Can a Will be changed after dementia or disability?

Things you need to know…

Everyone knows that there are certain minimum requirements for a Will to be valid and to be carried into effect after a person’s death.

For a Will to be valid;

  • The person making the Will must be over the age of 18 years
  • The claimant must have testamentary capacity at certain key times during the will-making process
  • The will must be up-to-date and of sound mind, memory and understanding

The Courts have gone to great lengths to determine when a person does and does not have capacity for the purposes of assessing the validity of a Will. What many people do not realise is that, in certain circumstances, it is possible for a person to make a Will even if that person does not have testamentary capacity. A fact that can be vital is ensuring fairness in the distribution of an estate when the intestacy rules would otherwise apply or ensuring that a lifetime of asset protection is not undone upon death through imprudent gifting.

Special provisions in the Succession Act 1981 (Qld) permit the Supreme Court to make an order:

  • Making a new Will
  • Altering an existing Will; or
  • Revoking the whole or part of an existing Will.

The Court can only make such an order if:

  • The person in respect of whom the order is sought lacks testamentary capacity;
  • The person is alive when the order is made; and
  • The proposed Will, alteration or revocation is approved by the Court.
  • The Court has broad powers and may make or give any necessary related orders or directions. The Court may make the order on the conditions it considers appropriate.

Leave of the Court

Applicants for a statutory will, do not have an open right to apply to the Court but must instead first obtain the Court’s leave or permission to apply for such an order.

When seeking leave, the applicant must provide the Court with the following information;

  • A statement of the general nature of the application to be made and the reasons for making it;
  • Evidence of the lack of testamentary capacity of the person in respect of whom the order is sought;
  • Any evidence of the likelihood of the person gaining or regaining testamentary capacity;
  • A reasonable estimate of the size and character of the person’s estate;
  • A draft proposed Will, alteration or revocation in respect of which the order is sought;
  • Any evidence available of the person’s wishes;
  • Any evidence of the terms of any Will previously made by the person;
  • Any evidence available of the likelihood of a family provision claim being made in relation to the person (that is, a family member challenging the Will);
  • Any evidence available of a gift for a charitable or other purpose that the person might reasonably be expected to give by Will;
  • Any evidence available of the circumstances of a person for whom provision might reasonably be expected to be made by Will by the person in relation to whom the order is sought;
  • Any evidence available of any persons who might be entitled to claim on intestacy; and
  • Any other facts of which the applicant is aware that are relevant to the application.

The Court will not grant leave unless the Court is satisfied that the applicant is the appropriate person to make the application and that adequate steps have been taken to allow all persons with a proper interest in the application to be represented at the application. Such people would include those with a reasonable expectation of benefiting from the person’s estate.

The Court will not grant leave unless satisfied that the person does not have testamentary capacity and the proposed Will, alteration or revocation is one that the person would make if the person did have capacity.

Effect of such an Order

Any Will made under an order of the Court is signed by the registrar of the Court and has the same effect as if the person without testamentary capacity were capable of making a valid Will and have signed a Will in that form.

Costs

The Court may order that costs in relation to such an application be paid out of the person’s assets.

Statutory Will Case Studies

There have been a number of successful statutory Will cases in Queensland and applications are becoming more prevalent as our population lives longer, the incidence of illnesses such as dementia and Alzheimer’s rises and general wealth increases.

The case authorities can be sorted into three classes:

  1. ‘nil capacity’ cases – the person has never had capacity;
  2. ‘lost capacity’ cases – the person lost capacity after having previously expressed testamentary intentions (most commonly by making a Will); and
  3. ‘pre-empted capacity’ cases – a minor was old enough to form relationships and express wishes about property but lost capacity before reaching adulthood.

Following are some of the recent decisions:

• Re Matsis; Charalambous v Charalambous & Ors:

Matsis was 90 years old and had amassed a fortune in excess of $13 million. He had executed a basic Will leaving his entire estate to his wife. If his wife predeceased him, Matsis gifted his family home to a grandson and the residue of his estate equally between all three of his grandsons. No provision was made for his only child, a daughter, as she was independently wealthy. At the time this Will was prepared, testamentary trusts for his grandsons was discussed for asset protection and valid tax planning reasons. Matsis’s wife died shortly after Matsis’s mental health began to decline due to dementia. Testamentary capacity was lost and not regained and Matsis’s physical health began to rapidly decline after he broke his hip. Two of Matsis’s grandsons were now engaged in businesses carrying a high degree of financial risk making testamentary trusts highly desirable. One of the grandsons applied to the Court to amend the Will to provide for the inclusion of testamentary trusts. No other amendments were sought. An order was made by the Court that a codicil (an amendment of the Will) be authorised implementing the testamentary trusts.

 RKC v JNS:

A girl, who was 12 years old at the time of the application, was delivered by caesarean section due to foetal distress. She suffered from severe spastic quadriplegic cerebral palsy as a result. This combined with other conditions resulted in severe mental retardation. As a result of a personal injuries action, the girl received a damages payout of $1.375 million. The girl lived with and was cared for by her mother and maternal grandmother. Her relationship with her father was poor and he did not financially contribute to her wellbeing. The girl had no capacity, no likelihood of gaining capacity and there was no direct evidence of her wishes as she had little to no ability to understand or communicate her wishes. The girl’s mother applied to the Court for a Will to be made for her daughter so that the intestacy rules did not apply. The intestacy rules would have resulted in the girl’s estate being divided equally between her parents. The Court authorised a draft Will making gifts for the girl’s mother and other family members as substitute beneficiaries.

• ADT v LRT:

A dying Alzheimer’s sufferer did not have capacity to change her Will. Her current Will gifted $5 million to her son who was undergoing a divorce dispute, therefore if the mother died the inheritance could be factored into the divorce settlement. The son argued that his mother wanted the assets to remain in the family and if she had capacity she would change her Will to include testamentary trusts to protect them from his divorce. The estranged spouse argued that the son limited his decision to work throughout their marriage based on his expectation to receive this inheritance which substantially reduced the size of their marital pool of assets. The Court authorised the inclusion of the testamentary trusts in the Will.

• Doughan v Straguszu & Ors:

A woman applied to the Court in respect of her mother who was suffering from dementia. The mother’s Will was unclear and failed to deal with some assets, such as the family farm. The woman’s brother, also a beneficiary, was involved in dealings with receivers and in danger of becoming bankrupt. The reason for the application is that the proposed Will better dealt with how the family farm was to be held for future generations. Whilst the timing of the application was connected with the son’s financial problems, the driver was considered to be more one of future testamentary dispositions and not as a means of altering the son’s present ownership of assets.

For more information on Statutory Wills, contact the team at Crosby Brosnan Creen Lawyers. For more information visit these pages;

Queensland Government – Births, Deaths and Marriages/ Wills and Estate Planning

Australian Government Registry of Births, Deaths and Marriages

Disclaimer

This Information Brief is intended to provide a summary and general overview only and is not intended to be comprehensive or to constitute legal advice.  Whilst we attempt to ensure the information is current at the time of publication, we do not guarantee its currency.  Legal advice should be sought before acting in reliance upon the information contained in this Information Bulletin.