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LWB309 – SUCCESSION LAW Shane S Ulyat

LWB309

SUCCESSION LAW Terminology and definitions: (a) A will is a revocable disposition of property intended to take effect on death. These testamentary documents must be in writing and their execution must be atended by certain formalities set down by legislation. However, a will may consist of any number of documents and apart from the formalities required by statute may be in any form. A holograph will is simply a will writen in one’s own handwriting. Functions of a will apart from disposing of the testator's property include:

1. 2. 3. 4.

The appointment of an executor; The revocation of a former will; The appointment of a testamentary guardian for the testator's children (if infant child/ren); and The execution of powers of appointment. This is a power given by deed or will by which a nominated person (the donee) may direct that an interest in property devolve to anyone (including the donee) or just to a specified person or persons. The former is called a general power of appointment, the later a special power of appointment. The later is the more common situation, eg the testator leaves property to his wife for life and then to such of their children as the wife by deed or will appoints, and in default of appointment to their children in equal shares.

(b) A person who dies and has made a will is said to have died testate. (c) The person who makes a will is called a testator (male) or testatrix (female). (d) Usually under a will the testator or testatrix appoints a person to administer his/her estate. That person is called an executor (male) or executrix (female).

(e) A person who dies without having executed a valid will is said to die intestate. In this situation the law prescribes under the intestacy rules who is to inherit the estate.

(f) A person who receives a benefit under a will, either as being named in the will or under the intestacy provisions, is called a beneficiary.

(g) A devise is a gift of realty. (h) A bequest is a gift of personalty. (i) A pecuniary legacy is generally a gift of money. (However, it will be seen later that the definition in s 5 Succession Act (Qld) is wider in scope than a mere gift of money. This is relevant when dealing with s 60 Succession Act (Qld).)

(j) A residuary benefit is a remaining gift incorporating all the property not disposed of by the testator. The named recipient is called the residuary beneficiary.

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LWB309 – SUCCESSION LAW Shane S Ulyat (k) A codicil is a testamentary document which is supplementary to the will which may modify, vary or simply confirm the terms of the will itself. It must also be executed in accordance with the formalities set down by statute.

(l) Donatio Mortis Causa - these are gifts made in contemplation of death. They usually do not form part of the estate provided the gift is effective. Enduring Power of Attorney - An enduring power of atorney allows a person of your choice to make decisions regarding your business, financial, personal and health maters. The enduring power of atorney can be structured to take effect immediately upon execution or at a time when you become incapable of looking after your own affairs. Once the enduring power of atorney is enacted, your atorney’s signature acts as your own on legal documents, with banks or in other maters, such as real estate transactions. Who you choose as an atorney is very important to ensuring it is used properly. A lawyer can give advice as to the kind of qualities needed by this person. Advance Health Directive - The AHD has become very commonplace. This document enables you to make decisions about your future health care, particularly for end of life decisions. When you appoint a atorney under an AHD, that person has the right to authorise treatment and make medical and personal decisions on your behalf, which may become very important if you become disabled or become incompetent to advance your own interests. General Power of Attorney - When you are travelling overseas for an extended period or experiencing a temporary interruption to your routine that will make you unavailable, you can make a general power of atorney. Under the terms of a general power of atorney, your atorney can make decisions about your assets, your medical care or execute documents on your behalf during that period. However, this power ends if you lose capacity. A Testamentary Trust may be set up under your will to provide a trustee (who you choose) with discretion to distribute funds to your beneficiaries after your death. This can provide protection for the inheritance where there is a beneficiary who is ‘at risk’ for example, through the breakdown of a relationship, bankruptcy, immaturity, addiction or disability. You can give instructions as to how this discretion is to be exercised to your trustee. The trust works on the principle that discretion will be exercised in the most advantageous way for the beneficiaries, eg payments to a child in a time of personal instability such as impending divorce or bankruptcy may be avoided and paid at some later time. In the same way payments may be structured to ensure tax minimisation. Testamentary trusts can be particularly important if you have a disabled child or child who incapable or inept at managing financial maters, eg a child with drug addiction or gambling problem. A trustee can structure benefits in a way that promotes well-being, rehabilitation or beter financial management.

Beneficial and representative succession Beneficial succession involves succession to the deceased's property where the successor (beneficiary) is able to enjoy the property for their own benefit. This occurs in one of three (3) ways:

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LWB309 – SUCCESSION LAW Shane S Ulyat (i)

Through the naming of a successor in the will of a deceased.

(ii)

Where the deceased dies intestate. Here the intestacy rules govern succession to property.

(iii) By a COURT ORDER made under legislation which may vary the deceased's will or even vary the effects of the intestacy rules. See Family Provisions, Part 4 Succession Act (Qld).

Representative succession This involves the vesting of the estate property in the PERSONAL REPRESENTATIVE, ie there is no question of a beneficiary under a will succeeding to that benefit immediately after the testator's death. Until administration of the estate is completed the only right a beneficiary has is a right to go to the court to insist that administration be duly carried out by the Personal Representative, ie a right of action but not a right of property. See Commissioner of Stamp Duties (Qld) v Livingstone.1 See s 45 Succession Act 1981 (Qld). (Contrast with the situation in NSW where the property devolves on death to the Public Trustee and only devolves to the Personal Representative where a grant of probate or leters of administration is made.) Personal representative This is a general term used to describe the person whose duty it is to administer the deceased's estate. covers three (3) different types of person.

1. The executor (male) and executrix (female) This person is appointed by the will itself. An executor can obtain PROBATE OF THE WILL.

2. The administrator (male) or administratrix (female) This person is appointed by the COURT to administer a deceased's estate. They get their authority from LETTERS OF ADMINISTRATION. This occurs: (a) when there is a will but no executor is appointed; (b) where there is a will and a named executor, but that person is unwilling or unable to act. In these two circumstances the person beneficially interested in the estate who becomes the administrator seeks LETTERS OF ADMINISTRATION (CUM TESTAMENTO ANNEXO), ie with the will annexed (usually abbreviated to cta); and (c) where the person dies intestate. Persons beneficially interested in the estate may apply for leters of administration. As to who may apply it will be seen later in the course that there is a statutory order of entitlement. The procedure of having an administrator appointed is more technical and more costly than is the case where an executor is appointed by will. 1 (1964) 112 CLR 12.

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LWB309 – SUCCESSION LAW Shane S Ulyat Note: The term grant of representation or just grant is a general term which covers both a grant of probate and a grant of leters of administration.

3. Public officials who may be charged with interim duties before an administrator is appointed (ie the Public Trustee). See s 45(1) Succession Act (Qld). As to the title of administrator relating back to the date of death, see s 45(4), s 49(4) and s 50 Succession Act (Qld). Note: The Succession Act 1981 (Qld) aims to facilitate the INFORMAL winding up of a deceased's estate, ie without the necessity of obtaining a grant of probate or leters of administration. See s 54 Succession Act (Qld). Executors - Probate of the will If there is a valid will and an executor has been validly appointed he or she has the right to obtain probate of the will. This involves an application to the court which includes a submission of the original will and certain other forms. If the court approves the will as the last will of the deceased it is said to grant probate of the will. This is evidenced by a document, sealed by the court and called a GRANT OF PROBATE. Applications to be made to Registrar Chapter 15, Part 2 Uniform Civil Procedure Rules 1999 provide that applications for grants of probate or administration may be made in the first instance to the REGISTRAR who shall have power to make the grant. The Registrar may refer any question arising upon the application to a Judge, or may require the application to be made to the court. Proof in common form and solemn form An executor who obtains probate is said to prove the will and this process is known as proof in common form - (the most common in practice). A will is proved in common form where there is no contest about the will, but the executor presents it at the Registry, and upon formal proof of its validity, obtains the probate and seal of the court. A will may also be proved in solemn form. This occurs where there is a dispute concerning the will, e.g. as to its validity, and the will is involved in a court action brought by the executor or any other person with an appropriate interest, resulting in the court declaring that the will is valid. Once the court has determined the mater it issues a grant in solemn form and the mater cannot be litigated again. See Rule 640(1) Uniform Civil Procedure Rules 1999. Court proceedings in relation to succession The Supreme Court in each State has jurisdiction in respect of all maters concerning succession. See s 6 Succession Act (Qld). Domicile The problem of domicile arises where, e.g. the deceased died living in one domicile but owning property, the subject of the will which is in another. This is covered by the rules in Conflict of Laws. The basic rules are: 4

LWB309 – SUCCESSION LAW Shane S Ulyat (a) If the deceased lived in one domicile and had movable property in another, this is governed by the law of the deceased's domicile at the time of his/her death.

(b) Succession to IMMOVABLE property is governed by the law of the jurisdiction in which the immovable property is situated.

What is Succession law about? Legal consequences of death on a person’s property o General principles of will making and construction o

Intestacy rules

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Family provision

o

Introduction to estate planning

o

The administration of a deceased estate, in particular payment of debts in a deceased estate

o

Taxation of a deceased estate

It is necessary for the law to provide for succession to the property of a deceased for two main reasons (a) because English property law requires that all property should have an owner and (b) death terminates the deceased's ability to exercise any rights in respect of property. Most adults are permited by law to indicate by a document called a will who shall succeed to their property. Emerging field of elder law formed across formerly distinct fields of succession, equity and trusts o Wills and other protective documents e.g. enduring powers of atorney, Advance Health Directives, Superannuation nominations o

Issues of capacity not just testamentary capacity

o

Relevance of equitable doctrines and remedies to estate planning and to contribute to the protection of vulnerable persons

o

Issues of civil and professional disciplinary liability of lawyers engaged in estate planning

Objectives of the law of succession  

Freedom of testation Protection of family members

Protection of Family Members  Family provision  Fixed share legislation 5

LWB309 – SUCCESSION LAW Shane S Ulyat

Interesting cases Dore (as executor of the will of WHB Chenhall dec’d)2 Facts:  Christopher Dore as solicitor/beneficiary/executor drew will for client and friend  Dore was secretary of a number of client’s (Chenhall) companies  Gift to solicitor of company (Muffincastle) worth $1 000 000; $100 000 each to sister’s children.  In event of wife’s predecease (quite likely) solicitor to take as residuary beneficiary (worth at least $20 000 000) subject to gift of $1m to sister and $200 000 each to nieces and nephews  Client believed that solicitor had saved he and his wife’s lives  Client not independently advised though solicitor urged him to consult another solicitor  Client adamant that solicitor compose will  Solicitor made no notes other than to record instructions as to the terms of the will; no external persons present during taking of instructions or tape recording  Witnessed by employee of solicitor and a real estate agent  Client given copy of will  Client died some 18 months later  Challenge: widow and later her administrators challenged will on basis of lack of:  Lack of knowledge and approval of contents of the will (known as the suspicious circumstances doctrine)  Lack of testamentary capacity Held:  

Probate of will granted to solicitor with costs of proving will; unanimously upheld by CA Possible other grounds of challenge?  undue influence in the equitable sense  Breach of solicitor’s fiduciary duty

Ellaway v Lawson3 Facts:  Will provided family home to be sold and divided between 2 daughters  Mrs Lawson to take absolutely, Mrs Ellaway’s share to be held on trust on condition  Mrs Ellaway not entitled to share until:  She divorces her current husband  Or he dies  If condition not satisfied gift to be taken by a Catholic parish Church Can such a condition be contrary to public policy?  Will be contrary to public policy if the ‘tendency’ test is satisfied  If the “generality of mankind will be induced by a gift of the kind in question to act in a way which is against the policy of the law” – Lord Atkin in Fender v St John-Mildmay  Applied in Ramsay v Trustees Executors and Agency Co (1948) HC and by Douglas J in Ellaway  Douglas J: “It should not be a question of debating over the figure for which one will forgo one’s spouse.”  Condition more likely to be void if absolute gift which is cut out or back if the condition is not fulfilled. Held:

   

Douglas J in Ellway No need to use the ‘unruly horse’ of public policy Can atack will by family provision application “Why use the blunt tool of public policy to atack the clause when a more precise tool has been provided by Parliament?”

2 [2006] QSC 494. 3 [2006] QSC 170.

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LWB309 – SUCCESSION LAW Shane S Ulyat

Legal Services Commissioner v Ford 4  Decision concerned a lawyer failing to act competently in assessing whether his client had capacity to make a will and enduring power of atorney  Practitioner found guilty of unsatisfactory professional conduct Who is entitled to see a will on the death of the testator?  At common law only beneficiaries and executor  Section 33Z entitles a wide range of persons to inspect and obtain a copy of a will of a deceased person. See the list of persons entitled in s 33Z (4). o A person mentioned in a will or any earlier will o Spouse, parent or issue of the testator o A person entitled to share in the estate if the testator died intestate or who may make a family provision claim o A creditor of the estate  The term ‘will’ extends to parts of wills, purported wills or revoked wills, s 33Z (4).  Under s 76 (8) the section applies regardless of when the testator died.

Qld Intestacy rules  If there is a spouse (including de facto spouse) and no children, spouse takes all.  If there is a spouse and de facto spouse the estate is divided according to an agreement or court order.  Where there are children the children share equally.  Stepchildren are not entitled  Where a child predeceases the parents, but has children, the grandchildren take per stirpes the parent’s share.  Where there are no children, grandchildren, great-grandchildren etc, the order of taking is as follows:  Parents  Siblings; nieces and nephews  Aunt and uncles; first cousins  Line stops at first cousins; then Crown takes bona vacantia.

Formal requirements for execution of a valid will Introduction The formalities required in Australian jurisdictions for the execution of a valid will stem from s 9 of the Wills Act 1837 (UK). New section 10 sets out the requirements for executing a valid will, as follows:. The requirements are: 1.

The will must be in writing

4 [2008] LPT 12.

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LWB309 – SUCCESSION LAW Shane S Ulyat 2. The will must be signed by the testator or by some other person in the presence of and by the direction of the testator. 3. The testator (or other person) must sign with intention that the document is the testator’s will. 4. The testator must make or acknowledge his or her signature in the presence of two or more witnesses who are both present together 5. The two witnesses must atest and sign the will in the testator’s presence, though they do not need to be in each other’s presence at this stage. The will does not have to have an atestation clause. New s 10(10) disqualifies as a witness “... a person who cannot see and atest that a testator has signed a document.”

Disqualifies 

S 10(10) disqualifies as a witness “a person who cannot see and atest that a t/or has signed a document” o S 10(5): none of the witnesses need to know the document signed is a will o Formerly s 14: any person competent to be witness in civil proceedings, other than a blind person, may act as a witness to

Formal requirements 1.

2.

“In writing” i. See s 36 Acts Interpretation Act 1954: ‘any mode of representing or reproducing words in a visible form’; see Estate of Slavinski.5 ‘Signed’- Summerville v Walsh6 - BY THE TESTATOR OR HIS/HER AUTHORISED AGENT: i. It must in fact be a signature. The actual form of the signature is not important e.g. a mark, a cross etc, so long as the requisite intention of it being a signature is present. See: Re Male:7 - Rebecca signed it ‘R’ In the Goods of Chalcraf:8 Elizabeth Chalcraft signed it ‘echal’ due to illness was enough. 3. Dodd v Lang:9 Dot made, and another mark made by accident, testator was unconscious was not intended to be a signature.

1. 2.

There was no signature in Summerville v Walsh.10 Summerville v Walsh Facts: Held:

Solicitor acting for client was called to the hospital in early hours of the morning to atend client badly burned in house fire. Client dictated terms of will and there was one person as sole beneficiary. Atempted to make testator to sign, but badly burned and could only make a smudge by the bandage.

5 (1989) 53 SASR 221. 6 [1998] NSWSC 52. 7 [1934] VLR 318. 8 [1948] p 222. 9 (1989) ACLD 735. 10 [1998] NSWSC 52.