Wills and Family Agreements

There are a significant number of generous parents who purchase properties for their adult children.

The agreement varies from the parents legally owning the house, to the house being placed in the child's name absolutely. The matter is further complicated if the house is placed in the name of the adult child and his or her partner. These good intentions can result in family warfare.

Who does own the house? Is there any money owing to the parents? What promises have been made? The parents have both passed away. What does the Will say?

In these situations the child often refers to the house, which is in their parents' name, as "my house". The parents may have a different interpretation of the arrangement and see the house as their house simply occupied by the child. You can see how there is confusion. In the event that the parents die, there is only one side of the story.

If the house is in the name of the child it is not a part of the estate of the deceased parent; if the house is in the name of the parent, then it is a part of the estate of the deceased parent and controlled by the deceased's Will. I am sure you can now see the problem evolving.

Peter and Carol had been living in a house they regarded as "their house".
However, it was formally owned by Peter's father who had purchased the house by
advancing the deposit and borrowing the balance in his name. Peter and Carol couldn't get a loan but they made all the mortgage payments. It had always been the understanding that the house was really the property of Peter and Carol. They had been encouraged by the father to improve the property; put an addition on the back of the house; fix the electrical wiring; replace the gutters; improve the gardens and paint the exterior.

What everyone failed to do was set out in writing what the agreement was and amend the Will.

Peter's father died unexpectedly. The family feud began.

Peter's brothers and sisters were not really interested in hearing Peter's interpretation of what the arrangement was in relation to the house. They adopted the rigid position that the house was owned by their father and formed a part of his estate to be distributed in accordance with his will. The Will of Peter's father simply said, "I give the whole of my estate to be divided equally between my children."( He had meant to fix that up given the agreement he had with Peter.) Peter and Carol claimed the house but there was little to support their claim.

The moral of this story is to document what it is you intend when providing financial assistance to your children. What is clear now may not be clear to your estate after you have passed on.

Clear documentation of family arrangements and intentions will remove argument and discontent after you have passed on.

To claim your obligation free probate or mini estate planning consult for up to half an hour please telephone (03) 8742 3199 to make an appointment or email us at info@rigolilawyers.com.au

Example of How a Power of Attorney was Desperately Needed

Alice aged 48 and her de facto partner Bill aged 51 live together. Bill has a serious car accident and is in intensive care and doctors advise that he may take some time to recover and appears to have a deterioration of his mental capacity. The family home and mortgage are in joint names however since Alice and Bill never really trusted each other with finances, the signing authority on the mortgage offset and joint account requires both of them to sign before any money can be withdrawn. Bill can't sign due to lack of capacity and Alice can't sign on his behalf either because she does not have legal authority. Household bills are accumulating and Alice has discovered the bank does not have a direct debit in place to deduct funds from either of their accounts to pay the mortgage. Without a power of attorney in place, Alice will have no choice but to apply to VCAT for a guardianship order which will take time and add to her stress, both financial and emotional. Further, Bill's adult children of his previous relationship would have the right to be notified of any VCAT hearing and have their say as well and even contest Alice's application for guardianship. A power of attorney would have saved the day with Alice having immediate access to the bank accounts and avoid privacy issues when dealing with banks and other organisations regarding Bill's status. Moral of the story-without a power of attorney you could leave your spouse or loved one with their hands tied regarding facilitating your finances should you become incapacitated.

And Another Example.....

Gwenda aged 79 has been caring for her husband Harry for the last few years but cannot cope doing it anymore and has her own health issues and wants to live with her daughter. Harry is aged 82 and in very poor health and has been assessed as an appropriate candidate to enter a low care aged care facility. As with most of these facilities, they require an accommodation bond of an amount close to the value of Gwenda and Harry's paid off home. In earlier years they discussed should anything like this happen then they agreed the paid off home be sold and the proceeds placed in an accommodation bond to ensure that the disabled partner would have proper care. Gwenda is ready to sell the home to do this however there is no one legally able to sign on Harry's behalf as joint owner because he has dementia and has lost capacity. Without a power of attorney Gwenda cannot sign for Harry or sell their home. If a power of attorney was made by Harry before he lost capacity, then Gwenda could use it to carry out Harry's wishes as well as any actions for his benefit which would normally require Harry's consent. Moral of the story- dont leave it too late for power of attorney to be made eg: if dementia or other incapacity sets in, as it would be too late.

To claim your obligation free probate or mini estate planning consult for up to half an hour please telephone (03) 8742 3199 to make an appointment or email us at info@rigolilawyers.com.au

In Victoria, and most states of Australia, the role of Executor of a Will is to:

1. Organize or assist with the funeral arrangements for the deceased.

2. Ascertain whether the deceased left a Will and if so, the whereabouts of the original document.

3. Ascertain the assets held by the deceased and any liabilities owed as at the date of their death.

4. Notify the following parties of the death, although this task is often carried out by family members:

• Medical Practitioner. 
• Solicitor 
• Accountant / Australian Taxation Office 
• Banks and other financial institutions 
• Insurers 
• Health Insurance / Medicare 
• Electoral Office 
• Vic Roads - Vehicle registration and cancellation refund (if any) of drivers licence. 
• Libraries 
• Dentist 
• Optometrist 
• Post Office 
• Clubs and other organisations. 
• Subscriptions to Newspapers or magazines. 
• Cancel taxi card. 
• Utilities - electricity, gas, telephone, municipal office (rates) water supply company. 
• Veterans Affairs (if relevant)

5. Obtain a Grant of Probate from the Victorian Probate Duties Office (if required). In some instances obtaining a Grant of Probate will not be necessary and a lawyer experienced in this area will be able to advise if so.

6. Until the Estate assets are called in and the debts of the Estate paid, the beneficiaries under the Will have no right to the assets of the Estate, even if they are specifically bequeathed to them.

7. On winding up the Estate the Executor is required to provide an accurate record of the monies received and disbursed by the Estate and to prepare a Distribution Statement reflecting same.

8. On the winding up of the Estate the Executor is responsible for the preparation of Releases, which are required to be executed by the beneficiaries of the Estate acknowledging receipt of their entitlement in the Estate.

9. An Executor must discharge his or her duties with all due care for the good and benefit of the beneficiaries and to ensure the interests of the beneficiaries, and particularly the interests of any minor child or children or disabled beneficiary are protected.

10. An Executor has an obligation to avoid a position of conflict between his/her own interests and the interests of the Estate in general and the interests of beneficiaries in particular.

11. The Executor should make arrangements with an Accountant to obtain a tax file number for the Estate and for a taxation return to be prepared for the Estate for the current financial year. The Executor or their Lawyer or Accountant should also contact the Australian Taxation Office to ascertain whether a final tax return for (the deceased) is required to be lodged. In the event tax is assessed as being payable, this will be classed as debt of the estate and will need to be paid from the proceeds of the estate, prior to any distribution taking place.

12. Due to the complexity of obtaining Probate, the administration of and the winding up of an Estate, it the usual practice for Executors to appoint Solicitors to attend to all these matters on their behalf. The Executor is entitled to be reimbursed for all such reasonable expenses incurred by them from the Estate.

Role of Trustees: (this is normally the same person as the executor unless the will provides otherwise ):

1. The Trustee's role is to ensure that the directions of the deceased are carried out in accordance with the terms of the deceased's Will and pursuant to Law.

2. This can range from merely having to pay out stipulated adult beneficiaries after payment of the debts of the Estate to overseeing and administering trusts, which may last for many years.

3. If there are beneficiary children who are minors, their share in the deceased's Estate will need to be held in trust on their behalf until they attain the age of 18 years or older if specified so in the Will.

Probate applications- what paper work and information is required:

1. The original Will of the deceased.

2. The full Death Certificate of the deceased.

3. The date of birth and country of birth of the deceased.

4. The date of death and place of death of the deceased.

5. The occupation of the deceased as at the date of death.

6. Executor's occupation and full residential address.

7. Whether the deceased was married, living in a bona fide domestic relationship, was widowed, separated or divorced at the time of death.

8. Whether the Executor is aware of any other persons who may legally be entitled to a share in the estate or be making a claim or contesting the Wife.

9. The full details of the make and model of any motor vehicle owned by the deceased and estimate of the value of same.

10. Whether the deceased was in receipt of any Centrelink (Social Security) payments, or benefits or any other pension either in Australia or overseas and whether the Executor has notified these agencies of the deceased's death.

11. Whether the deceased had any accrued salary entitlements, holiday pay entitlements, long service leave, retirement or superannuation benefits accruing from date of death. (Superannuation does not fall into the estate but is usually paid to the beneficiaries nominated therein, however payment to any beneficiary is at the discretion of the Trustee of the Fund).

12. Full details relating to any shares held by the deceased, inclusive of the name of the company with whom the shares are held, the number of shares held, and the SRN numbers of the holdings.

13. Full details relating to any life insurance policy over the life of the deceased. Proceeds of life insurance do not fall into the Estate but are paid to the beneficiary nominated therein.

14. Full details of all debts owed by the deceased at the time of death.

15. Full details of any other investments, bank accounts or other assets held by the deceased. All bank accounts will be frozen by the relevant institution once they have been notified of the death, with the exception of payment of funeral expenses. The bank will release these funds upon provision of a tax invoice from the funeral parlour. Any funds which may be withdrawn from the deceased's account after death, with the exception of funeral expenses, will need to be repaid to the Estate by the person who withdrew the funds.

16. Full details of any real estate owned in Victoria or elsewhere by the deceased. In the event the property is owned with another person as a joint proprietor, then the property does not fall into the estate of the deceased, but automatically passes to the surviving proprietor. If the property is owned by the deceased solely or as a tenant in common with another person, then the property does fall into the deceased's estate. A current market appraisal of the property from a local real estate agent should be obtained, so that the value of the property can be accurately recorded in the Inventory of Assets and Liabilities. Legal and accounting advice should be sought on any capital gains tax implications on selling the property.

17. Full insurance details relating to any real estate owned by the deceased are required. It is important to ensure that any building insurance does not lapse whilst Probate is being obtained and the Estate is being wound up.

18. In the event a decision is made by the beneficiaries jointly that they wish to sell the real estate, the Executor should bear in mind when placing any property on the market for sale that until such time as a Grant of Probate has been obtained and an Application by Legal Personal Representative has been lodged with the Land Titles Office, an Executor will not have the legal capacity to deal with the property. In the event of a sale being secured prior to this occurring the Executor should allow sufficient time for Probate to be granted, when determining the settlement date. This can take several months depending upon the size and complexity of the estate.