Disabled dad has $9m, two children and no Will – Statutory Will to the rescue

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Grandparents get Court to write son’s Will

Statutory Will

A Statutory Will is a Will written by the Court for you – before you die. Ten years ago Rolf suffered a ‘near fatal’ car accident. The Court said that from that moment on he had ‘no testamentary capacity, no current Will and no real or even remote prospect of regaining capacity’. At that time his partner deserted him and their two children.

Today, Rolf has no Will but has $9m from the insurance pay-out. The two children are now 10 and 13.

Under the rules of intestacy, his children, at Rolf’s death, would receive the whole of the estate in equal shares at the age of 18 years.

Court to the rescue

Rolf’s parents bravely approached the Court to draft, from scratch, a tax-effective Will for their disabled son. They wanted Rolf’s children to not get control of the money until 25 years of age. The court created a Will for Rolf:

(a) revoking previous Wills and codicils (just in case Rolf had made a previous Will);

(b) appointing a professional trustee as executor (I think this is a complete waste of money. The grandparents and auntie should have been made the executors. They would have done the job for free with a sympathetic approach that only comes from family members)

(c) appointing financial advisers in the Will (this is a very clever idea, to have the aid of financial advisers, especially with the children being so young)

(d) setting up two Testamentary Trusts for the two children

(e) gifting Rolf’s household contents to his mum and dad (this is the two children’s grandparents)

(f) gifting 20% of the estate to Rolf’s mum and dad and some to his sister

(g) providing the residuary estate to Rolf’s two children to be held in trust for the children until they reach the age of 25.

Courts stand in Will maker’s shoes

The courts stand in the Will maker’s shoes. They are seeking to sit as a ‘wise and just testator’. For example, most people allow their children at 18 years of age to gain control of their deceased estate. However, if you have $9m then an age of majority put back to 25 seems reasonable. While a 3-Generation Testamentary Trust is more tax effective, even a basic Testamentary Trust saves the children a lot of income tax, Capital Gains Tax and stamp duty. Leaving a bit of money to the grandparents and auntie, who are very much hands-on with the children, seems fair.

This case warms my heart and shows the compassionate and caring side of the judicial system. I think we will see a lot more Statutory Wills in Australia. However, going to court costs tens of thousands. So it would be better for young people to make the effort to create tax-effective Wills, now. While they are fit and healthy. You also escape being forced to have professional trustees getting their snouts in the trough as executors.

You can read JW v John Siganto As the Litigation Guardian for AW & CW here.

Do Estate Planning

As an Adjunct Professor, I lecture both the Estate Planning and Superannuation units at different universities. I have done so since 1999.
I have 7 degrees, 4 of them are in law including my doctorate. My research was on Estate Planning and succession planning.
You can build your Estate Planning online here:
1. Wills including 3-Generation Testamentary Trusts
4. Contractual Wills Agreements – for 2nd marriages
Plus when you have a Family Trust:
5. Family Trust Update with succession planning
6. Deed of Debt Forgiveness to get rid of money the Family Trust owes the children
Plus when you have a Self-Managed Superannuation Fund

See also Legal Consolidated’s article on Court re-writes Will to save tax.

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Adjunct Professor, Dr Brett Davies,  CTA, AIAMA, BJuris, LLB, LLM, MBA, SJD
Legal Consolidated Barristers and Solicitors
Australia wide law firm
39 Stirling Highway, Nedlands, WA
Free online training courses:
Mobile:       0477 796 959
Direct:        08 6389 0400
National:    1800 141 612
Reception:  08 6389 0100
Email:         brett@legalconsolidated.com
Skype:        brettkennethdavies

You may find these cases of further help:

Dovedeen Pty Ltd & Another v GK [2013] QCA 116
Lawrie v Hwang [2013] QSC 289
McKay v McKay [2011] QSC 230
Re JT [2014] QSC 163
Keane [2011] QSC 49
Matsis; Charalambous v Charalambous [2012] QSC 349
Sadler v Eggmolesse [2013] QSC 40
SPM v LWA [2013] QSC 138
Van der Meulen v Van der Meulen & Anor [2014] QSC 33

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