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1300 COMLAW (266 529)

02 4704 9991

Suite 11, 354-360 High Street, Penrith NSW 2750
PO Box 1835 PENRITH NSW 2751

Deceased Estate

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Problems Arising Out Of Disputed Wills

The legal area of Wills and Estates is fraught with difficulty. The main reason is that disputes often arise as to the contents of deceased persons’ Wills, and the people who wrote the Wills are not around to explain what they intended and the reasons why they did what they did when drafting their Will.

The most common forms of dispute regarding Wills arise out of the following:

  1. Family provision claims – also known as contesting a person’s Will.
  2. Testamentary capacity cases – where someone is arguing that the deceased lacked the mental capacity to make a Will.
  3. Constructions suits – where the terms of the Will are ambiguous or confusing and the Court’s assistance is required to interpret them.

Another common type of dispute that arises in the context of deceased Estates is that of constructive trust or resulting trust. This usually occurs where a deceased person has promised someone a portion of their assets, sometimes in return for things like domestic assistance and care, but this promise is not contained in their Will and therefore there is no record of it. The law says that people who have been made such promises have the right to enforce these promises if they can be proven.

This week we attended a mediation in a deceased Estate matter where we were able to secure an award for our client in the hundreds of thousands of dollars. This dispute involved a deceased person who left a Will leaving his entire Estate to a friend and some charities and leaving nothing to his three adult sons.

If the matter had have proceeded to a hearing in the Supreme Court of NSW because no settlement could be reached, the legal fees would have most likely exceeded $250,000. This is money that would have been taken directly from the pockets of beneficiaries to pay for Lawyers and Barristers.

We were able to assist in avoiding these costs and putting more money in our client’s pocket by coming to a mutually beneficial settlement.

These types of family disputes are not often motivated simply by financial gain. There are many personal and emotional issues attached that it takes an experienced Lawyer to navigate.

Contact us today if you are involved in a some type of Estate dispute and we will tell you if we can help you free of charge.

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Taxation Considerations in Deceased Estates

One of the most common questions we get asked is whether or not there is an inheritance or estate tax in Australia? The short answer is no. If a person inherits assets from a deceased person that were held in the deceased person’s sole name at the date of death, there is no tax payable on this inheritance as a general rule.

There are a few exceptions to this however and it is very important that both the executor and the beneficiaries under a deceased person’s Will are aware of their taxation obligations when administering an estate.

Here are some of the scenarios where the death of a person may have tax implications:

1. Superannuation Death Benefits:

If a superannuation death benefit is paid by the superannuation fund to a beneficiary who was not a tax dependent of the deceased person at the date of death, then tax needs to be paid from these funds. This means that the beneficiary will not receive the full amount and the executor has an obligation to file a tax return and pay the necessary tax from the superannuation fund. There will be no tax payable if the superannuation death benefits are paid to a tax dependent, such as the deceased’s spouse or a dependent child.

2. Capital Gains Tax:

There is no Capital Gains Tax payable on the disposal of a deceased person’s property if the property is sold within 2 years of the date of the deceased person’s death AND it was acquired prior to 20 September 1985 or was the deceased person’s principal place of residence.

If a property is sold outside these time frames or if the property was not the deceased’s principal place of residence, then Capital Gains Tax will be payable.

3. Date of Death Tax Return:

If the deceased person was earning an income that required them to file a tax return in the years preceding their death, then it may be necessary for a date of death tax return to be completed. This is the responsibility of the executor and money should be held in the estate to satisfy any potential taxation liability.

4. Sale of Shares:

In some circumstances the sale of shares may trigger a taxation liability depending on the time the shares were acquired, the value of the shares and the date on which they are disposed of.

It is important that the executor of a deceased person’s Will employs an appropriately qualified lawyer and accountant to ensure that the tax obligations of the estate are met. If the obligations of the estate are not met, then the Executor may be held personally liable for non-payment of the taxation. The above is not an exhaustive list of all scenarios where tax may be payable from a deceased estate.

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Family Provision – Wran Estate

ANOTHER FAMOUS WILL BATTLE

The daughter of former New South Wales Premier Neville Wran has settled out of Court over a dispute with her half-sister about Wran’s $40 million Estate.

Harriet Wran is currently in gaol accused of murder. She launched her legal action together with her brother Hugo from behind bars.

There are a number of specific people who are eligible to contest a deceased person’s Will and this includes natural children, adopted children, spouses and de factos and some other categories of people who were dependent on the deceased.

While the terms of the settlement remain confidential there are a number of claims that accused murderer Harriet Wran may have been making regarding Mr Wran’s Estate. These include:

  1. Asking for a greater share of the Estate (it is understood she stood to receive approximately $10 million).
  2. Altering the terms of the Will, for example if there were restrictions on when and how Harriet could access her money.
  3. Contesting who was to be in charge of her inheritance while she remains in gaol.

The process for making a claim against a deceased person’s Estate is as follows:

  1. Establish that you are an eligible person to make a claim.
  2. File a Summons in the Supreme Court within one year of the deceased’s date of death.
  3. Attend a compulsory mediation with the Defendant (who is usually the Executor).
  4. While the above is occurring the legal representatives of the parties may correspond with each other trying to settle the matter.
  5. If the matter cannot be settled out of Court, then it will go to a full hearing whereby a Judge will decide what the outcome is.

Interestingly, being convicted of a serious crime does not preclude a person who is an eligible claimant from making a claim against a deceased person’s Estate.

Typically, the Court will only be concerned with this conduct if it involved the deceased.

If you have been left out of a Will or haven’t been adequately provided for, or you are an Executor who has been threatened with legal action, contact us today to discuss your rights.

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Case Study: Dying Without a Will

The Surry Hills property of an elderly woman whose body lay undiscovered for some 8 years after her passing has been determined by the Supreme Court of New South Wales to rightfully belong to her sister-in-law. This is despite the fact that the deceased died leaving a number of blood relatives behind.

The decision by the Supreme Court may surprise some on the surface, however it is a decision that makes legal sense.

A Coronial Enquiry found that the deceased, Ms Wood, died at the age of 86 in the year 2004. Despite the fact that her body was not found until 2011, the law dictates that where a person dies without a Will the question of who is entitled to their estate is to be determined as at the date of the person’s death.

As at the year 2004 (when Ms Wood died) Ms Wood had no spouse, children or parents surviving her and only one remaining sibling.  The laws that govern what happens when someone dies without a will dictate that her surviving sibling became the person entitled to her estate immediately upon Ms Woods’ death.  What makes this case interesting is that the said sibling died after Ms Wood’s passing 2004 but before her body was discovered in 2011. The issue of contention amongst family members is the fact that this did not extinguish his entitlement. As he was entitled to Ms Wood’s estate at the date of his death, it follows that the beneficiary of his estate (being his wife/Ms Wood’s sister-in-law) became the indirect beneficiary of Ms Wood’s estate as well.

The decision of the Supreme Court has left many members of Ms Wood’s family who are related to her by blood outraged that her estate has passed to someone who was related to the deceased only by marriage.

While the circumstances surrounding Ms Woods’ death are disturbing, the lesson is that had she written a Will before her passing then her estate would have ended up in the hands of someone other than a sister-in-law with whom she had little contact (such as a blood relative).

Ms Wood’s estate was made up of her Surry Hills home which is expected to fetch $1.2million at auction.

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Deceased Estates

What do you have to do when a person dies?

When a person dies there are so many things to think about that it can be overwhelming. One of the most common questions we get asked when a friend or family member dies is “what happens next?”

We have outlined some facts below to help you if you find yourself managing a deceased person’s estate:

  • The person with authority to deal with estate matters is the Executor/s of the will or if a person dies without a will then this will usually be the job of the spouse or children of the deceased
  • There is no hurry in finalising a deceased’s person’s estate – the family can take all the time they need to grieve before they need to start the estate’s administration
  • Once a bank finds out a person has died they will usually freeze the deceased person’s accounts, but most banks will release money to pay for the deceased’s funeral
  • If a person dies owning real estate or a large sum of money then the Executor/family of the deceased need to see a lawyer to make an application to the Supreme Court to have the assets released
  • An Executor or person in charge of finalising a deceased person’s estate usually has one year in which to finalise the estate
  • The lawyer who is dealing with a deceased person’s estate will need the original will (if any) and the original death certificate to finalise the estate
  • The funeral home will usually order a death certificate for the deceased person

An Executor/family members are free to choose their own lawyer to finalise a deceased person’s estate and do not have to use the lawyer who holds the will. f you are an Executor of a deceased person’s will, or you find yourself taking charge because someone close to you has died, contact us with any questions you have. We will happily speak with you on the phone free of charge.