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

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Australian 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. The defacto may have a chance to challenge the intestacy. Does a defacto breakdown invalidate a Will?

Court creates a 3-Generation Testamentary Trust Will – statutory wills

Rolf’s parents bravely approached the Court to draft, from scratch, a tax-effective 3-Generation Testamentary Trust 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:

  1. revoking previous Wills and codicils (just in case Rolf had made a previous Will);
  2. 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)
  3. 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)
  4. setting up 3-Generation Testamentary Trust Wills for the two children
  5. gifting Rolf’s household contents to his mum and dad (this is the two children’s grandparents)
  6. gifting 20% of the estate to Rolf’s mum and dad and some to his sister
  7. providing the residuary estate to Rolf’s two children to be held in trust for the children until they reach the age of 25.

Financial Planners witnessing POAs prepared by Legal Consolidated

Courts stand in Will maker’s shoes to make the Statutory Will

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.

Young and vulnerable children tool kit

Free resources to help protect young and vulnerable children:

Estate Planning vs Statutory Wills vs 3-Generation Testamentary Trust Wills

As an Adj 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.
 
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Plus when you have a Family Trust:
Plus when you have a Self-Managed Superannuation Fund

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

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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