Archive for the ‘News – Wills and Estates’ Category

The perils of not making a Will

What do Michael Jackson, Abraham Lincoln, Picasso, Jimi Hendrix, Stieg Larsson and Robert Homes a Court all have in common? You would be forgiven for thinking, not much. But in fact they do—all six died intestate which means, they died without leaving a Will.

Even the rich and famous can fail to plan ahead when it comes to their estate.

What happens if someone dies without leaving a Will?

According to New South Wales law, if you don’t have a legal Will you have died intestate and your estate will be divided according to the rules of intestacy which is set in legislation.

This means that even if a friend or relative is appointed to obtain administration of your estate, the law decides who your beneficiaries are and how your estate is divided.

According to some statistics up to two-thirds of adults do not have a valid Will, potentially their leaving families with serious problems if they die. In all likelihood many more would make a valid Will if they knew what would happen if they died intestate.

Under New South Wales law, if a person dies without a Will and has a spouse who survives them by at least 30 days (including a de facto relationship as set out in the law) the estate is automatically given to the surviving spouse. This is the case even if there are children of the relationship.

After this, seemingly straight forward application of the law, the legislation provides a specific order of distribution of an intestate estate’s assets, depending on the particular situation.

Common scenarios in which an intestate’s assets are distributed include:

Spouse and Children

Where all the children are children of the relationship between the intestate and the spouse, the spouse takes the whole estate.

Children and No Spouse

The children are entitled to the whole estate. If there is more than one child then the estate is distributed in equal shares between the children. Where a child has died before the interstate any grandchildren will take in equal shares the share the deceased child would have taken

No Children and No Spouse

The whole estate passes to the intestate’s parents in equal shares.

No Children, No Spouse and No Parents

Brothers and sisters will take in equal shares the estate provided they survive the intestate by at least 30 days. If a brother or sister does not survive the intestate but leaves children, then that share passes to the children of the deceased brother or sister.

These are just some common examples of how an estate will be divided according to the rules of intestacy which is set in legislation. There are other situations that might arise and your lawyer can advise you about the law depending on your personal circumstances.

Famous People who died without a Will

Famous or not, everyone should have a valid Will. It’s simple to do and it saves your family a lot of money and headaches as illustrated below:

Abraham Lincoln

Probably the most famous person not to leave a Will was Abraham Lincoln, the 16th president of the United States; even though he was assassinated and died unexpectedly in 1865, he was a lawyer.

Jimi Hendrix

In 1970 Jimi Hendrix the famous musician died intestate and left a massive fortune to no nominated beneficiaries. The battle to control his millions took place over 30 years. His estate had the added complication of generating huge income after his death through record sales.


 

Stieg Larsson

More recently in 2004 the Swedish author Stieg Larsson who wrote The Girl with the Dragon Tattoo died without leaving a Will. As a consequence Swedish law dictated that Larsson’s estate was to be divided up between his father and his brother. Sadly his lifelong partner of 32 years, Eva Gabrielsson, received nothing, although the family did grant her ownership of the couple’s apartment.

Robert Holmes a Court

In Australia Robert Holmes a Court, Australia’s richest man before the October 1987 stock market crash, left no Will when he died of a heart attack. At the time his property and shareholdings were worth almost $460 million, while Heytesbury Holdings, the family’s private company, had estimated cash reserves of more than $154 million.

Interestingly, he had carried an unsigned Will with him for 18 months before his death.

Pablo Picasso

Pablo Picasso died in 1973 at the age of 91. He was one of the most famous artists of the 20th century and left behind a fortune in assets that included artwork, homes, cash, gold and bonds.  It took 6 years and $30 million to sort out his estate with his assets eventually being divided up among six heirs.

Michael Jackson

Although a Will was later discovered, immediately following Michael Jackson’s death in July 2009, his mother filed court papers claiming that Jackson died intestate. Like Hendrix, Jackson’s estate continues to generate money. In the years since his death, his estate generated over $242 million.

Summary

As illustrated by the stories above, you’re never too young, or too smart or too powerful, not to need a Will.

To ensure that your estate and your desired beneficiaries are protected into the future and to avoid these avoidable dramas talk to an experienced wills and estates lawyer.

If you or someone you know wants more information or needs help or advice, please contact us on 02 6372 3388 or email richard@richardwisesolicitor.com.au.

Enduring Powers of Attorney explained

A lot of people have heard of a Power of Attorney however most do not fully appreciate the extent of its power, the benefits it delivers or the types of Powers of Attorney that exist.

A Power of Attorney is a useful legal document used to allow someone to handle your affairs in a variety of circumstances. It is often used if you are planning to go overseas, taking an extended holiday, suffer from poor health, have an accident or reach a stage in your life when you need greater assistance managing your affairs.

In this article we examine why appointing a Power of Attorney is so strongly recommended by lawyers and explain the difference between a General Power of Attorney and an Enduring Power of Attorney.

Selecting a person to act in your place

The appointment of your Attorney enables that person (or people) to act in your place, and do the things you would normally do yourself. Such as signing documents, paying the bills and doing the banking. The person you choose, your Attorney, has the right to stand in your shoes when you wish them to look after your affairs. In reality they can enter into agreements in your name and on your behalf.

Therefore as a result of the power of the appointment it is critical that you select the right person to act in that capacity. The person does not have to be a lawyer. In fact it is important for the person to know you well and for you to trust them. It is often a trusted family member but whoever it is must be over 18.

The difference between a General and an Enduring Power of Attorney

Not all Powers of Attorney are the same.

A General Power of Attorney is a legal document that gives the Attorney the authority to make decisions about financial and legal matters on behalf of the person who appoints them. This power lasts only for as long as the person who appoints them has mental capacity. The general power ceases to operate if the person that has made the Power of Attorney loses capacity to make decisions. A General Power of Attorney is often used as a tool of convenience. For example, a person might appoint a General Power of Attorney to look after their financial and legal affairs in Australia while they travel overseas.

An Enduring Power of Attorney is similar to a General Power of Attorney except that the powers continue, or endure, in the event the donor loses mental capacity.

In New South Wales, a document appointing an Enduring Guardian can be used alongside an Enduring Power of Attorney to authorise medical and health decisions.

An Enduring Power of Attorney, unlike the General Power of Attorney, must be explained to you by a prescribed witness, that is, a lawyer.

It is important to be aware that an Enduring Power of Attorney becomes void when you die.

What happens if you lose capacity without having a Power of Attorney?

The probability that someone can lose capacity is often not properly considered by people. However if you do not have an Enduring Power of Attorney and develop a mental incapacity you are therefore unable to manage your financial affairs. It is too late then to have a lawyer prepare such a document as you do not have capacity to sign it.

The difficulty is that no person automatically has the right to manage your assets. Not even if they are your husband or wife.

This therefore has a colossal effect on all the financial decision making thereafter with your bank accounts, your jointly owned home, shares or other jointly owned assets or liabilities.

To have decisions made in these circumstances would then involve an application to the NSW Civil and Administrative Tribunal (formerly the Guardianship Tribunal).

The applicant, usually a family member, would apply to become your financial manager. However this is subject to that person being deemed fit (as in ‘fit and proper’) by the Tribunal. Failing this finding of being ‘fit’, the Tribunal may appoint the NSW Trustee and Guardian to manage your affairs.

If the NSW Trustee and Guardian is appointed, your spouse may need to consult with a government department to deal with your ongoing financial decision making until your death.

When does the Attorney’s power begin?

You may nominate when your Attorney’s power is to begin.  If you do not name a date or an occasion, it begins immediately.  On the other hand, if you lose the capacity to make such decisions before the date or occasion you name, the power begins at that point.

It is important to note that even if you give your Attorney power immediately, you may also continue to make decisions yourself while you are able to do so. By providing a Power of Attorney you do not restrict or give up the right to make financial decisions as you do today.

Summary

Today Powers of Attorney are used as a precautionary step by sensible adults rather than as a stop gap measure for an overseas trip. Professional groups such as accountants and financial planners, along with lawyers all strongly recommend that their clients of all ages and walks of life, make a Power of Attorney so their assets are not locked up if a person loses legal capacity to sign documents and their loved ones are put through avoidable stress.

If you or someone you know wants to know more don’t leave it to late, please contact us on 02 6372 3388 or email richard@richardwisesolicitor.com.au.