Succession Law - Distinction grade assignment

Issue:   The 1985 Will

The 1985 Will was prepared prior to the enactment of the 2006 Succession Act, 1 March 2008, so the legislation that applies to this will is the Wills, Probate and Administration Act of 1898.

• The Divorce

Section 15A(1)[1] results in both the disposition and the executorship of the testators former spouse being revoked upon termination of the marriage.  Therefore the divorce revokes the gift to Wendy and her executorship.

• Revocation of the 1985 Will

Section 17(3)(b)[2] insists that in order to revoke the will the testator must destroy it with the intention that it be revoked.  Crumpling in this the will does not amount to a complete destruction (Doe v Perkes) and might only be seen as symbolic (Cheese v Lovejoy). Furthermore the fact that he had collected “all of the papers” may show that he did not intend to crumple it and that it was accidentally collected up with the other papers.  I don’t believe the court would be satisfied that this dealing with the will (s.17(3)(c)) would be sufficient to show an intention to revoke the will.  Therefore the will is still valid to the extent of the disposition of the holiday home to Mary.

Issue: The unsigned document of 1995

This document is not a codicil or a will (s.3)[3] as it is not signed by the testator (s.7(1)(b))[4].  It also does not make reference to a will.  It also does not amount to a testamentary disposition as it does not state that dispositions will take effect upon death.

Therefore, when it was made it was not effective as either a codicil or a will.  It is just a document at that stage.

Issue:   The document of 1999

In order to amount to a will the 1999 document must contain a testamentary disposition.  This disposition can be either a gift in a will, or the creation by will of a power of appointment affecting property. (s.3)[5]  In this case, the 1999 document contains no disposition of property, but does appoint Charles to deal with the testators debts.

The 1999 will appoints Charlie as the executor.  He has instructed Charlie to deal with his assets and to take care of everything.  This shows an intention that Charlie is to carry out the duties of an executor. 

This codicil may also incorporate the 1995 document if it clearly refers to the 1995 document. (Allen v Maddock) However the issue is whether or not the phrase “my wishes of 1995” refers to the 1995 document.  Extrinsic evidence may be admitted to identify the document so if there is sufficient extrinsic evidence to show that the testator was referring to document as “his wishes” then it could be incorporated as part of his will.  However since Grace received a gift under the 1995 document she would not be entitled to her gift of the real estate since she has witnessed the 1999 document (s.13(1))[6] unless subject to the exceptions under s.13(2)[7].

Grace can apply to the court for relief from the interested witness rule – s.13(2)(c)[8] if she can prove that the testator knew and approved of the gift.  There is insufficient evidence to show that the testator knew and approved of the document of 1995.  Graces gift in the 1995 document therefore fails.  However the disposition of the farm to Larry is valid.

Issue:   Reading the 1999 and the 1985 Wills together

The 1985 and 1999 wills can be read together as there is no direct conflict between the valid dispositions.

Issue:   The outstanding debt receivable

The silver goblets are secured so Charlie cannot deal with them without the consent of the true owner.  Charlie should either request that the debt be paid, with reasonable notice, and return the silver goblets or refer to the contract for the rights of the estate in this regard.  Jack does have an option to purchase the asset, which would of course be subject to the charge.  This debt could therefore be assigned to Jack but he would take this debt with notice of, and subject to, the owners equitable charge.  Charlie would also have to refer to the loan contract to see if death activates any event in the contract.

Issue:   The Superannuation Policy

Provided the superannuation fund has a valid binding death nomination then the superfund is to distribute the $250,000 of super to Jack in accordance with the testators wishes.

In order for a valid binding death nomination to exist it must have been executed within three years of the testators death.[9]  Furthermore, Jack must be the testators dependant or spouse –Reg 6.22 (1)(a)[10] and satisfy the definition of an interdependent relationship under the – s.10A.[11]

In this case Jack and the testator have been described as a couple and they have adopted a child.  In order to adopt a child under section 26 of the Adoption Act 2000 (NSW) Jack and the testator must have been legally recognised as a couple.  The dictionary in the Adoption Act defines a couple as either 2 people who are married, defacto, or in a registered relationship under the Relationships Register Act 2010.

Jack will therefore receive the superannuation prior to dealing with any other issues.

Issue:   Application of Order of Assets

            Holiday home to Mary (daughter)

            Farm to Larry (grandson)

Firstly, there is no direction in the will as to how the debts are to be paid.  This means that the statutory order for the application of assets will apply.  In this case the testators estate is solvent since its assets outweigh the debts and testamentary expenses and therefore s.46C(2)[12] dictates that the debts and liabilities are payable in the order set out in Part 2 of the Third Schedule of the Wills, Probate and Administration Act.  Therefore the first thing to do is to separate the assets of the estate into their classes as per the Third Schedule.

Class 1 – Assets undisposed of by will

House                                       $500,000

Antique Furniture                       $150,000

Cash on Hand                           $200,000

Money in the Bank                     $100,000

Shares in Public Companies      $400,000

Greyhound Dog                                    $80,000 (business-use asset)

Trading Stock                           $600,000

Debt Receivable                        $20,000

SubTotal                                   $2,050,000

Less Debts and Expenses         ($100,000)

Total                                         $1,950,000

Class 2 – Assets not specifically disposed of, but included in the residuary

            The residue that was originally disposed of to Wendy failed on the basis of the divorce.

            The further gift of the residue to Grace also failed due to the interested witness rule.

            No other gifts of residue.

Class 3 – Assets specifically appropriated or disposed of by will for the payment of debts

No assets.

Class 4 – Assets charged for the payment of debts

No assets

Class 5 – Funds to meet pecuniary legacies

None.

Class 6 – Assets specifically disposed of by will

Holiday Home                           $300,000

Farm Property                           $200,000

Distribution

Jack – Jack meets the definition of a spouse under s.104[13] as he was in a domestic partnership with the intestate immediately before the intestates death.  Jack meets the definition of a domestic partnership under s.105[14] since he has been in a defacto relationship for more than 2 years.  The indicating factors of the relationship are that they live together and have decided to adopt a child together as parents.  Jack therefore is entitled to the spouses entitlements as per Part 4.2, s.113[15] which includes the following;

The personal effects;

            Antique Furniture - $150,000

Note: The greyhound dog is not a personal effect.  The value of this dog and the fact that it is raced every weekend shows indicators of a business.  Lack of earnings or profit is not sufficient to prevent the existence of business.  Information and confirmation should be requested from the intestates accountant and/or an opinion sought from a professional accountant before distributing to avoid later problems since Jack may want to keep the dog and insist that it is a personal effect.

Statutory legacy according to s.106[16] as follows;

            Legacy = $350,000 x ((180.4)x101.8/100)/150.6)

                        = $426,803

Jack also has the option to purchase property of the intestate but will require the courts authorisation in certain circumstances – s.115(2)[17].

            Jack is entitled to half of the remainder of the property.

                        Ie. ($1.950,000 - $150,000 - $100,000 - $426,803) /2 = $636,598

            Remaining Distribution of the intestate estate is as follows

The surviving issue of the intestate are Mary, Grace – s.127(2)[18] and each receive a distribution per stirpes – ¼ share. Ie. ($636,598 / 4 = $159,149

Edward predeceased his father but his children are entitled to his presumptive share – s.127(4)(a)[19] and each receive a per stirpes share - 1/8^th share ie. $79,574.

Barry is also entitled to share as he has equal rights as a whole blood child under the Adoption Act. (see above) – ¼ share. Ie. $159,149

            Fiona is not entitled to a share as she is not an issue of the intestate