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Trusteeships

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hoobook View Drop Down
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  Quote hoobook Quote  Post ReplyReply Direct Link To This Post Topic: Trusteeships
    Posted: 11/June/2005 at 19:15

I am 67 and have  been married for 10 years and have property and other assets, accumulated over my life and have increased during my current marriage. I have no problem with the normal state of affairs that in the event of my death my wife would have an entitlement to the benefits of my estate. However in the event of her death, if after me, I would be most upset( in absentia!!!) that my life's savings might be distributed to her relatives or a future husband. My options appear limited in that I could distribute, in my will, 50% of my estate to my sons and/or their heirs, and 50% to my wife and leave it at that.

My preferred alternative would be that I might be able to appoint a trustee to administer the whole of my estate, for my wife's benefit during her lifetime, in terms of interest on deposits, accommodation, and liquidity, ( I also have significant superannuation benefits which accrue to her on my death, and would expect that to provide her with ample funds for her normal expectations ).

My theory is that, I could direct the trustee to act on my instructions at the death of my wife to then distribute the proceeds of the trusteeship to my sons or their heirs.

Is this second option a legal method of administering an estate?

 

hoobook View Drop Down
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  Quote hoobook Quote  Post ReplyReply Direct Link To This Post Posted: 13/June/2005 at 17:26

Thanks,

Much appreciated.  By direct family members do you mean all of wife, sons, brothers etc?  Do I have the discretion to omit benefitting my sons, at the timeof my death, any for any reason if so stated in the will. (For example, estrangement). My aim is to ensure that the will is not challenged successfully, or my wife given any cause for distress.

At my wife's death, I would hope that all of those funds which have been applied to her benefit would then be distributed to my sons and their heirs.

mpanayi View Drop Down
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  Quote mpanayi Quote  Post ReplyReply Direct Link To This Post Posted: 19/June/2005 at 05:31

Hoobook

For each category of 'property':

REAL ESTATE

An alternative (perhaps simpler) approach is that you give your wife a 'life estate' in the property(s) until her death and after that it goes to your children.  A life estate means she can use the property but she cant sell it.   If after your wife's death your children cant agree on what to do with the property, it will usually have to be sold with proceeds going to them in the shares you nominate (eg equal shares, a percentage etc).

SUPER

If you give the super to your wife, then you can't really control what she does with it in her will.  So an alternative is to give her the benefit of any interest on moneys only, or grant her a weekly sum plus interest out of the proceeds, with the remainder at her death (if any) to go to your children.

OTHER ASSETS (cars, jewellery)

This is where it gets a bit trickier.   You can simply give the assets to your children (cars, money, jewellery etc) but not until the hapenning of an event such as they turning a certain age or until your wife's death.  The executor will have to look after them in the meantime (see comments below about selecting an executor).

NEW CHILDREN

I assume you dont have any children with your current wife.  There are certain limited circumstances where her children could make a claim on your will, but there is little you can do about this.  You can make 'comments' in your will why you have not provided for her children but it probably wont make much difference.  Generally, her children won't have much success (if any) in disputing the will unless they can show that they had a reasonable expectation that you would provide for them.  This will depend on issues such as their age, how long they lived with you and your their mother, any promises you made about you looking after them after your death etc.  If they were never your dependants and they are over 21 they have a hard task succeeding.

FINAL NOTE

You must be careful who you make your executor(s).  They have duties to ensure that they administer your wishes properly but there is never a complete guarantee.  You need to be specific in your will about what you want.

A good person to make your executor could be your wife.  Upon her death, if there are any gaps (eg you have forgotten to deal with an asset) it will be administered by the public trustee unless you provide for a second executor in your will.(eg one of your children).  Indeed, if you feel comfortable about it, you could make one or more of your children the executor of your will - but be aware that having stepchildren (especially more than one) as executor can cause family rifts.

Good luck. 

Kind Regards,

Michael.

hoobook View Drop Down
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  Quote hoobook Quote  Post ReplyReply Direct Link To This Post Posted: 19/June/2005 at 14:38

Thanks Michael,

Really good information for me to have before approaching a solicitor. I have never heard of a "life estate" but no doubt they will advise me all of the ramifications. I wonder if making her the executor would be wise or even legal if she is a beneficiary? We have no children but she could in a future marriage. On my death my super fund automatically pays her a fortnightly sum until her death and can not be commuted.  One more thing I dont understand is your statement about the executor looking after my children, who are by the way over 40. Does this mean that if I don't bequeath an immediate benefit to them that they would have some grounds to contest the will? I have no problem with giving them a percentage of my liquid assets at that time but then could they successfully contest a specific sum or percentage?

mpanayi View Drop Down
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  Quote mpanayi Quote  Post ReplyReply Direct Link To This Post Posted: 19/June/2005 at 15:58

A beneficiary can be an executor (but not a witness to the will - rarely happens but if it does, the beneficiary gets nothing !!! - Most lawyers know this and will get their legal sec or some other third parties to be witnesses - you need two witnesses by the way). 

Frankly, I think it is almost always safer to have an independent executor such as a trustee company or the Public Trustee (see Roy–v-Roy [2004] NSWSC 463 as an example where a fight between the son and a friend of the deceased over how to administer the estate led to huge costs orders thus dicipating the estate).

Bequeathing or devising a benefit after your wife's death (with no immediate benefit to children) is probably ok.  Basically the legislation (in NSW - similar but some differences in other states and territories) provides a mechanism for some categories of people to make a claim on the estate ( children of the deceased are of the allowable categories of applicants) where they can establish a need or dependency upon the deceased, or they have made significant contributions to the deceased and the justice of the case requires it. In determining whether a person has an entitlement to from an estate, the Court will usually  take into account:

  1. Whether provision made from the estate was inadequate for the proper maintenance, education and advancement in life of the person.
  2. If no provision was made from the estate, whether the person has a need for provision to provide them with proper maintenance, education and advancement in life.
  3. The competing claims of any other eligible persons or beneficiaries.
  4. The size of the estate (for example, an eligible person may have a very strong claim on the grounds of relationship and need, but if there is
    only $20,000.00 in the estate, then there is very little scope for a Court to order extensive provision).

Establishing 'need' and what is 'adequate' is a question of fact.  It is unusual for 40+ years of age children (unless they have some disability) can succeed against the estate.

I hope that helps.  Michael.



Edited by mpanayi

mpanayi View Drop Down
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  Quote mpanayi Quote  Post ReplyReply Direct Link To This Post Posted: 19/June/2005 at 16:00
PS I am not from afghanistan. Error in my logon :D

hoobook View Drop Down
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  Quote hoobook Quote  Post ReplyReply Direct Link To This Post Posted: 19/June/2005 at 20:47

Didn't think you were from Afghanistan. But a cockroach, hey?

Thanks for taking the trouble to give me all that detail.

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