Wills, Powers of
Deceased Estates and Death
Australia is a tax haven for inheritance tax –
according to the Australian Taxation Office, no less!
But there are tax traps to avoid for leaving assets
(other than the family home) and for your super balance so
that they are not caught by other taxes that lie in wait for
see my article for the full story
If your parent leaves you a token amount in their will, is
it a sign of dementia?
If a child receives less than their 'fair share' under
their parent's will, the question is: Was the parent making
a rational decision or was it a symptom of dementia?
In a recent legal case, the father's 2008 will left an
estate valued at $3.2 million to his six daughters in equal
shares (about $530,000 each). But in 2013, the father made a
new will and left $40,000 to five of the daughters and $3
million to the sixth daughter. The father died in 2015 aged
Not unnaturally, two of the daughters who were left
$40,000 challenged the will. They argued that their father
had lost the plot - that he lacked the mental capacity to
assess what he had to leave in his will, and to decide upon
the relative claims of his daughters.
They relied upon some sensational comments made by their
father before he made the 2013 will, including:
- He had seen prostitutes in the street ringing their
bells at midnight
- He had seen a black panther in the street
- His wife was running a brothel making $5,000 per
- His bank had given him $100,000 for being a good
Despite these hallucinations, the medical evidence was
that he suffered mild cognitive impairment, not dementia.
The solicitor and a neighbour gave evidence that he was
coherent and in command of his faculties with them, with no
sign of dementia.
The NSW Court of Appeal concluded that the hallucinations
were episodic and did not affect his mental capacity to make
a will. The fact that he left the five daughters $40,000
each was a rational response to a family feud, where they
had sided with their mother, while the sixth daughter who
sided with her father received the bulk of his estate.
The conclusion is that it takes more than hallucinations
and mild cognitive impairment to invalidate a will for which
there is a rational explanation.
For more, click on my case note
Disputing a will for dementia? It's
harder than it looks.
DIY Wills are a goldmine for lawyers
DIY Will Kits are cheap and easy, but they all should
carry a big red warning sticker –
Beware - This DIY Will Kit is a goldmine for lawyers!
Why bother to have a will professionally prepared when
it's so simple to fill in a DIY Will form with the name of
someone to look after your affairs when you die (your
'executor') and to list all you have to give away (your
'gifts', 'bequests', 'legacies')?
A simple DIY Will or no will at all works in cases where
the circumstances are simple and there is nothing to give
away, apart from small bank account balance, some household
goods and superannuation. It also works with a jointly owned
house where 'joint tenancy' means that the house passes
automatically to the survivor.
But if there is any complexity, a simple DIY Will is not
up to the job, just like a pair of scissors will cut grass,
but is not up to the job of mowing a lawn. These are some
- The will-maker's spouse or partner has died before
them or they are no longer together
- The will-maker has a blended family
- The will-maker has no children
- The will-maker has lots of property, shares and
other assets to leave
If a DIY Will is made and these reasons apply, then the
legal fees will be in the tens of thousands of dollars to
interpret the Will and to settle competing claims by persons
entitled to a share. These days, the persons entitled to
claim include not only spouses and partners (both current
and former) and children, but anyone financially dependent
or with a close personal relationship to the deceased.
When Peter Reid died, his wife had predeceased him and he
had no children of his own. What he did leave was a large
fortune - $76 million to be exact, and a DIY Will. It was a
lawyer's goldmine. Two court cases and a mediation later in
which 40 step-children, nieces, nephews and others claimed a
share, the division of the estate was settled.
To read my case note
click - A do-it-yourself will is a beacon to controversy.
wills is one will too many
Colleen McCullough was a prolific author, most famously for
her novel The Thorn Birds, which has sold 30 million copies
since it was published in 1977.
Colleen McCullough was so prolific that she left not one
but two wills. In the first will, she left her entire estate
to the Oklahoma University. In the second will, she left her
entire estate to Ric Robinson, her husband of 30 years.
As in many of these situations, the existence of two
wills can be traced to a 'domestic'. In this case, Colleen
accused Ric of overspending, and on 24 June 2014 asked him
to move out (which he did). Two weeks later, she signed a
new will leaving her entire estate to Oklahoma University.
To add insult to injury, she added a bequest letter in which
she explained that she had cut Ric out of the will because
she had made adequate provision for him during their
Shortly afterwards, Colleen and Ric reconciled, when
Colleen asked him to return to look after her. He moved back
into the house and cared for her until she died on 29
Before she died, in October 2014, Colleen asked her
solicitor to reinstate Ric in her will to inherit her entire
estate. Instead of preparing a whole new will, her solicitor
prepared a fresh page which named Ric as the beneficiary,
instead of the Oklahoma University - which Colleen signed.
The old page was removed and the fresh page inserted into
the Oklahoma Will.
After Colleen died, the Oklahoma University applied to
the Probate Court to grant Probate of the will with the old
page while Ric applied for probate of the will with the
After 8 hearing days in court, which were estimated to
have cost each side $400,000 in legal fees, the Probate
Court decided that Ric's will was her last will and
testament because Colleen had not been coerced into signing
That is why one will is more than enough!
For more analysis,
click - From The Thorn Birds to thorny
will dispute: Estate of Colleen McCullough.
Should you sell the
family home when your parents move to an aged care home?
It's often a difficult decision for your parents to move
to an aged care home.
The decision is made more difficult
by the need to decide whether or not to sell the family home
when they move out. Often these decisions are made for the
parents by the child acting under an Enduring Power of
Here are some options -
- The family home will need to be sold if the move is
to an aged care home where a bond is payable, to pay for
the bond. Large bonds of $600,000 are common for aged
care homes in Sydney.
- The family home can be transferred to a child, a
nephew or niece. If so, stamp duty must be paid on the
value (regardless of whether it is a gift or it is paid
for). No stamp duty is payable if you wait and the
transfer takes place on death (there is no death duty in
- The family home can be kept, and rented out, if the
move is to an aged care home where no bond is payable.
If so, the aged care costs must be funded.
The Commonwealth Government will pay the aged care costs,
subject to a means test. Even if you qualify for a full
pension, you may not qualify for aged care costs payments.
For instance, to satisfy the Centrelink rules for the
aged care means test, the person cannot own, or cannot have
owned a home within the previous 5 years (at least).
Why is this an issue? Without government assistance, aged
care cost can exceed a full pension and must be funded by
the person out of their own assets.
To find out more and how not knowing the Centrelink rules
can lead to an unmitigated disaster,
click - Attorneys transferring the principal's home to themselves
must be careful