4 areas for potential Will disputes continued

A dispute over a Will can occur for many reasons, possibly unrelated to a challenge over the validity of the Will itself or a contest about the entitlement or adequacy of provision for a family member. Disputes may, for example, result from uncertainty over what a Will means or even how key individuals carry out their duties.

Further to our recent blog (6 frequently seen Will disputes and how resolution might be achieved), we will explore some more situations that can lead to Will disputes, both in NSW and other parts of Australia. The legislation is broadly similar across the country with some variations, except for ‘notional estate’ disputes which are unique to NSW.

1). Statutory Wills

A statutory Will is essentially a Court made Will for Will-makers without the capacity to do so themselves. This might by someone under 18 years of age or someone lacking the necessary mental capacity. An example might be an older person’s Will that has beneficiaries who have all already pre- deceased the Will-maker, and the Will-maker is no longer well enough to make a new Will.

A Will-maker is normally expected to understand the nature and effect of their actions. If the circumstances outlined arise, a member of the family, friend, carer, trustee, guardian or involved professional may be able to make an application to the Court requesting that the Court make a Will for the Will-maker.

In these circumstances, a Court may authorise a proposed Will if it is considered that it was reasonably likely that it is a Will that the person would have made if they had had the mental capacity to make it.

Disputes can arise because there are family members or others, such as carers of the Will-maker, who believe that the statutory Will produced treats them unfairly in some way.

2) Notional Estate (NSW only)

Notional estate claims are unique to NSW in Australia. In effect, these claims are an application to the Court to reacquire assets into a deceased person’s estate.

If certain conditions are met, the Court has discretion to treat certain assets not directly owned by the deceased at the time of death, or that they had distributed prior to their death, as being notionally part of their estate.

Examples of ‘relevant property transactions’  for this purpose can include superannuation interests which are held by a trustee and normally do not form part of a deceased’s estate, property owned as joint tenants and assets previously transferred without full consideration.

In order for the Court to make a notional estate order, it will need to be satisfied that there are special circumstances that warrant the making of an order. Normally they are reserved for circumstances where an eligible individual can demonstrate a need for a family provision, but there are not enough assets in the deceased’s estate to fulfil a family provision order.

The Court will only make a notional estate order if it considers the need for making an order overcomes the importance of not interfering with reasonable expectations in relation to property, the substantial justice and merits involved and any other relevant matters.

Disputes can arise in several regards, including the validity of a family provision claim, what transactions meet the criteria to be included in the ‘notional’ estate and whether the circumstances meet the criteria.

3) Power of Attorney

Attorneys appointed under a Power of Attorney have an obligation to exercise their power with reasonable diligence in order to protect the affairs of the person granting the Power of Attorney, their principal.

Where there is a concern that the attorney is not acting in the best interests of the principal by mismanaging their affairs (perhaps because of a conflict of interest) they may be liable for compensation.

It may be possible to apply to the Supreme Court to obtain an order for the financial records of the attorney to be made available for investigation and cross examination. The Power of Attorney may be revoked, and the attorney ordered to repay any unacceptable expenditure.

If the person who granted the Power has passed away and the mismanagement has resulted in a reduction in what a beneficiary would otherwise have received, the beneficiary can apply for rectification.

Although it may not be immediately apparent why issues involving attorneys can be categorised under Will disputes, the problems often do not come to light until after the principal’s death.

4) Ademption

Ademption of a legacy in a Will applies if the Will-maker no longer owns the specific asset that was the subject of the gift at the time of death. In these cases, the gift will normally fail though case law has developed some exemptions. These include situations where:

• a gift is presumed to be more of a general nature rather than specific;
• the property has changed but only in name or form but is still substantially the same;
• the Will maker no longer owns the item of property in question because of a wrongful act by a third party unknown to the Will-maker.

If the Will-maker does not want a gift to adeem, they can specify that it can be a replacement asset. If an express statement is not made, the issue of replacement assets can become a question of the construction of the Will concerned.

Disputes can arise over allegations of unfair play and unintended consequences. Property sold or disposed of by a ‘substitute decision maker’ such as an attorney under a Power of Attorney may, for example, give rise to issues. There may be circumstances where the attorney has to make a difficult decision that could ultimately impact on a beneficiary’s interest following the death of the Will-maker.

Contact our Will Dispute Lawyers based in Sydney, NSW

If you are considering disputing a Will, please contact the experts at Szabo & Associates Solicitors on 02 9281 5088 or complete the online contact form. While based in New South Wales we can also help clients in Queensland, Victoria, Tasmania, Western Australia and South Australia with disputing a Will, deceased estate litigation and more.