InSuccession Wills & Estates Bulletin May 2015 Issue No 8
Welcome to the first Insuccession newsletter for 2015. This year poses many challenges for Wills and Estates Lawyers with many legislative changes coming into effect this year. As at 1st of January, the class of persons who can contest a Will has been significantly reduced. A Grant of Probate is no longer required for estates valued at less than $100k. New Enduring Powers of Attorney legislation comes into effect on 1st September this year and Superannuation and Binding Death Benefit Nominations are already playing a leading role in matters before the Court. This edition of our newsletter Will look at the changes to Part IV of the Victorian Administration and Probate Act and their impact on contesting a Will; the recent changes to VCAT; statutory Wills as an option for families where a testator has lost capacity and finally a case update - the importance of the superannuation trust deed when making a binding death benefit nomination. > Contents Where there is a Will, there is a nephew - this is no longer the case 2 How recent VCAT developments may affect you 3 Case Update - Superannuation 5 No Capacity? No Problem - Why a Statutory Will May be the Answer 5
> Where there is a Will, there is a nephew - this statement no longer rings true Dying on or after the 1st of January 2015 will impact upon those people who believe they should have been provided for under the deceased s Will. PART IV of the Victorian Administration and Probate Act which deals with claims for further provision from a deceased estate has been significantly amended. The old law still applies in relation to claims made against estates where the testator died before 1 January 2015. The first requirement under the new law is that the claimant must be an eligible person within the meaning of the Act. Below is a summary of who is an eligible person: 1. A spouse or domestic partner at the time of the death of the deceased, That is, a wife or husband or registered domestic partner under the Relationship Act 2004 or an unregistered domestic partner. 2. A former spouse or former domestic partner who at the date of death was able to take proceedings in the Family Law Court. 3. A registered caring partner at the date of death of the deceased. They must also demonstrate that they were wholly or partially dependent on the deceased for proper maintenance and support. 4. A child of the deceased including an adopted child. 5. A step-child of the deceased. 6. An assumed child being a person who for a substantial period during the deceased s life believed that the deceased was their parent and was treated by the deceased as a natural child. 7. Spouse or domestic partner of a child, adopted child, step-child or assumed child of the deceased. If the child etc of the deceased died within 1 year of the deceased s death, such claimant must be wholly or partly dependent on the deceased for proper maintenance and support. 8. Grandchild. The grandchild must be wholly or partly dependent on the deceased for proper maintenance and support. 9. A member of the household of the deceased. They must wholly or partly be dependent on the deceased for proper maintenance and support. The effect of these provisions is that parents, siblings, nephews/nieces, cousins and unregistered carers can only bring claims if they can fit into another category such as a member of the household or an assumed child of the deceased. Before making a claim against a deceased estate, it is important that you seek legal advice to determine your eligibility. You should also remember that such claims should be made within 6 months of the date of the grant of probate or letters of administration. The amendments to the Act also place an onus on the Court to be satisfied of a number of other matters such as, is there a moral obligation on the deceased to provide for the claimant, and the financial need of the claimant. We will discuss these factors the Court takes into account in our next publication. > Welcome Paul Beasant The Wills & Estates team at Rigby Cooke Lawyers welcomes Paul Beasant as a new addition to the team! Paul is a Senior Associate in our Wills and Estates team with extensive experience representing clients in litigated matters involving contested Wills, estate disputes, trust disputes, breaches of fiduciary duties and applications to the Guardianship list of the Victorian Civil and Administative Tribunal. Paul previously worked for a Trustee Company and in private practice. He has handled a large number of contested Will claims for both plaintiffs and defendants as well as proceedings to recover assets for the elderly and people with a disability. Rigby Cooke Lawyers - InSuccession May 2015 2
> How recent VCAT developments may affect you The VCAT Amendment Act 2014 (the Act) came into effect on 2 June 2014 with the objective of promoting fair and efficient justice for Victorians and enhancing the powers of the Victorian Civil and Administrative Tribunal (the Tribunal). This article outlines some of the recent changes relating to the Tribunal s powers, practice and procedures. New Structure of the Tribunal The Tribunal now consists of four divisions: 1. Civil Division; 2. Administrative Division; 3. Residential Tenancies Division; and 4. Human Rights Division (includes the Guardianship List). The Guardianship List is empowered to appoint a person or an organisation to make financial and personal decisions for the benefit of an adult who does not have decision-making capacity. New Processes 1. Inviting the original decision-maker to review its decision The Tribunal now has power to review the decisions of original decision-makers such as Councils. The Tribunal can invite an original decision-maker to reconsider the decision in review hearings at any time in a proceeding. The original decision-maker can either reaffirm the original decision, vary it or make a new decision. The Tribunal will then proceed with the review hearing on the basis of the reaffirmed, varied or new decision. The objective of this new process is to encourage original decision-makers such as Councils to be more involved in the final outcome of review hearings. 2. Request to change Member hearing case A party who is aggrieved by the Member hearing their case may make an application to a Presidential Member (appointed Court Judges and Magistrates) to request the appointment of a new Member. The Presidential Member is required to decide whether a new Member should be appointed. Notably, once a decision is made by the Presidential Member, it is the end of the line and parties can no longer take a second bite of the reconstitution cherry. 3. Re-opening of Orders of the Tribunal made in the absence of a party In accordance with section 120 of the Act, the Tribunal may hear and determine an application to re-open an order (made by the Tribunal) where the person affected by the order was not present and was not represented at the hearing at which the order was made. The Tribunal has discretion to review the decision only if the applicant: President Justice Garde had a good excuse for not attending the hearing; has a reasonable case; and Presidential Member DP Aird Presidential Member DP Nihill Presidential Member DP Dwyer Presidential Member DP Barker re-opening the order does not prejudice the other party. Civil Division Building &Property List Civil Claims List Owners Corporation List Human Rights Division Guardianship List Human Rights List Administrative Division Legal Practice List Review & Regulation List Planning & Environment List Residential Tenancies Division Residential Tenancies List 4. Appeals from the Tribunal The process for challenging an order made by the Tribunal is now more onerous. Decisions of the Tribunal can be appealed only on a question of 3 Rigby Cooke Lawyers - InSuccession May 2015
law. If the decision was made by a Member of the Tribunal who is a Judge of the Supreme Court or the County Court, leave to appeal must be given by the Court of Appeal. If other Members of the Tribunal make the decision, then leave to appeal must be given by the Supreme Court (Trial Division). Section 148(2) of the Act states that an application for leave to appeal must be made within 28 days of the Tribunal s order in accordance with the rules of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 which require the following: Originating Motion delivered to the Tribunal and served on the respondent; The 3 exhibits include a summary of the case, list of authorities supporting the case and a copy of the orders; and Affidavit in Support with 3 exhibits filed within 7 days of filing the Originating Motion; and On the hearing of the Summons, the Associate Judge may grant or refuse leave to appeal. The Associate Judge may refuse leave to appeal if the applicant does not have a prima facie case on appeal or if no substantial injustice would be imposed by a refusal to grant leave. The new test for granting leave is enshrined in section 14C of the Supreme Court Act 1986 which states that the Court of Appeal may grant an application for leave to appeal only if it is satisfied that the appeal has a real prospect of success. 5. Expert Evidence Restrictions The Tribunal has a new regime for expert witnesses and expert evidence as set out in Schedule 3 of the Act. The Tribunal now has the power to refuse a party to call evidence, including expert evidence in certain circumstances. The main objectives of Schedule 3 are: to enhance the case management powers of the Tribunal in relation to expert evidence; to restrict expert evidence required for the reasonable running of proceedings; and to reinforce the paramount duty of an expert witness owed to the Tribunal. A Tribunal Member can give a wide range of directions in relation to how and what evidence can be provided by experts in a proceeding. Such directions include but are not limited to: the preparation of an expert s report; the time for service of an expert s report; limiting expert evidence to specific issues; limiting the number of expert witnesses who may be called to give evidence on a specified issue; appointing single / joint experts or Tribunal appointed experts (at the expense of the parties); and any other direction that may assist an expert witness to give evidence in a proceeding. 6. Awarding Costs The general rule in relation to costs is that parties bear their own costs in a proceeding. However, in accordance with section 109 of the Act, the Tribunal may order that a party pay all or part of another party s costs in a proceeding if it deems it to be fair. The Tribunal considers the following issues when making a costs order: Party failing to comply with an order, direction or the Act without reasonable excuse; Party asking or causing an adjournment unreasonably; Party attempting to deceive another party or the Tribunal; and Party conducting the proceeding vexatiously. The default position in relation to an order of costs is that those costs will be payable on the County Court scale. You can seek an order that costs be paid on a standard or indemnity basis (all costs reasonably incurred and of a reasonable amount), however, you will be required to persuade the Tribunal to make such an order. Rigby Cooke Lawyers - InSuccession May 2015 4
> No Capacity? No Problem - Why a Statutory Will May be the Answer There is an oft-quoted saying amongst lawyers operating in the area of Wills and Estates: Where there s a Will, there s a way. But what if a person lacks testamentary capacity to make a Will, or loses the capacity to change their Will? Section 21 of the Wills Act 1997 (Vic) (the Act) empowers the Supreme Court of Victoria to authorise a Will to be made on behalf of a person who does not have testamentary capacity. This is a significant power that has been underutilised by the people it is intended to benefit. The numbers speak for themselves. On 15 October 2013 the Victorian Law Reform Commission (VLRC) tabled a report in Parliament citing that, in 16 years, the Supreme Court had authorised approximately 32 Statutory Wills. Why are the numbers so low? The VLRC was notified of several possible reasons for the low number of court applications for Statutory Wills. This included a lack of knowledge of the Statutory Will process, lack of access to relevant information including any existing Wills, uncertainty about costs and the perception of potential beneficiaries that an application may be inappropriate while a person is still alive. Who can apply to the court for a Statutory Will? The Act allows any person to make an application for a Statutory Will on behalf of another person. This will usually be a family member or a potential beneficiary. When will the court authorise a Statutory Will? Before making an order authorising a Statutory Will, the court must be satisfied that: 1. the person on whose behalf the Will is to be made does not have testamentary capacity; 2. the proposed Will reflects what the intentions of the person would be likely to be, or what the intentions of the person might reasonably be expected to be, if the person had testamentary capacity; and 3. it is reasonable in all the circumstances for the court to authorise the making of the Will. It is important to note that it is not only the likely intentions of the person that a court will consider, but also what their intentions might reasonably be expected to be. This gives the court power to authorise Statutory Wills for people who have lost capacity during their life and for people who never had testamentary capacity. For example, a person born with significant mental impairment. What do you need to make an application? The information the court will generally require to support an application includes, amongst other things, evidence of the wishes of the person on whose behalf the Will is made, evidence of any previous Wills and evidence of the likelihood of potential challanges to the Will under Part IV of the Administration and Probate Act 1958 (Vic). > Case Update - Superannuation The recent Queensland case of Munro & Anor v Munro & Anor [2015] QSC 61 serves as a reminder of the problems that can arise when drafting a Binding Death Benefit Nomination (BDBN) for a self-managed superannuation fund (SMSF). In that case, the Court held that a BDBN form providing for a benefit to be paid to the Trustee of the Deceased was not a binding nomination as it did not comply with the requirements of the trust deed that the nominated beneficiary be the legal personal representative of the deceased member. In reaching their decision, the Court noted the distinction between a legal personal representative (defined in the Superannuation Industry (Supervision) Act 1993 (Cth) to relevantly mean the executor of the Will of the deceased) and a trustee of the deceased s estate. The lesson from Munro: BDBN s are a legal document and care must be taken when drafting to ensure that the requirements of the trust deed are strictly complied with. A timely reminder that all clients should obtain appropriate legal advice when preparing their BDBN to ensure the nomination is valid and continues to be valid and binding on death. 5 Rigby Cooke Lawyers - InSuccession May 2015
When can you make an application for a statutory Will? There are numerous scenarios in which consideration should be given to a Statutory Will. For example, where a person has lost capacity later in life, it be may that: their existing Will is out of date and needs to be updated; their existing Will needs to be remedied due to concerns about testamentary capacity or validity at the time of signing; their assets or financial circumstances have changed; their relationship with a beneficiary has ended or broken down; a beneficiary has abused a position as administrator or financial power of attorney. In Queensland, it has also been found that the Statutory Will provisions contained in the Succession Act 1981 (Qld) can extend to estate planning purposes, including tax reduction and asset protection. For example, in Re Matsis; Charalambous v Charalambous & Ors 1 the Supreme Court of Queensland authorised a Statutory Codicil to be made on behalf of an elderly man which had the effect of incorporating testamentary discretionary trusts into his Will in place of absolute gifts to his grandsons. Whether this approach will be followed in Victoria remains to be seen. However, it is anticipated that a similar approach may be adopted here. Conclusion In his recent judgement in Simpson v Cunning 2, Justice Hargrave recognised that, People are living longer than in the past and their physical health is outlasting their mental capacity. As this trend continues, it is expected that more and more people will make use of the Statutory Will provisions contained in the Act to ensure the affairs of their loved ones are put in order. 1 [2012] QSC 349 2 Simpson v Cunning [2011] VSC 466 (22 September 2011) [45] > On a Lighter Note Mrs. Jones, the grade 5 teacher, posed the following maths problem her class: A wealthy man dies and leaves ten million dollars. One-sixth is to go to his wife, one-fifth is to go to his son, one-fourth to his butler, and the rest to charity. Now, what does each get? After a very long silence in the classroom, Little Johnny raised his hand. Yes Johnny? With complete sincerity in his voice, Little Johnny answered, A lawyer! Rigby Cooke Lawyers - InSuccession May 2015 6
Our Team Rachael Grabovic / Special Counsel T +61 3 9321 7826 rgrabovic@rigbycooke.com.au Dennis Millikan / Consultant T +61 3 9321 7845 dmillikan@rigbycooke.com.au Paul Beasant / Senior Associate T +61 3 9321 7983 pbeasant@rigbycooke.com.au Rosa Bazzanella / Associate T +61 3 9321 7881 rbazzanella@rigbycooke.com.au Level 11, 360 Elizabeth Street Melbourne Victoria 3000 T 61 3 9321 7888 F 61 3 9321 7900 www.rigbycooke.com.au Disclaimer This publication contains comments of a general nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional advice. No responsibility can be accepted by Rigby Cooke Lawyers or the authors for loss occasioned to any person doing anything as a result of any material in this publication. Reprinting articles Articles in this publication may be reproduced in whole or in part, provided that appropriate recognition is given to the author and the firm, and prior approval is obtained. To obtain approval, please contact Rigby Cooke on +61 3 9321 7888 or email marketing@rigbycooke.com.au. Rigby Cooke Lawyers 2015 Liability limited by a scheme approved under Professional Standards Legislation