facto relationship or had an issue after her husband’s death.  The son was unmarried and there was no record that he had ever had any children.

Depending on the sequence of death, there are two potential outcomes. If the son had died first the entirety of his estate would pass to his mother. From there the assets would be distributed according to the intestacy rules of the Succession Act 2006. Alternatively, if the mother died first her estate would pass to her son and then be distributed in accordance with the intestacy formula.
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Executors of Estates

Traps and liability issues for Executors of Estates

You are appointed as Executor of an Estate. You appreciate the confidence expressed in you, and you are more than happy to help your relative or friend.

It can’t be that hard, can it?

What is often not appreciated is the responsibility that comes with being the Executor of an estate and that an Executor can be personally liable if the legal requirements are not performed properly.

The basic requirements are:

Executor’s role. An Executor is required to uphold the deceased’s Will and put into effect the deceased’s wishes as expressed in the will. This usually requires the Executor to obtain a Grant of Probate from the Supreme Court. The Grant proves to the rest of the world the Executors power to deal with the deceased’s assets
An Executor has a strict duty to properly and effectively administer the deceased’s Estate. An Executor can be personally liable for a breach of that duty. Executors must act impartially and prudently.
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Are your Contracts Properly Signed?

Contracts are a part of every day commercial life and it is vital that they be properly signed to reduce challenges about whether they are legally binding.

How do individuals sign?

An individual signing:

  • an agreement needs to sign under their own name
  • a deed needs to sign under their own name and have their signature witnessed by a third party adult who is not a party to the deed and that witness should print their name and address

It is also good practice for an individual’s signature on any contract to be witnessed by a third party as this will be helpful in case there is a subsequent dispute about the authenticity of the individual’s signature. If the document is especially important, the individual’s signature should be witnessed by a solicitor or a justice of the peace.

How do companies sign?

Section 127(1) of the Corporations Act provides that a company may execute an agreement by any of the following methods:
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Blended Families and Mutual Wills

Blended families (“Brady Bunch families”) create their own challenges in estate planning. In particular, how can both sets of children and both sides of the family be protected?

One method is the use of Mutual Wills. Mutual Wills are based on the Willmakers signing a contract regarding the contents of a Will.

A Will is of its nature revocable and can be changed. The main feature of Mutual Wills is that there is an express or implied contract not to revoke a Will after the death or incapacity of one of the contracting parties.

Typically a Mutual Will Contract will include covenants as to the agreed terms of the Wills of each party which are not to be changed.

Advantages of Mutual Wills

One advantage is that a Mutual Will gives the survivor of the contracting parties more freedom and flexibility to deal with assets during their lifetime while still reflecting the joint wishes of the Willmakers at the time they make their Wills. This is contrasted with limitations imposed by way of alternatives such as life estates.
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