Estate Planning, it’s more than just completing your Will. Beneath the surface there can be a lot of factors that could lead to potential dangers or a negative impact on your legacy intent. Trust in the people who are experts in this field and allow them to secure your situation.
7 MINUTE WISDOM PODCAST #7: The Black Sheep
A real issue in many families which people often do not wish to admit or discuss could be a family member or beneficiary with a substance or behavioural addiction. These condition might prevent them for managing their inheritance effectively and as you really intended.
Taxman Set for Purple Patch
Prince's DNA tested as claims besiege estate. As the singer had no Will, it is expected more than 50 per cent of Prince's estate will be lost to death taxes.
Prince's estate has been deluged by claims prompting a request for his blood to be DNA tested. Bremer Trust, appointed to temporarily oversee Prince's assets, has been given permission by a Minnesota judge to obtain a sample of his blood held by the Midwest Medical Examiner.
Judge Kevin Eide, who ordered the blood analysis on Friday, said people wishing to make a claim had four months to file a claim. Judge Eide said the request for genetic testing was because "parentage issues might arise".
Prince's estate is estimated to be $300 million and his sister, Tyka Nelson, said he had left no will.
Possible heirs include Nelson and five half siblings. Prince's only known child was a son, Boy Gregory, who died a week after his birth in October 1996, due to a rare genetic disorder called Pfeiffer syndrome. As the singer had no will, it is expected more than 50 per cent of Prince's estate will be lost to death taxes. Minnesota's death tax rate, one of the highest in the US, is 16 per cent. After the US federal government 40 per cent death tax is added, a total of 56 per cent death tax will be applied.
Prince, whose full name was Prince Rogers Nelson, was found dead on April 21 at his Paisley Park home-studio complex in Chanhassen, a Minneapolis suburb. He was 57. The Minneapolis Star Tribune and KSTP-TV reported on Thursday that Prince's autopsy had found the painkiller Percocet in his system. KSTP-TV, citing two unnamed police officials, reported that Prince also had a dangerously low red blood cell count, indicating he had been ill. A spokeswoman for the local medical examiner's office that conducted a post-mortem examination of Prince declined to confirm the reports.
The cause of Prince's death remained undetermined.
THE SYDNEY MORNING HERALD | May 7, 2016 Lenny Ann Low
Therese Reined It In
WOULD $5.2M make you update your legacy documents?
THERESE Rein, wife of federal Labor leader Kevin Rudd, bought shares with a market value of $5.2million from the estate of her dead business partner for a tenth of their worth.
When the executors of the estate tried to stop the sale, Ms Rein took them to the Queensland Supreme Court until they relented, a month ago.
Ms Rein filed a lawsuit last July in which she argued that Frances Jane Edwards, a former nun and physiotherapist who helped establish Ms Rein's successful company Work Directions Australia, now known as Ingeus, had agreed to sell her 5200 shares in the company if she died.
Ms Rein and Edwards - the founding shareholders in the company - signed an agreement on or about May 22, 1998, declaring that their shares would be sold to the other, for a pre-determined price of $100 a share, if either of them died.
Under the agreement, if Ms Rein had predeceased her partner, her beneficiaries would have received the same amount.
Ingeus had revenues of $175million last year and employs 1300 people in 66 offices worldwide. The company is the third-largest provider of services to the federal Government's Job Network Agency.
Edwards had been ill for more than 10 years when she died, of cancer and renal failure, on January 21 last year. She was 74, and had never married. Edwards's will - which she actioned two days before her death but was too ill to sign - left the bulk of her estate to her sister, Martha Sirovs.
Within weeks of the Supreme Court granting probate to three executors, Ms Rein gave notice, on June 21, of her intention to buy the Ingeus shares in accordance with the agreement and sent a cheque for $520,000 and a share transfer form the following day.
When the executors blocked the sale, Ms Rein asked the court to enforce the terms of the original agreement and award her costs. Ms Rein - who resigned as chair of Ingeus last year but remains on the board and is understood to now have 13,000 shares in the company - withdrew the lawsuit on January 23.
She last night told The Australian the dispute was resolved out of court when the executors agreed to sell the shares for $520,000. "That agreement was upheld to the letter and honoured and the matter was resolved."
The Australian understands Ms Rein owns 13,000 shares in Ingeus worth $13 million, according to a KPMG valuation from June 2004 filed with the court.
The executors, in a defence filed in the court, had disputed the terms of the agreement, and argued Ms Rein had altered the company so much since 1998 the agreement had become void.
Since Edwards signed the agreement, the company has been renamed, three other directors - including former Queensland premier Wayne Goss - had been appointed to the Ingeus board, shares had been sold to nine other parties and the company was no longer a proprietary company. Furthermore, a new constitution filed in 2002 also departed from the terms of the 1998 agreement.
The executors also noted that Edwards's role in the company had changed and the company's profitability had increased, as had the value of the company and its shares, which, at June 30, 2004, were worth approximately $1000 - 10 times as much as listed in the agreement.
Ms Sirovs said yesterday "there is really no problem with the whole situation" but otherwise would not comment on Ms Rein's pursuit of the shares.
The executors' solicitor, Harrold Littler, confirmed the matter had been resolved out of court.
THE AUSTRALIAN FEBRUARY 21, 2007 | Sean Parnell, Brisbane
Estate Planning: Duties of Professional Advisers
Following the recent decision in Calvert v Badenach [2015] TASFC 8, it is imperative for professional advisers to identify the manner in which a client owns property and ensure that the manner of holding is consistent with the client’s estate planning wishes.
Property ownership and death
Co-owners generally hold property as either:
- Joint proprietors; or
- Tenants in common.
If a joint proprietor dies, the property will not form part of the deceased owner’s estate. Jointly held property “automatically” passes to the surviving co-owner(s), regardless of the deceased owner’s Will or the intestacy provisions. For most states and territories in Australia, this means that the property will not be vulnerable to a family provision claim against the deceased’s estate. However, if a tenant in common dies, the deceased owner’s share of the property will form part of the deceased’s estate. The deceased’s share of the property therefore passes in accordance with the deceased’s Will (or in accordance with the rules of intestacy if there is no Will). This means that the deceased’s interest in the property will be vulnerable to a family provision claim.
Adviser’s duties
In Calvert v Badenach, the Court held that when preparing a Will, an adviser owes a duty of care to a Willmaker and his or her intended beneficiaries to:
- identify the manner in which co-owned property is held (i.e joint proprietors or tenants in common);
- inquire as to the possibility of a family provision claim and likely ramifications of such claim; and
- advise the Willmaker as to ways of dealing with his or her interest in the property (and any other assets) to minimise the risk of a family provision claim.
In this case, the Willmaker co-owned two properties with a friend as tenants in common. The Willmaker instructed a lawyer to prepare a Will leaving his whole estate to that friend. When the Willmaker died, his share of the two properties formed part of his estate, with the intention (in his Will) that the properties pass to the friend as sole beneficiary under the Will. However, the Willmaker had an estranged daughter, who successfully brought a family provision claim against the estate. The court found that the lawyer failed to advise his client of the possibility of a claim by the daughter and of the options available for dealing with the deceased’s interest in the properties to minimise or avoid a family provision claim. Damages are yet to be assessed.
Minimising a claim
In this case, the lawyer would have satisfied his duties if he had made independent enquiries as to the manner in which the Willmaker held his interest in the properties and advised the Willmaker to:
- transfer the manner of holding from tenants in common to joint proprietors (so that ownership would “automatically” pass to the friend); or
- gift his share of the property to the friend during his lifetime.
Either option would have avoided the property forming part of the Willmaker’s estate and therefore being available to the estranged daughter in her claim against the estate.
Whether the Willmaker would have actually taken either of these steps was considered irrelevant.
What does this mean for advisers?
It is important for advisers to be aware of:
- the significance and effect of the different types of property ownership during life;
- the significance and effect of the different types of property ownership on death;
- the importance of verifying the manner in which a property is held;
- a client’s personal circumstances and who may be eligible to claim against their estate; and
- how to protect property and other assets from potential claims, including seeking specialist advice where necessary.
Kliger Partners Lawyers, Melbourne.
Today, Where There's A Will, There's A Way to Fight Over It
Australia faces a growing battlefield over the distribution of deceased estates as more complex family arrangements trigger post-death conflicts, and a “sense of entitlement” by family members results in expensive fights over small amounts.
Special counsel at Paxton-Hall Lawyers Sharon Winn said that, in Queensland alone, 80 to 90 small estate family provision claims were lodged in the Supreme Court every month.
Small estates were those valued at about $500,000 and based around a primary asset such as a house.
Ms Winn said disputes were commonly between a second spouse and children from a first marriage, but the large number also reflected changing social attitudes and greater knowledge of court challenge options through legal firms advertising no-win, no fee.
“We’re seeing a distinct change in the estate dynamic,” she said. “People nowadays are more materialistic and have more assets worth more money, so families want their share.
“There (also) seems to be a societal shift to towards a greater sense of entitlement.”
The comments followed the release of a national report this week calling for community and legal re-education to redress the growing cost of conflict and family fracturing off the back of will disputes.
The research, conducted jointly by the University of Queensland, QUT and Victoria University, found 74 per cent of family challenges to wills were successful, but the disputes were known to drain the entire proceeds of an estate.
Further clues to the issue emerged yesterday with the release of survey findings by law firm Slater and Gordon suggesting most Australians did not support funds being left to non-family members. This reinforced the findings of the university report, which found a strong sense of entitlement to “family money” in Australia.
Earlier Slater and Gordon research showed more than a third of Australians had experienced conflict over distribution of assets from an inheritance.
The new research, based on a survey of 2000 people, found 63 per cent of people did not believe that a non-relative was entitled to a significant inheritance even if they visited someone regularly, helped with daily tasks and celebrated holidays together.
Slater and Gordon senior estate planning lawyer Rod Cunich said people needed to be mindful when they were drafting wills of the potential to create family disputes after their death.
“Clearly, these new figures show that the majority of people feel that assets should stay in the family,” he said. “I see quite often many people who don’t have family, or aren’t close to their family members, so they choose to leave their assets to people who they have forged a strong relationship with — and that’s well within their rights.
“But we must remember that in Australia children have the right to contest a Will, so a willmaker should be very clear and concise about how their assets are to be distributed, why, and the likely consequences.”
Ms Winn suggested parties should avoid emotional distress and save money by exploring other settlement avenues such as mediation.
“What people don’t understand is (that) the legal fees surrounding these seemingly small cases can be upwards of tens of thousands of dollars, and that’s before it’s even been to court,” she said. “These cases are labour-intensive, and the same administrative procedures and standard responses need to be followed, no matter how small the estate.”
THE AUSTRALIAN, APRIL 10, 2015, Shane Rodgers, Queensland editor