Wills and estates: November 2017

Judicial advice: section 205 Life Insurance Act 1995 (Cth)

No doubt, practitioners are familiar with recommendations by financial planners that obtaining life insurance cover is a good method of asset protection. The extent of that protection was recently tested in the judicial advice of Ward CJ in Eq in Application by Clauson [2017] NSWSC 1265.

The deceased was a partner in the accountancy firm Price Waterhouse Coopers. He left a de-facto spouse and children from two former relationships. But for the proceeds of superannuation and insurance policies there was effectively no distributable estate.

Her Honour advised with little discussion that the superannuation was protected from creditors and did not form part of the deceased’s estate.

The insurance policies were different. The Australian Taxation Office was the principal creditor. Chief Justice Ward drew a distinction between debts incurred by the deceased during his lifetime, which were protected, and certain ‘post-death liabilities’. Her Honour did not extend the protection to what were termed the post-death tax liabilities which were incurred in respect of income earned after his death. Her Honour accepted that the Crown was bound by the Life Insurance Act 1995 (Cth).

Judicial advice: identity of beneficiaries

The Victorian Supreme Court judgment of Re Staughton; Grant v McMillan [2017] VSC 359 raised the question whether the expression ‘my grandchildren’ included step-grandchildren. In this case it was held that the step-grandchildren were indeed included. The statement of Kunc J in Re Estate of Wright [2016] NSWSC 1779 (below) is noted with approval in the course of the judgment:

‘Notwithstanding adherence to what might be seen as the traditional meaning of the word “children”, the Court has no doubt that in today’s society in particular cases its meaning readily extends to stepchildren’ (at [28]).

The facts and manner of drafting of the will should once again alert practitioners to the necessity of obtaining precise instructions and drafting the will to avoid ambiguities.

The judgment is significant for its review of judgments, on similar problems of construction and identification, particularly in New South Wales.

The unsuccessful family provision plaintiff: ‘fessing up too late’

John Leary was an unsuccessful family provision plaintiff who also received an adverse costs order (Leary v NSW Trustee and Guardian [2017] NSWSC 1113 and Leary v NSW Trustee and Guardian (No. 2) [2017] NSWSC 1226). The plaintiff swore an affidavit two days before the commencement of the hearing to the effect that he had lied to his solicitors, his counsel and the Court as to his true financial circumstances. Those disclosed financial circumstances indicated that, with his entitlement in his mother’s estate, he possibly had no need and that properly instructed, his solicitors would not have commenced the proceedings. He claimed in his disclosure affidavit to be a gambler and to have lost his separate monies. Certainly he rolled the dice once too often in that as found by Her Honour. He also rejected offers at mediation which would have been better for him than the final result.

The message to practitioners must always be that utmost frankness is required from plaintiffs at all times. Practical problems can arise where there are wilful untruths from a client coupled with lack of documentary evidence.

Construction and rectification (ACT)

The judgment of McWilliam AsJ in In the Estate of Rummer [2017] ACTSC 277 is interesting. Death bed written amendments to the will operated as a codicil. The principal question for construction was the meaning of the words ‘most of the residue’. The costs of all parties were ordered to be paid from the estate.

Revocation of guardianship order

In Re UF [2017] NSWSC 437, White J set aside an order of the Guardianship Division of the NSW Civil and Administrative Tribunal (‘NCAT’), which had given the Public Guardian functions in relation to F’s accommodation, services and access. A financial management order was also in place.

The judgment is important in its consideration of the nature of an appeal from the Guardianship Division of NCAT.

Of particular interest are the findings that NCAT did not fail to afford the parties procedural fairness by: (a) failing to call F’s medical practitioner; (b) failing to provide her with legal representation; or (c) failing to give her the opportunity to state her wishes fully, contrary to the principles in s 4 of the Guardianship Act 1987 (NSW).

The judgment also discusses the role of the separate legal representative appointed to F.

Pamela Suttor, partner L. Rundle & Co., Law Society Councillor and Chair of the Elder Law, Capacity and Succession Committee.