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Episode 81
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Professional Skills Substantive Law
Will They or Won’t They: Combating Ambiguity in Wills
Law as stated: 3 March 2023
What is this?
This episode was published and is accurate as at this date.
Wills expert and Principal Solicitor Anne Brown of Marriott Oliver joins host DT to cut through intestacy, partial intestacy, ambiguity and best practice drafting.
Professional Skills
Substantive Law| What area(s) of law does this episode consider? | Full and partial intestacy, residue clauses, and best practice will drafting. |
| Why is this topic relevant? | The Succession Act 2006 (NSW) (Succession Act) is the source of truth for the processes that happen to someone’s estate when they die without a valid will in NSW – this is known as intestacy. But sometimes the documents which describe and allocate the property of the deceased may not have been updated for quite some time and, in the intervening period, the person may have acquired property which is not mentioned at all in their will when they die. This is known as a partial intestacy. To make things even more confusing, drafting wills is an area of law in which a simple mistake or just loose drafting may not be discovered until after the death of the client – usually in the form of a dispute between potential beneficiaries. Knowing how to spot – and prevent – potential disputes and errors before they arise is a key skill for any lawyer. |
| What legislation is considered in this episode? | Succession Act 2006 (NSW) |
| What cases are considered in this episode? | Wales v Dixon & Ors [2020] EWHC 1979 (Ch) (British and Irish Legal Information Institute link)
Re Staughton; Grant v McMillan [2017] VSC 359 (Jade link)
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| What are the main points? |
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| What are the practical takeaways? |
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| David Turner:
1:00 | Hello and welcome to Hearsay the Legal Podcast, a CPD podcast that allows Australian lawyers to earn their CPD points on the go and at a time that suits them. I’m your host David Turner. Hearsay the Legal Podcast is proudly supported by Lext Australia. Lext’s mission is to improve user experiences in the law and legal services and Hearsay the Legal Podcast is how we’re improving the experience of CPD. The Succession Act 2006 governs what happens to someone’s estate when they die without a valid will in New South Wales – this is called in intestacy. Now, sometimes the documents which describe and allocate the property of the deceased might not have been updated for quite some time and, in the intervening period, the person may have acquired property which isn’t mentioned at all in their will when they die – and this is called partial intestacy. To make things even more confusing, drafting wills is an area of the law in which a simple mistake or even just ambiguous or loose drafting may not be discovered until after the death of the client – usually in the form of a dispute between potential or actual beneficiaries. Joining me today to talk about intestacy, partial intestacy, as well as best practice in constructing and drafting wills and the disputes which can arise when they’re not constructed correctly, is wills and estates expert Anne Brown, a Principal Solicitor at Marriott Oliver. Anne; thanks so much for joining me today on Hearsay. |
| Anne Brown: | No problem. Thank you for having me. |
| DT: | Now, before we get into intestacy, will drafting, fully or partial intestacy, let’s talk a little bit about your career. You’re a principal at Marriott Oliver, as I mentioned. How did you come to practice there and have you always practiced in wills and estates? |
| AB: 2:00 | I started off practicing in insurance litigation in the city, but I’m from the South Coast, so I ended up getting the job in Nowra with Marriott Oliver Solicitors. When I started there I worked primarily in property and commercial work and did a little bit of will drafting on the side, which I always enjoyed. I became a partner around 4 or 5 years after being in the firm, and it was a mutual fit at the time for the partners that were in existence and myself – it was always the plan to go down that path. After I became a partner, the principal partner who was dealing with wills and estates work wanted to reduce her workload, and she asked me if I would like to work primarily in that area. And I jumped at the chance to do that because I had always enjoyed that area and she was a fantastic mentor and I learned a lot from her. And since that time, that’s all I’ve been doing is pretty much the wills and estates area for the practice. |
| DT: | We’ve talked to a lot of guests on this show who’ve started in one practice area and are moved on to another. Do you think that experience outside of the will and estates field has made you a better wills and estates lawyer? |
| AB:
3:00 | Absolutely. Obviously there are lots of crossovers between practice areas and doing the property work and then drafting wills for people was really beneficial, particularly in terms of the nature of ownership and potential ademption issues. So I think that was a really good background for me and it worked well in my practice. |
| DT: | Yeah, absolutely. Sometimes it’s a case of; “you don’t know what you don’t know”, and you’re just alive to more issues, having seen a broader range of practice areas. Now let’s talk about intestacy. It’s our first subject to discuss on the podcast today. Now intestacy under the Succession Act is what happens when someone dies without a will. In that case, where someone has died without expressing their wishes in a binding will at all, what happens under the Act? |
| AB: | So there are provisions of the Succession Act, which essentially sets out a formula for how the deceased’s assets are dealt with after they pass away without a will. It is a fairly complex process because there are a range of different scenarios. For example, normally it would go to spouse, children or a combination of those depending on the makeup of the relationship, particularly with so many second marriage situations these days. |
| DT: | Sure. |
| AB: 4:00 | Then after that it goes to parents, siblings, children of deceased siblings and so on. So there’s a specific formula that’s set out. In terms of process, normally you have to apply for letters of administration instead of probate, which is what you obtain when a will is held by the testator. So it is a more complex, time consuming and expensive process to go through the letters of administration situation rather than probate, which does cause issues for estates and it can get very complicated and messy when there are multiple spouses or children of various spouses within an estate. |
| DT: | I think sometimes some people have the perspective of, “well, I’m okay to pass intestate because I want everything that I have to pass to my spouse.” But it’s not as simple as that, is it? |
| AB: | If you have one spouse that obviously is the result, it would go all directly to that spouse. If any children you had were of that spouse, if the children were the children of you and the spouse, the problem is the burden is much higher of getting a grant of letters of administration from the court rather than getting probates. So there are certainly additional costs to the estate because of the level of proof that’s required to show the entitlement of the persons involved and the time taken is a lot longer as well. |
| DT: 5:00 | Yeah, even if you think you’re saving some time and money in allowing that intestacy situation to prevail, you’re really just deferring all that time and cost for your beneficiaries, aren’t you? |
| AB: | Absolutely. |
| DT: | Now, for our listeners that situation of complete intestacy is going to be pretty rare, isn’t it, because most of the clients coming to see them about wills and estates issues are likely to have already had a will prepared or are coming to see them about preparing a will. So what’s partial intestacy? |
| AB:
6:00 | Partial intestacy occurs where there are assets which haven’t been dealt with under a will. In my view, partial intestacy where a solicitor has drafted a will is usually pretty rare as well. It often occurs when people are doing will kit wills or trying to draft their own wills. We had an instance recently where a deceased client drafted his will based on a previous will that he had organised through a solicitor, but he only chose to include some of the provisions of his previous will, and he omitted a residue clause from his will. So he left lots of specific items to various beneficiaries, but because he didn’t include the residue clause, he died with a partial intestacy because there were many assets which weren’t included in the items he’d specifically delineated. So that created a partial intestacy in that regard and we find that’s what happens more often than not with partial intestacies. TIP: David and Anne will talk a bit about residue clauses and their use throughout the rest of the episode, but for the sake of clarity let’s quickly go over what exactly they are. A residue or residuary clause is designed to cover anything that isn’t specifically mentioned in a will, like property acquired after the will is made, or small things you wouldn’t even think to include. Pretty much what it says on the tin. However, it’s also important to cover situations where a beneficiary dies before the testator and the will doesn’t account for that. Anything that was left to the deceased beneficiary can be accounted for under the residue clause. |
| DT: 7:00 | I was about to ask actually, is the reason why so few solicitor-drafted wills have this partial intestacy problem is because of the residue clause that almost uniformly appears in those documents? |
| AB: | Yes. I’ve never seen a will drafted by a solicitor which doesn’t include a residue clause. |
| DT: | Yeah. Just thinking about will kits and self-drafted wills, do you think the increase in online DIY legal services, the modern will kit that you might not pick up at the post office, but that you might fill out with the assistance of a chatbot, do you think that might increase the incidents of partial intestacies if those residue clauses aren’t being uniformly applied? |
| AB: | Absolutely. I think it will be an ongoing problem, particularly if there is the scope to amend the DIY online will type of templates and people don’t understand what a residue clause means, or they don’t think it applies to them and their situation, they often could remove it or alter it to have the situation prevail where there is a partial intestacy. |
| DT: 8:00 | Now, if this has happened, what then happens to those parts of the estate that haven’t been specifically provided for in that incomplete will? |
| AB: | They are dealt with in the same way as a total intestacy would be, except that the executor would apply for probate as usual of the estate. Any of the legacies or gifts bequeathed in the will will stand, but the partial intestacy will cause the solicitor to have to still provide the burden of proof of who the entitled beneficiaries are, and again that can be complicated depending on the makeup of the family situation. |
| DT: | Do the gifts and bequests in the part of the will that’s complete in relation to the identified property have any bearing on what happens to the property that’s the subject of the partial intestacy, or is that simply governed by the intestacy rules? |
| AB: 9:00 | They don’t have any bearing at all. So it’s basically the gifts that are given are held to be still in effect, it’s just any assets that aren’t caught by the specific items that have been bequeathed, they form part of the partial intestacy. So, an example; we had a client who had a share in his parents’ estate that hadn’t been finalised properly and he didn’t have a residue clause in his will. So that portion of the estate, which he didn’t consider at the time to be part of his estate, had to go through the intestacy. Plus also I think clients sometimes don’t realise the enormity of what the residue involves. It involves everything – the toilet paper in your house, the cleaning products underneath your sink, your bits and pieces that are in your nightstand, all of the stuff that you have in your garage. So when they think that they’re giving away all of their goods and chattels or personal items, they’re not realising that it includes every single item that they own. Which is, I think, why will kit wills and DIY wills are problematic. |
| DT:
10:00 | Absolutely. All of those unknown unknowns; you can list all of your big ticket items but as you say, there’s all of these things that you don’t think about unless you’re consulting an expert in this area. Now something that occurs to me is; how do these partial intestacy cases, like the one you just described, end up on your desk? Because they are often the result of a self-drafted or will kit will. Is it usually the case that it’s a beneficiary coming to you having discovered an issue about, or a controversy about, who owns this particular item, or is it the case that many partial intestacies aren’t really discovered because people aren’t thinking about what’s in the nightstand or what’s in the locked desk drawer? |
| AB:
11:00 | I’ve had three in the last 18 months. All of those have been clients of the firm and executors or beneficiaries in wills of family members, and they’ve come to us to obtain probate for them. And when they’ve come to us we have read the will and realised that there’s been an issue with the will. In all of those instances our clients had no idea that there was any kind of issue with the will because, again, they’re not thinking about the residue as a global issue. And so in that instance we’ve had to explain to them what the situation is, which is quite difficult because they’re overwhelmed anyway, usually in a situation where they have never had to deal with this before and they’re dealing with grief and the practical realities of dealing with an estate. And then you have to explain to them what a partial intestacy is and how it impacts on the process moving forward. So it does create more stress certainly for the clients and more work for us as well – which results in increased legal fees for the estate. |
| DT: | Yeah, absolutely. Just an unnecessary additional stress to leave to your executor, I suppose. |
| AB: | Absolutely. |
| DT: | Now to segue to our next topic for today; this is kind of an example of a really bad drafting mistake, isn’t it? The partially intestacy where there is no residue clause, but it’s one that most solicitors would not make, perhaps really any solicitor regularly practicing in this area wouldn’t make, but drafting errors happen all the time in all kinds of legal documents and will are no exception. Tell us a little bit about some of the drafting errors that you might have seen in wills in your practice and the kinds of issues that they can lead to. |
| AB: 12:00
13:00
14:00 | So in our practice the biggest issue we have seen is ambiguity. So, not correctly identifying assets, not describing them properly, or not really thinking through ramifications of the plans that the testator has in place. For example, we have clients who often want to leave a specific property to somebody in their life. We really need to delve down into what happens if the nature of that property changes. So they might want to leave a particular property to somebody because it’s been in the family for many years and they want to keep that happening. Or for a specific child who has a special affinity with that property; they want it to go to that child. Lots of solicitors, in my view, are not delving down into what happens if that property is sold. So, for example, if a client owns Property A and they have to sell that property and use the proceeds of sale to purchase Property B; do they want that intended beneficiary to still receive Property B or not? Another example – and this is happening really frequently – is when a client has to sell their property to go into an aged care facility and part of the proceeds of sale are used to fund a refundable accommodation deposit. Does the client still want the intended beneficiary to receive the net amount of the proceeds of sale at the time the property was sold or do they want them to receive the total amount of the refundable accommodation deposit or none of that? Do they just want the funds to come back as part of the residue of the estate? So those are the types of things that we’re seeing cause problems going forward. Also clear descriptions of items. So, we had an example recently where we had a client who did a very good job of describing particular jewelry items that needed to go to intended beneficiaries and then inserted a clause which said that she wanted any jewelry items of real value to go to a particular beneficiary. So, obviously, real value is so subjective and very difficult to define. We were lucky in this instance that the executors were also the two residuary beneficiaries in that matter. And they didn’t really want any of the jewelry, so they were quite happy to have all of the remaining jewelry go to the particular person who was supposed to get the jewelry of real value. But if that didn’t happen that would be quite problematic. And if there was a fight about it, it would have to be determined by the court, potentially, if there couldn’t be agreement in place as to what real value meant. |
| DT: | Yeah, absolutely. I mean, what is the threshold for that and is it even real financial value or is it some intangible or sentimental value? It’s quite difficult to work out. |
| AB: | Exactly. |
| DT:
15:00 | Just going back to your earlier point about the situation where a property is sold, it’s realised into a fund or it’s then used to purchase other property or a refundable deposit for aged care or retirement accommodation. I mean, that really seems to be a reminder to me that having your will drafted and your estate planned for is not a “one and done”engagement, is it? It’s really something that needs to be regularly updated because that’s almost worse than the intestacy situation, isn’t it? Because you have stipulated what is to happen with the residue of your estate, that might result in a real unintended consequence for such a large asset to end up in the residue and left to residuary beneficiaries? |
| AB:
16:00 | Absolutely. When we meet with clients, we usually tell them that they should be looking at their wills every 5 years or as their circumstances change. And then we go through some examples of circumstances changing. So, for example, some clients don’t want to include potential grandchildren as beneficiaries in their wills if they don’t have grandchildren at that stage. We give that as an example. Obviously moving, changing assets, retiring because obviously the structure of finance has changed potentially at that time. So anything that’s really having a substantial change on their life we ask them to get out their will, have a review of it to see if it still suits their circumstances, and if they’re not sure to give us a call or to come in and see us so we can talk through that to make sure it suits them at the time. We also have clients who they know that they’re going to go through some changes in the next few years for various reasons and, usually, we diarise those to contact them again when we know things are going to be wrapping up or changing for them to make sure they come back in to get things sorted out. Actually, that reminds me of another thing that we’ve seen a little bit of recently where there have been de facto partners who have become married and their previous wills, or even wills they’ve had done together by other solicitors, haven’t included a marriage contemplation clause. |
| DT: | Right? |
| AB: | So obviously if that’s not included then the will becomes automatically void at the time that they’re married and clients don’t realise that. So it’s obviously something if we have people coming in who are not married at that time, we always go through that situation with them. Even if they’ve been together for 20 years we still tend to try and include that clause in case they do decide to get married. We don’t want their wills to become voided when they get married. So little things like that, making sure that you’re trying to encompass as many circumstances in the present and future as you can. |
| DT: 17:00 | When the will doesn’t contain that marriage contemplation clause, can the pre-marriage will be used as an informal will or is it just completely invalid? |
| AB: | No, it’s completely invalid. It’s revoked at the time that you are married. TIP: An informal will is a document that doesn’t meet all the legal requirements for a will. But it is a representation of the testator’s intentions for their will. One common issue is that a will hasn’t been signed by the deceased. As an example of an informal will – electronic documents made by the deceased have been found to be informal wills in some instances. |
| DT: | I suppose with more and more people not marrying, but remaining in long-term de facto relationships, you must see that quite often. |
| AB:
18:00 | Yes, we do. And it’s interesting, we’ve had a couple of clients who have actually been in really long-term relationships and then decided to get married 25 years later for whatever reason, which is why we ask the question. And it does get a little bit tricky but when we explain the situation and explain that it doesn’t matter if you don’t get married, the will’s going to be valid, but if you do decide to get married, the will will still be valid. So obviously they want certainty that their wishes are going to be fulfilled as well. So we tend to raise that quite often with them. |
| DT: | Speaking of ambiguity in will drafting, do you ever come across ambiguous terms regarding shares in property? For example, that someone should receive from the proceeds of sale of a property a certain amount referable to the value of some contribution they made to it, or the value of some work that they performed in improving the property because I’ve seen that in my practice. I’m not a wills and estates lawyer, but I occasionally have these sorts of matters related to property disputes come up. Someone has been promised, either in the will or outside of it, some amount of the proceeds of a property based on a contribution they’ve made to it, whether that’s household maintenance and care, whether that’s renovations, whether that’s a contribution to the purchase price, something like that. |
| AB: 19:00 | I haven’t had any where there’s been any issue with that. We have had wills where we’ve had to include clauses that set out a formula for working out what that amount is going to be. Often it’s percentage based. We have had situations where we’ve had valuations done at the time that funds have been contributed. So clients planning ahead for their demise basically when they’ve gone through agreements like that but I haven’t had a situation where there’s been an issue with it. But obviously there would be in terms of, again, lack of clarity about how the property or proceeds and sale should be dealt with. |
| DT: | There’s a particular case that I was reading in preparation for this interview that I thought was an interesting example of this kind of ambiguity coming into a will in a way that you might not have expected. It’s Wales v Dixon. It’s an English case, a 2020 case, and in that case the testator didn’t specify that nieces and nephews mentioned in the will were to be blood nieces and nephews and not nieces and nephews by both blood and marriage. Now that made a difference between 7 joint beneficiaries or 15 in the case of both by blood and marriage. Have you seen anything similar in terms of ambiguity in the description of who the beneficiaries are rather than the description of the property that’s to be granted to them? |
| AB: 20:00 | I haven’t had one personally, but I do know of a couple of cases in Australia which have had similar situations. One was a Victorian case which the term “grandchildren” was used and this particular testator had step-grandchildren. |
| DT: | Ah. |
| AB:
21:00 | And so the decision was; “were the step-grandchildren included?” And in that particular case they were deemed to be included. And the court looked at the nature and length of the relationship of the testator and the step-grandchildren, how he referred to them, the nature of the relationship and so on – which is a little bit similar to the English case you just mentioned. When we take instructions from clients, we really try to delve into their family situation in depth. We talk about their children’s marriages, their grandchildren, if there are any stepchildren, step-grandchildren and we ask them if they do want them to be included, particularly in situations where they’re leaving everything to their children and then their children’s children if something happens to one of their children before them and so we have clients often including the term “biological” when describing beneficiaries. So, for example, they may have a standard residue clause leaving everything equally to their children, which then goes on to say that if any of their children predeceased them, their share goes to their biological grandchildren if they really want to make sure it’s only going through their bloodline and not to any step-grandchildren in that situation. So, obviously we’re aware of cases like that. It’s a little bit the same with the nieces and nephews situation. We have clients who want to leave assets to nieces and nephews on both sides of the family and we’ll often describe it as we leave X amount to my nieces and nephews and X amount to my wife’s nieces and nephews… |
| DT: | I see. |
| AB:
22:00 | … or partner’s nieces and nephews. So it’s very clear about who is being contemplated in the class of beneficiaries. TIP: In Re Staughton; Grant v McMillan – that’s [2017] VSC 359 – the will had been drafted years before the deceased’s second child had gotten married to his wife, who had two children from a previous marriage. The court examined similar situations each turning on a slightly different set of facts. Things that consistently arose were, as mentioned, the relationship between the testator and the people in dispute, but also how those people had been referred to while the deceased was alive, in this instance the step-grandchildren were just called ‘my grandchildren’ by the testator. That Wales v Dixon citation mentioned by David is [2020] EWHC 1979 (Ch). We’ll leave a link to both in the episode notes. |
| DT: | That’s another good way to deal with that ambiguity, isn’t it? To give some context in the other terms of the will that make it clear what that first term means. |
| AB: 23:00 | We often have clients who want to name nieces and nephews or grandchildren – which again is really good because it’s very specific about who gets things – but the only issue there is that other grandchildren can be born obviously after the will has been done. So again, in that situation where the clients are really determined to name their grandchildren in the will, we include a clause saying and any other grandchildren born after the date of the will and before my death, or something along those lines to make sure that any future grandchildren are included in that class, if that’s what the client intends. |
| DT:
24:00 | I suppose, naming particular kinds of relatives – nieces, nephews, grandchildren, things like that – might render someone who has the same relationship to the testator, but who isn’t named, an object of testamentary recognition for the purposes of something we might talk about a little bit later, which is family provision claims that might arise on some of these wills. That description you just gave of your usual practice of asking about the makeup of the testator’s family and really delving deep into those family relationships to understand the instructions is a real reminder that wills and estates practice is not just preparing a will according to instructions, is it? It’s really understanding the whole of that estate and planning more holistically than even what the testator might initially intend, I think. We spoke to another wills and estates lawyer in an earlier season of the show about other documents that might accompany a will, that might not be binding, but might assist in understanding what the testator would like to happen to their property or to their family members after they pass like a statement of wishes, for example. Are there any aspects of your practice in wills and estates beyond the drafting of a will and really understanding those family relationships that you would give as a tip for our listeners to have a more holistic approach to helping your clients prepare for their passing? |
| AB:
25:00 | Yes. I think the most important thing, as I said, is developing the relationship with the client to the depth where you fully understand everybody involved in the situation and sometimes clients are reluctant to provide that information. So obviously open-ended questions, trying to find out exactly what’s going on within the family, but also with assets. So I think with clients, the more information you can obtain about their asset position and what they’ve been doing in their lives helps as well because clients don’t really understand often the nature of the property they own and how the ownership of that property can potentially affect the impact of their will. For example, joint tenant owned property as opposed to tenants in common owned property. Trusts are another area of law that clients don’t really understand. So they think they can give away assets held in trust within their will, which obviously they can’t do for inter vivos trusts. Lots of clients still don’t understand the concept of superannuation… |
| DT: | Binding beneficiary nominations, yeah. |
| AB:
26:00 | Exactly, how that correlates with the estate. So often what we try to do as well is work with the client’s accountant or financial planner to see what documents they have in place so we can ensure that their will is drafted to best suit their circumstances, particularly if there are companies and trusts or other partnerships involved. In terms of documents that clients create in addition to their will, the main ones that we have used in the past are statutory declarations. Particularly in relation to family provision claim information or potential challenges. So we use those. We have used statement of wishes quite regularly. Particularly if a client is creating testamentary trusts in their wills to delineate what they want to happen for the beneficiary in the trust. We have goods and chattels lists as well, if clients have a whole lot of items that they would like to go to particular beneficiaries, we include those by way of a brief clause in the will. But obviously it brings all of those clauses into action in relation to distributing properly. So there are some extraneous documents like that that we do use, but I find in terms of taking instructions to create a holistic will that’s going to cover all areas, I think it goes beyond just the client-solicitor relationship and you have to look outside that a little bit as well to include other people like accountants and financial planners to make sure that all of the bases are being covered properly. |
| DT: 27:00 | Yeah, that really interdisciplinary approach to understanding, as you say, the client’s circumstances – not only their family, but their financial circumstances as well, and understanding those assets that even the client may not be able to give you complete instructions on. You mentioned statutory declarations in the context of contemplated family provisions claims, tell me a little bit about that. |
| AB:
28:00 | So we generally ask our clients to provide a statutory declaration – which we often help them with if they’re not comfortable doing it themselves – to explain why they’ve made choices about various family members, particularly if they are leaving them out completely or they are leaving them a smaller share for whatever reason. We explain to the clients that the reason for this is that if the estate is litigated after they pass away, obviously they’re not there to explain the situation. We take notes every time we take instructions in a will client. So obviously those notes are used as evidence as well, but if the client explains in a statutory declaration form why they have chosen to set out their will in the way they have, that can be used as evidence before the court. It’s not always swaying, I guess, but it still provides some context about why decisions are made – particularly if a client is leaving a child out and that child is in a strong financial position, there has been a lack of relationship for an extended period of time, or there are other sufficient reasons. It certainly gives some context not only for the child who has been omitted from the will or left a smaller share, but also for their solicitor to give them some advice about going forward with any kind of claim. |
| DT:
29:00 | Absolutely, and I suppose it gives the deceased a voice in those proceedings because of course you see in the plaintiff’s affidavit filed with the originating process, plenty of information about the purported relationship that they had with the deceased and their financial circumstances and – I have to admit, having done a few of those disputes myself usually for the estate – sometimes you read that description of their financial circumstances and you wonder how they could possibly survive having so little income and so many liabilities. But it’s useful, particularly regarding that purported relationship between the deceased and the plaintiff, to have the deceased’s voice in that dispute to give a, I suppose, more independent perspective to the court. |
| AB: | I’ve had clients who have had amazing statutory declarations, which have attached copies of AVO orders that they’ve had to take out against their children…. |
| DT: | Wow. |
| AB: | … for domestic violence situations. Police reports about theft; so really going to conduct disentitling aspects. Which is quite important within the factors to be looked at by the court. So they’ve done a really good job in providing a whole lot of factual information about what has happened throughout the course of the relationship with their children and that’s really useful. |
| DT:
30:00 | And of course these sorts of documents and that sort of information, it really goes to the amount of the award that might be made in a family provision claim. Of course, very difficult to exclude someone from the ability to make a claim. I’m thinking of that case where someone had specifically stated in their will that they were to leave nothing to this particular beneficiary because they didn’t feel that they deserved anything and the court relied upon that clause in the will as evidence that the testator considered them to be an object of testamentary recognition that they would need mentioning so it sometimes works the other way as well, but useful to the court that is then considering that claim in terms of how much should be given. Going back to our earlier topic of intestacy, family provision claims can be made even in those circumstances, can’t they? |
| AB: | Yes, that’s correct and often are. So we do see that happening quite regularly in intestacy matters. |
| DT: | And I suppose that’s also the case for partial intestacy claims where one of those items may not have been caught by the residue clause and there’s some dispute over it. Do we see family provision claims in those partial intestacy situations often? |
| AB: | I’m not aware of any. I certainly haven’t seen any in my practice, but I definitely wouldn’t rule it out. Obviously depending on the nature and value of the assets, of course, but I think whenever there’s ambiguity involved or any gray area, I think that there’s the potential there for claims to be made. |
| DT: 31:00
32:00 | Now, I think all of our listeners – even those who don’t regularly practice in this area – would know just how much family provision litigation is taking place in New South Wales over the past 5 years. I don’t know how many matters are in that family provision list up in the Supreme Court, but it’s quite a number and there’s quite a backlog. And I suppose there are a number of different economic incentives for why that might be the case. High property values; the way costs are structured in those matters tend to mean that the estate is bearing the cost of that litigation irrespective of the outcome or very close to irrespective of the outcome, almost all of those matters settle at a mandated mediation – there’s a whole range of different incentives for why that litigation’s taking place. But I imagine if our listeners are aware of how many claims like this are being brought then clients are probably concerned about it as well. They’re probably hearing about these matters and want to make sure that they’re protecting themselves – so far as they can – from the risk of those claims affecting their wishes in the future. So when a client comes to you with a question about these sorts of claims, or even if they’re unaware of them, how do you help to mitigate the risk of those claims, recognising that you can’t exclude them completely? |
| AB:
33:00
34:00 | With our clients we, again, ask lots of different questions about their situation – not even just family members. So for example, one question we ask every time we meet with a client is if they have had anybody live in their household who has been totally or partially dependent upon them, and we give examples of that. They might have had a sibling live with them as an adult for a long period of time where they’ve helped them out in a particular area. Obviously stepchildren – even friends – they’ve had people who’ve lived with them for a couple of years and they’ve shared costs and living. We are trying to identify any potential claimants and once we do that, then we give advice to our clients about how that can impact their wishes in dealing with their assets after they pass away. When it comes to children in particular, we see most Fam Provision Act claims coming from children who have been left out of wills or left a smaller share than other people. We have clients that come in and their first question is; “what can I do to make sure my child can never make a claim on the estate?” Well, the answer to that really is nothing. Like it’s very, very difficult. Obviously, you can transfer assets into other people’s names or intended beneficiaries names before you pass away, but you still have to live for a certain period of time after that’s occurred, but also you run the risk of then potentially placing yourself in a precarious financial position if you do that. So there are pitfalls of doing that as well. But it’s really explaining to the client what the worst case scenario is, what can happen along the way. It’s ultimately still their decision as to whether they include a child or not. I’ve had lots of clients come in to see me and tell me that they have heard that if they leave $10,000 to their child that they can’t challenge the will. That’s one of the biggest myths, and we hear it at least once a month at work and we explain to them it doesn’t matter if you leave $10,000, $100,000 or $1,000,000 to a particular child – depending on the nature of your estate, they can still make a claim. We had an example about 10 years ago where a testator left everything equally to 3 children; 2 of those children made a claim for further provision and were successful in that challenge. So even if you leave things equally it can still be challenged. So when you’re explaining those kind of concepts to clients, they understand a little bit more about how the jurisdiction works and sometimes they do want to change their mind about how they deal with beneficiaries after knowing what can happen with the estate. Particularly with respect to the stress it causes on the executors and other family members, the time it takes to resolve these issues, and the financial toll it takes on the estate as well. And often they may change their ideas about what they would like to do but other times they are steadfast in their desire to either totally leave a child out or leave them less. And in that situation we prepare the wills with those instructions but obviously making sure that they know verbally from us in that meeting about the ramifications but also we send them a letter with the draft will explaining again about the family provision situation and then it’s up to them whether they go ahead with that. |
| DT: 35:00 | I imagine when a lot of people hear the possible costs of an estate defending a family provision claim, which again, unless that plaintiff is awarded nothing – which is rare, the estate is bearing both sides of that litigation – most people would rather see that money go to some of their beneficiaries, including perhaps the client, the natural object of testamentary recognition that they would rather have disentitled than seeing it all go to lawyers but I suppose sometimes they’re prepared to roll that dice. |
| AB: | Yeah. I’ve had lots of clients who definitely change their views after hearing what can happen, particularly with respect to costs. And I’ve had other clients who say to me; “I’ll be dead.“ |
| DT: | I suppose so. |
| AB: | “I won’t be here to worry about it and they can deal with it when I’m gone. I won’t have to sort it out.” So that’s another approach that we get quite often as well. Ultimately, we have to abide by our client’s instructions and wishes, but as long as they’ve got all of the background information, that’s their choice to make at the end of the day. |
| DT: 36:00 | And that very astute and sensible approach of giving that advice – both verbally and in writing – where you’re preparing that will in a way that might leave them open to a claim, brings to mind another question I wanted to ask you about will drafting errors. Because those circumstances where a family provision claim might be made possible – or more likely to be successful – by virtue of the provisions of the will. Might be intentional, like that situation, but it might be unintentional too. What are some of the liability risks for a solicitor who’s preparing that will where they’ve made a drafting error, where they’ve – in the really bad, worst case scenario – left out a residue clause or maybe haven’t given adequate advice about the risk of a family provision claim where a natural object of testamentary recognition hasn’t been provided for in the will because that liability might only be discovered many, many years down the track from that work being completed. |
| AB:
37:00
38:00 | Look, it is really problematic and as most practitioners would know from the Lawcover statistics every year, the claims are increasing in wills and estates, particularly as estate sizes are increasing. TIP: For those interstate, Lawcover is the single provider of professional indemnity insurance for solicitor practitioners in New South Wales and the Northern Territory and an approved insurer among several in the ACT. It’s a wholly owned subsidiary of the Law Society of New South Wales. The data which Anne just mentioned is reported in the Annual Report of the NSW Law Society. In the 2022 report, Lawcover specified that notifications totaled 703 for the year to 30 June 2022 – this was a slight decrease on the figures to 30 June 2021. However, when split by area of practice, the percentage of total reported notifications in the area of wills and estates rose from 7% to 9% of notifications year on year – an increase of notifications in the practice area in raw numbers. Obviously there are notional estate orders that can be brought into play and with large superannuation balances that people have these days as well it’s opening up further litigation. So there are many errors that are made by solicitors, either in the drafting process or in other aspects, for example, not getting a will drafted quickly enough. So there was a case in 2012 where a solicitor had taken initial instructions from a client who was in hospital and in that instance the testator had initially left everything equally to their children and then changed their minds and wanted to provide a larger share to one of their children with the other children receiving a specified amount. The solicitor didn’t get the will drafted in time and the testator passed away before the will… |
| DT: | Oh no. |
| AB: 39:00 | … could be signed. So the previous will leaving everything equally was the one that was probated. So a claim was made against the solicitor by the I guess disappointed beneficiaries, a term that’s often used, and that claim was successful against the solicitor. In that instance, there was only just over a week between taking initial instructions and when the solicitor planned to go back and see the client to get the will signed, which doesn’t sound like a lot of time at all but in this instance, obviously the testator was unwell in hospital and the relative of the testator was calling the solicitor and had left several messages which weren’t responded to. And the court found in that instance that the solicitor was negligent in those circumstances and held liable. So that’s something… |
| DT: | Wow. |
| AB:
40:00
41:00 | … to think about in terms of drafting informal wills in situations. I think most practitioners have done what they call a deathbed will – which is terrible terminology – but they’ve had to go and see somebody in hospital when they’re really unwell. In that situation, we take up various will templates so we’re there prepared and we can hand write the will and get it signed. If we can get back with a typed will, we do. But if not, at least we’ve got that informal will there ready to go which is important. So that’s one area of law I think is really important. There have been other situations where practitioners have not had wills witnessed correctly, and that’s caused loss and they’ve been held liable in that situation. Obviously drafting errors, as you said, many of them aren’t looked at until many years after and I think that’s why it’s important for solicitors to constantly be searching for as much information as they can, but the information is only as good as the drafter in terms of putting it all together. So in our practice we really focus on plain language and setting out things as clearly as possible. Excluding testamentary trusts, even our standard wills I find are getting longer, particularly if clients are wanting to include directions about what happens to maybe a vulnerable beneficiary and how they are looked after or dealt with. But I think it’s really important to put as much information in there for the executor as possible so they know exactly what their obligations are. For example, if there’s a right of residence clause included or a trust included to look after a vulnerable beneficiary, it’s really important to have the specific provisions in there to make sure it’s clear what needs to happen. |
| DT: | When you were talking about the deathbed will and how many practitioners in your area have probably been to hospital to prepare one of those wills at fairly short notice or with a fairly short turnaround time, that brought to mind another issue that can come up with deathbed wills which is capacity. And I can imagine just as easily a situation where within a week, because of someone’s deteriorating medical conditions, one might not have passed, but might have lost the capacity to execute the will that was being prepared. So, since you have so many great tips for us about how you take instructions and how your team prepares wills, especially in that situation. How do you satisfy yourself about the capacity of a client to make and execute a will, perhaps especially in that situation where you’re aware that they are suffering from a medical condition that’s perhaps hospitalised them? |
| AB: 42:00
43:00 | If we can, we speak to the doctors who are looking after the testator in hospital or it might be a rehab facility or whatever the situation may be. So whatever medical facility that they’re in, or even an aged care facility, we often go and see clients when they’re becoming unwell. We always try to speak to the doctors there to get their go ahead because sometimes we’re not actually even allowed to go and see them because their capacity is deemed to be insufficient at that time. So we try and establish that initially. I always take another solicitor with me, so there are 2 of us there, listening to what the client’s saying – obviously taking notes. Sometimes when you’re engaging with the testator, it’s harder to take contemporaneous notes in that instance, particularly if they’re tiring quickly. So it’s handy to have that second solicitor there taking more detailed notes about what’s going on and then obviously the standard test of; do they know what a will is? Do they know what their assets are? Who are their intended beneficiaries? What are the ramifications of leaving somebody out? So we still try and go through those. Certainly I find in my practice that often getting a will done in that circumstance, if they’re okay, is not as difficult as a power of attorney in enduring guardian. The test obviously is higher in that regard and so I’ve made many wills for people without being able to make a power of attorney and enduring guardian. I’ve never made a will where I haven’t been satisfied about capacity. If I’m really not satisfied about capacity, I have to apologise and I don’t make the will or in situations where it’s not a deathbed will – if it’s a client that has come to see me or I’ve gone to see them in an aged care facility – we’ll write to the doctor, their treating practitioner, to get a report back about their capacity before we go ahead. |
| DT:
44:00 | And how can that situation be overcome if you’re concerned about someone’s capacity but they’re insistent on wanting to change their wishes because something that’s always fascinated me about this capacity question is it’s not simply one threshold, is it? As you said, someone can have capacity to make one document, but not another. Someone can have capacity to make a will, but not enter into a contract. Someone can have capacity to make a will, but not manage their own financial affairs. We talked today about all of the sorts of issues that can arise from an outdated will, from partial intestacy to unintended consequences of the proceeds of sale of one property or a subsequent property being part of the residue of the estate rather than the original property going to the intended beneficiary. All of these issues that can arise if you’re not regularly reviewing and updating your will, but where someone’s suffering from diminished capacity, it sounds like it would be very difficult to remedy some of those issues. Is there anything that can be done when you’re concerned about someone’s capacity or their capacity to make a will might be fluctuating, they might be up and down to ensure that those sorts of issues can be remedied and their wishes can be, as accurately as possible, stated even where there are concerns about their capacity? |
| AB:
45:00 | Look, I think it’s a really difficult question. In terms of fluctuating capacity – I’ve had situations where I’ve gone to see a client one afternoon and have found that they weren’t in a position to provide instructions. But I’ve gone back the next morning, and they’ve been okay. So I think you have to try and persist. You have to be very careful where it’s driven by family members because obviously you don’t want to be creating a situation where you’re acting on behalf of a family member instead of the actual person you’re getting instructions from. |
| DT: | Yes. |
| AB: | Obviously we don’t have anyone else with the testator when we’re taking instructions – no families around or allowed around at the time. But we have had situations where we do try and persist. We’ve had a situation recently, this wasn’t me, but another solicitor in my practice went to see a client, they were very unwell in hospital, took a copy of their old will. And the testator, who wasn’t well physically but still fairly good mentally, actually took a copy of that will, read through it with the solicitor and crossed out various things physically with the pen that she didn’t want and then handwrote small amendments on that document and initialed everything and the solicitor came back to the office that same day to type it up, to try and go back the next day to see them and they died overnight. |
| DT: | Oh, wow. |
| AB: 46:00
47:00 | And we’re in the process of getting probate in that will that was hand amended by the testator, or the deceased now, in that instance, and even though the client was obviously extremely unwell and died a few hours later, I think that process was really good in terms of having the client looking at the document they had in place currently and making those changes. Obviously we haven’t had any backlash about that at this stage. There hasn’t been any kind of contest that has arisen as yet but it may, you never know. We had a matter recently where a client did his own will and everything in the will was fine in terms of the validity of it, but he did it at home with a friend writing it out for him, essentially. And he signed it and he was in palliative care at that stage and there were issues about his capacity because he was on palliative drugs at the time. We ended up settling that issue before it went to court but the capacity issue was going to be one that was very difficult to prove. I think if a solicitor does a will in that deathbed situation or when a client’s unwell, because they know the parameters of capacity required, it is a lot easier to try and uphold the terms of that will, rather than having a client do it at home in the same circumstances. |
| DT: | Yeah, absolutely. Such a tricky issue capacity, but I suppose important practice point there is that if someone is in care – or even if someone’s in home care, I suppose – that the presence of a medical professional of their treating physician or an opinion from that person is very useful in satisfying yourself and giving yourself the comfort that they’re capable of giving you instructions. |
| AB:
48:00 | Oh, absolutely. I’ve had children of clients who have called to make an appointment for one of their parents in hospital to go and do a will and I’ve gone up to the hospital and had the doctor say to me; “no, you can’t see them. They definitely don’t have capacity“. Even though that the child is telling me that they do. So obviously we try and speak to them beforehand to save the trip up to the hospital. We – definitely in that situation – defer to the medical practitioner’s view. In saying that the clients can get better. Capacity does fluctuate and we find that all the time with power of attorney and enduring guardian documents, clients might be able to make their own decisions, but they may have an operation where anesthetic affects their ability to manage things so for 6 weeks they can’t do things for themselves, but they regain that independence and cognitive process back after things settle down again. So it’s always something that is fluid and needs to be tested every time that you’re looking at different documents. |
| DT: | Absolutely. Well, we’re nearly out of time today, Anne. Thank you so much for joining me on the podcast to talk about intestacy, will drafting, capacity, all of these fascinating issues in this area. Before we go, I thought I’d ask you, for those of our listeners who might dabble in this area and want to do a little bit more of it what would be your tip to them and maybe for something different tell us why more of our listeners should be doing this work, why you really enjoy it. |
| AB:
49:00
50:00 | Okay. Firstly, in terms of tips, I think there are lots of resources online these days in terms of finding out more about the wills and estates practice area. It is a burgeoning area of law so I think there’s plenty of material out there. In terms of why to do it, look, I enjoy all aspects of the process. I really want to get things right for clients. I love learning about people and trying to get the best outcome for them in terms of their estate planning situation. As I said earlier, I really enjoy helping clients through difficult situations when family members have passed away. So helping them to get probate and get their estates finalised. With the estate litigation, I find it just such a fascinating study of human nature. Even though matters can become really contentious, obviously knowing the law is really important, but it’s also about managing clients’ expectations and managing their personalities and giving them the information to ensure that they’re doing what they want, but in the realms of what can potentially happen. I also find it really rewarding to get clients through matters. So, particularly if someone’s passed away or through estate litigation, it’s our goal really to make sure that financially estates are kept intact as much as possible but also emotional wellbeing after them. It’s a really stressful, harrowing experience at times. You’re dealing with grief and high emotion and family interactions which aren’t always pleasant. So I really enjoy that practical side of it and being able to develop rapport with people to help them through those situations. So it’s really rewarding in that regard and certainly never boring. Every matter’s different, every client’s different, every estate’s |
| DT: | It’s really one of those practice areas where you’re helping someone through what might be the hardest time in their life, and that must be so rewarding. So, Anne Brown, thank you so much for joining me today on Hearsay the Legal Podcast. |
| AB: | That’s okay. Thank you so much for having me. |
| Ross Davis:
51:00
| As always, you’ve been listening to Hearsay the Legal Podcast. I’d like to thank our guest Anne Brown for coming on the show. If you’re interested in more wills and estate content, check out episode 12 “Beyond the Will – Practical Considerations in Estate Planning” with Simon Bennett. As you well know, if you’re an Australian legal practitioner, you can claim one Continuing Professional Development point for listening to this episode. Whether an activity entitles you to claim a CPD unit is self-assessed, but we suggest this episode entitles you to claim a substantive law or a professional skills point. More information on claiming and tracking your points on Hearsay can be found on our website. Hearsay the Legal Podcast is, as always, brought to you by Lext Australia, a legal innovation company that makes the law easier to access and easier to practice, and that includes your CPD. Finally, before you go, I’d like to ask you a favour. If you like this episode and the other episodes you’ve listened to, please leave us a Google Review. It helps other listeners find us and that means that we can keep making the great content that you love. Thanks for listening and we’ll see you on the next episode of Hearsay. |
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