Estate Planning & Deceased Estates

Amazingly, around 40% of people die every year without having a Will. This is despite the fact that having a comprehensive Will is not a difficult or costly task, and that dying without a Will usually causes unnecessary grief, costs and possible misdirection of assets. If you are concerned about who receives your assets after you die, then it is essential that you make a Will. It is particularly important to make a Will if you have a family or dependants.

If you die without a Will, the legal procedures are more complicated and time consuming and will usually cause more expense and worry to your family. If you do not leave a Will, the law provides a formula which sets out who is entitled to your assets. The formula may not distribute your assets in a way you would have wanted.

While you can leave your assets to anyone you wish, the law expects you to make proper provision for your spouse, children (including ex-nuptial children) and certain dependants. If you do not, those persons could challenge your Will by making what is referred to as a ‘family provision application’. There is no way to prevent a family provision application being made, but there are things you can do to reduce the risk.

Since your Will is one of the most important legal documents you will ever make, it is unwise to write your own Will without skilled professional advice considering the relatively small cost involved. There have been many cases where homemade Wills were either unclear, not properly drafted, not properly signed or caused unwanted tax liabilities. Many of these cases end up in Court and carry on for years, causing distress and hardship to the family involved.

Many of us feel a well-grounded fear that one day we may be unable to handle our own affairs either through illness or absence. If our fears became reality, who would act on our behalf to pay bills, make bank deposits, watch over investments and handle our paperwork? By making a power of attorney and appointing an enduring guardian, these worries can be eased by ensuring that your affairs will be managed by trusted people who you choose.

A power of attorney is a document by which a person or company authorises another person to lawfully act on his or her behalf. The Principal may wish the attorney to carry out only one specific transaction on his or her behalf (such as selling a house) or may wish to give the Attorney unlimited power to act on his or her behalf.

In New South Wales (and most other States), there are two types of powers of attorney:

(a) General Powers of Attorney, which ceases when the Principal loses mental capacity; and

(b) Enduring Powers of Attorney, which remain effective even if the Principal loses mental capacity.

A power of attorney is advisable when, for example, someone is planning an overseas trip and needs a trusted person to manage their affairs at home while they are away. In our view, a power of attorney on a permanent basis is recommended for business people, frequent travellers and the elderly. It can also be a good idea for spouses to have a power of attorney in favour of each other.

On the other hand, an ‘enduring guardian’ is a person appointed by you to make decisions on your behalf in relation to your health and lifestyle in the event that you become totally or partially incapable of making these decisions for yourself because of a disability. Some examples of these decisions are where you live, what medical treatment you receive and what other personal services that you receive.

The term ‘enduring’ refers to the fact that the appointment endures or continues even if your capacity to make decisions diminishes. It is worth noting that unlike a power of attorney, your enduring guardian can only act if you lose the capacity to make decisions for yourself.

You must appoint an enduring guardian using a prescribed form. Your signature must also be witnessed by a special class of witness who certifies that you understood the appointment and voluntarily signed it. These witnesses include a legal practitioner (i.e. a lawyer), Court Registrar or an approved employee of either the NSW Trustee and Guardian or Service NSW.

The passing of a loved one can be one of the most difficult times you will experience. At HPL Law Group, we are able to assist families finalise the affairs of their deceased loved ones and navigate the often complex process.

The person who is responsible for administering a deceased estate is called a legal personal representative, which will either be:

(a) the executor appointed under a will; or

(b) if there is no executor, a person appointed by the courts.

The duties of a legal personal representative will include taking control of the deceased’s assets, paying the deceased’s debts and distributing the remainder to the beneficiaries. If a person dies without leaving a will (known as intestacy), then the legislation in New South Wales dictates the relatives who are entitled to receive an inheritance and in what proportions.

When someone is named as an executor in the deceased’s will, they will normally need to apply to the Supreme Court of New South Wales for a grant of probate of that will in order to lawfully administer the deceased’s estate. A grant of probate is the court’s official recognition that the will is legally valid and the executor is authorised to deal with the deceased’s assets.

If there is no executor able to apply for a grant of probate (e.g. if the deceased did not leave a will), then the deceased’s next of kin will need to apply for a grant of letters of administration. While the process for applying for a grant of letters of administration is very similar to applying for a grant of probate, there are usually additional issues that need to be considered.

Chapter 3 of the Succession Act 2006 (NSW) (‘Act’) provides that certain persons can bring an action against an estate where they have not been adequately provided for under the deceased’s will (or under the rules of intestacy). This is commonly referred to as a family provision application.

Section 57 of the Act provides that a family provision application can only be made by certain eligible persons (e.g. spouses, former spouses, children, grandchildren).

An applicant has 12 months from the death of the deceased to file a family provision application with the court and must notify the legal personal representative within six months of the death of the deceased of an intended application.

HPL Law Group has a team of lawyers who can act for applicants who believe they have not received adequate inheritance and executors who wish to defend such applications.