Carolyn Flanagan Carolyn Flanagan

WHO WILL TAKE CARE OF MY CHILDREN IF SOMETHING HAPPENS TO ME?

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Parenthood brings so many questions. 

Most are related to the welfare of these little people for whom we take total responsibility. 

One major question  parents must address is: who will take care of them if something happens to me?  For sole parents, and for parents of disabled children, this concern is particularly critical.

If you want to ensure your children are taken care of as well as possible if the unthinkable does happen, then you need to make a will, and you need to include a Guardianship Clause which gives the appointed guardian legal control of the children. This means the guardian will have the day-to-day control of the children, and they will be able to make decisions about the children's upbringing (including where they live and go to school), education, health and welfare.

Lynn Flanagan of Flanagan Legal Newcastle at www.flanagnlegal.net.au can guide you through the process.


QUESTIONS TO BE ADDRESSED

why should I write a will which includes a guardianship clause? 

Writing a will which includes a guardianship clause will save your child or children even more trauma in the event of your death. If you have made your wishes clear, a guardianship clause in your will will be legally binding and your children would automatically go to the guardian who you previously decided will look after them best. This may save  disputes between relatives and friends and help avoid applications to the Supreme Court for guardianship. If it does go to court your wishes as expressed in the Guardianship Clause will carry weight, as courts will assume that you are the best judge of who will care for your children.

who should I choose as guardian?

This is a very personal decision. There are so many factors you have to weigh up and obviously it will be gruelling to go through this process, however, it is a question that needs to be addressed by all parents.

Relatives are usually the obvious and most practical choice, but sometimes a very close family friend  who has a bond with your child might be the most suitable. When choosing someone, remember that they’ll be raising your children, not just providing for them. Do they share your values and beliefs? Do they have the ability and means to care for your children (sometimes in addition to their own)? Perhaps one person will express a clear desire to play this role, or a person you were considering may not be willing to take on the responsibility. The initial conversations you have may reveal feelings and attitudes that will help you make your final decision.

A MEMORANDUM OF WISHES can provide guidance to the guardian as they raise your child. 

Having made a guardianship decision, it is advisable to inform your relatives and friends who you have chosen and why you made your choice: this would give them a chance to absorb your decision and to learn to live with it.

what provisions should be in the will to support the guardian financially?

We all know that raising children is expensive. If someone is willing to take on the role of guardian it is important to ensure that provisions in the will ensure they do not suffer financial burden or loss. The will needs to include a clause that gives an executor the power to advance income and capital from the child’s share of the estate to the guardian for the maintenance, support, education and benefit of that child. The MEMORANDUM OF WISHES may also provide a guide for the executor. Sometimes, in the case of a disabled child, it will be necessary to set up a Special Disability Testamentary Trust.

As it is likely that the executor and the guardian will be acting for many years, careful consideration needs to also be given to the choice of executor/s and whether the guardian might also be appointed as a co-executor (because of a possible conflict of interest, generally a guardian is not appointed as sole executor).


Having answered these questions you can know you have done everything  you can to smooth out your child’s life in the event something does happen to you. 

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Carolyn Flanagan Carolyn Flanagan

SUPERANNUATION DEATH BENEFITS

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SUPERANNUATION DEATH BENEFITS: CLAIM STAKING 

Superannuation is rapidly becoming a major part of post death assets for many Australians.  Frequently these very large “pots of money” are not inherited through someone’s will, but are available (usually to dependents) outside the estate. 

Sometimes the Superannuation Member who has died has made a water-tight binding nomination of the person/s who will receive his/her Death Benefit; frequently a nomination has not been made, or a nomination fails. In both cases an opportunity is provided for genuine dependents to stake their claim to these often very significant amounts of money.

THE CLAIM STAKING PROCESS

Superannuation fund trust deeds give the trustee of the fund a discretion with respect to distribution of death benefits. When the superannuation member dies, the trustee will notify possible dependents of the death, and sometimes of how they propose to pay out the death benefits. If someone believes that they should be a recipient, or that they should receive more share than is proposed, then they have 28 days to stake their claim.

who can make a claim

Superannuation death benefits can be paid to a dependant of the deceased member or to their legal personal representative (usually the executor of the will). Dependants include a spouse (including a de facto spouse), children and interdependent relationships, or people who were financially dependant on the deceased member. Claim stakers need to provide evidence that they fit within these categories.

submissions to the trustee

The de facto spouse in D14-15\198 [2015] SCTA 58 provides an example of the type of evidence a claimant needs to provide to support their claim. In this matter the Trustee had decided that the claimant was a de facto spouse, and that she was entitled to 40% of the available superannuation (which meant the de facto received around $100,000).

The evidence in the de facto’s submission included:

  • a variety of payments from her bank account on behalf of the deceased

  • she and the deceased were committed to buying a house together in which to live together as a couple, as evidenced by the statement of the real estate agent

  • the employer had contacted her on the day of the deceased’s death to offer his condolences and had offered to pay for the funeral.

  • there were copies of many condolence cards sent directly to her

  • there were copies of many text messages between herself and the deceased member which demonstrated how inter-locked their lives were

The claimant was successful in proving she was, indeed, a de facto spouse and that the share that she received in the Trustee’s discretion was appropriate.

Flanagan Legal Newcastle can provide advice regarding the likelihood of a death benefit claim being successful and, if this appears likely, to provide the expertise to assist the claimant in organising and collating a submission to stake their claim. The initial discussion is free.

 www.flanaganlegal.net.au





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Carolyn Flanagan Carolyn Flanagan

ARE YOU THINKING OF LEAVING AN ADULT CHILD OUT OF YOUR WILL?

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ARE YOU THINKING ABOUT LEAVING AN “UNDESERVING” ADULT CHILD OUT OF YOUR WILL ?

Think carefully. Seek advice. It may not work out and you may leave a lot of trouble and expense behind you.

Crawford v Munden [2020] NSWSC provides some guidance on how the court may deal with situations like this: when a parent has left an adult child nothing in their will because of a lengthy and bitter estrangement.

In Crawford an adult child made a claim for provision from his deceased mother’s estate. The mother and son, despite earlier good relations, had been estranged for some 16 years and the court determined that the origin and duration of the estrangement rested with the son. During the estrangement the mother had made several attempts to re-establish contact with him and her grandchildren. She had even sold her house on two separate occasions and moved to where they lived. All to no avail. The son re-buffed her at every turn. They re-connected shortly before her death when he was informed she had a terminal illness. (The details of this case are quite heart-breaking to read).

Despite all this, the son was successful at court in getting substantial provision from the estate. The court, though recognising his responsibility for the estrangement, still declared the son had a moral claim, as her child, to be “the natural object of his mother’s testamentary bounty” (in other words she should have left him something!)

The court described the estrangement as tragic and serious but not of a kind to extinguish his moral claim. It determined that  a wise and just testator/will maker would have divided her estate equally between the son and a niece (who had provided devoted love and support to his mother). 

The court determined that estrangement did, however, warrant a reduction in the amount of what would have been proper provision by about 25-30%.

What guidance does this case provide:

  • adult children, even though not necessarily poor, or in poor health, may still be seen by a court as being a natural object of a will maker’s bounty/estate

  • there is no rule that an adult child is not entitled to “ample” provision just because they have been estranged from their parent (though in some circumstances that may be the case)

  • in such provision claims, lawyers’ fees (in Crawford around $160,000) may eat up much of the estate: NOTE: this is about the sum the adult child got in the end

  • the executors of the estate are put under a great deal of stress

  • are your circumstances of a kind to extinguish your child’s moral claim?

If you are thinking about leaving a child out if a will you should probably seek advice from a solicitor regarding your best course of action. Flanagan Legal Newcastle (www.flanaganlegal.net.au) is ready willing and able to help.

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Carolyn Flanagan Carolyn Flanagan

ENDURING POWER OF ATTORNEY AND INHERITANCE IMPATIENCE

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In these days when many of us live very long lives (and are sometimes more affluent than our children) it is not uncommon for children to become impatient to get at least some of the money they believe will eventually be theirs before (rather than after) we die.

Given this view (and sometimes with the encouragement of a partner) the most loving of children, granted their parent’s power of attorney, may come to view this power as a means of getting some of that inheritance early. In fact, Rosalind Croucher of the Australian Law Reform Commission stated that "people describe powers of attorney as a licence to steal”. Financial abuse is the most common form of elder abuse in Australia, and much of it is facilitated by the misuse of enduring powers of attorney.

By the time financial abuse is identified  attorneys with inheritance impatience who have misused their powers have often left few assets to recover for other beneficiaries.

The creation of an Enduring Power of Attorney is very serious business. It is essential that the donor (usually a parent) of the power understands what they can do to place limits and conditions on how the attorney (usually a relative) who holds the power can act. An example of one possible condition is that the attorney provides the rest of the family an annual account of all financial and legal decisions they have made. A solicitor can explain and advise so that the donor can decide what conditions and limitations are appropriate in their particular circumstances.

It is also essential that the attorney understands the scope and limitations of their appointment. It is advantageous if the solicitor spends time with the attorney to ascertain this understanding.

Flanagan Legal Newcastle ( www.flanaganlegal.net.au )) will spend sufficient time with both parties so that they understand the great power conferred by an enduring power of attorney and the serious responsibilities that come with the wielding of such power. 

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Carolyn Flanagan Carolyn Flanagan

GETTING YOUR AFFAIRS IN ORDER

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Have you planned both for yourself and your family members in the future? This sometimes referred to as Estate Planning.

Estate planning is really no more than deciding matters like:

  • who you will pass your assets onto? and how can this be managed?

  • how will you provide both for your partner and for your children from different relationships?

  • who will have parental responsibility for your young children or for a disabled child in the event of your death?

  • if you lose capacity, who will manage your affairs and make decisions in your best interest?

Most people in planning their estates really only need to make a will and set up an Enduring Power of Attorney and an Enduring Guardianship.

Without this type of planning you or your family members may face very significant difficulties down the track.

Flanagan Legal Newcastle (www.flanaganlegal.net.au) can provide you with professional assistance at a very reasonable cost to help you get your stuff/estate/assets in order:

Lynn will return contact on the same day, usually between 4-5pm.

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Carolyn Flanagan Carolyn Flanagan

TESTAMENTARY TRUSTS: WHEN THE FAMILY COURT LOOMS

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TESTAMENTARY TRUSTS

Testamentary trusts are a type of trust created in a will to hold assets (such as an inheritance) after the will-maker’s death. The Trustee ostensibly has full discretion to decide who gets income or capital from the trust and when they get it, A beneficiary does not own the property in the trust and cannot demand income or capital from the Trustee.

WHEN THE FAMILY COURT LOOMS

Sometimes will makers will draft their will so that on their death their children (for example) will not get their inheritance immediately: instead the will maker will instruct their solicitor to set up a Testamentary Trust. The inheritance will then sit in the trust: the trust owns it, not any individual. The will maker might do this because they want to leave their child an inheritance, but they don't want the child’s estranged partner to get their hands on it. After a long marriage such property would rightfully be included in the pool of assets to be divided by the parties. The will maker, however, wants to prevent this.

It is commonly believed that the assets in a testamentary trust are untouchable and therefore cannot be the subject of division between separating spouses: indeed, in Ward v Ward [2004] FMCAfam the husband told the court that his mother had set up the trust in her will to put his inheritance “out of the reach of his wife”.

FAMILY COURT SETTLEMENTS INVOLVING TESTAMENTARY TRUSTS

This method of quarantining assets didn't work as intended for the husband in Ward v Ward. Even though his inheritance had not vested (his mother hadn't died) the Family Court determined that though the assets in the testamentary trust were not properly to be regarded as property of the parties to the marriage, or to either of them, (and therefore not to be placed in the asset pool) they did provide Mr Ward with a financial resource from which he would benefit in the future. The testamentary trust therefore needed to be taken into account to ensure the just and equitable division of the property of the parties. The court divided the pool 57.5% to 42.5% in favour of the wife.

A similar fate awaited the husband in Mantel v Mantel {2020} FMCAfam. Once again, while the court deemed that the assets in the testamentary trust were not to be regarded as property of the parties they did however provide Mr Mantel with a financial resource from which he would benefit in the future. It needed to be taken into account (with other matters) to ensure the just and equitable division of the property of the parties. The court made adjustments in favour of Mrs Mantel.

IN SUMMARY

Perhaps the assets in testamentary trusts are somewhat “untouchable”, however the cases indicate that such assets are nonetheless taken into account when Family Courts determine what is just and equitable in settlement proceedings.

“It is extremely difficult to protect assets of a person from being accessed by the court for the purposes of a matrimonial property settlement…The provisions of a trust deed cannot be relied on to be effective in this regard” (Birtles & Neal, 2018).

Will makers who wish to include a testamentary trust for such purposes should obtain financial and legal advice. Flanagan Legal Newcastle can provide advice in such situations.

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Carolyn Flanagan Carolyn Flanagan

APPLICATIONS TO NCAT

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MAKING AN APPLICATION TO THE TRIBUNAL (NCAT) WHEN YOU ARE CONCERNED AN INCAPACITATED PERSON MIGHT BE AT-RISK

If you are concerned about someone’s welfare you can make an application to NCAT:

  • if there is no guardian in place, to ask that a guardianship order be made, or

  • if there is a already a guardian and you believe the guardian is not acting in the best interests of the person to ask that a different guardian be appointed, or

  • if NCAT has previously made an guardianship order and you believe it should be changed, you can request a review

THERE MUST BE GROUNDS FOR MAKING AN APPLICATION TO NCAT

You should tell NCAT about any possible risk to the person. It may, for example, be a risk of:

• Being physically abused or neglected

• Being exposed to verbal abuse, intimidation or conflict

• Engaging in behaviour exposing them to harm or danger

THESE GROUNDS MUST BE SUPPORTED BY EVIDENCE

This can be in the form of :

  • Reports, letters or statutory declarations from a doctor, nurse, social worker, a provider of accommodation or services, or family members and friends

  • Character references

  • Medical reports

  • Contracts

  • Letters

  • Emails

  • Invoices

  • Phone records

  • Minutes of meetings

  • Photographs and film (CCTV footage).

NCAT WILL DECIDE

  • if the person has a disability (some persons with disability will not need a Guardian)

  • as a result are they totally or partially incapable of making their own decisions

  • do they need an appointed Guardian to make decisions on their behalf

  • if so who should that Guardian be

  • what areas of life should that Guardian make decisions about

  • should the order be subject to any conditions

  • how long should the order last

  • is it in the best interests of the person to make an order

GUARDIANSHIP APPLICATIONS

In BFT [2014] NSWCATGD Mr OGT, the son, wanted to be appointed joint guardian of his elderly father in conjunction with his sister, who was already doing the job. He was unsuccessful. He was unable to explain and support the reasons for his application with relevant documents and evidence and he did not have an accurate understanding of the orders NCAT could make. He was unprepared and out of his depth.

On the other hand in The Husband v The Public Guardian [2016] NSWSC a husband who applied for a review of the NCAT guardianship orders already made for his wife was successful in having these orders reversed and being appointed as Guardian himself. The Court noted that the husband, assisted by his solicitors, filed “thorough statements … giving a detailed and admissible narrative account of the husband’s long relationship with the wife (which) …have been an important integer in the Court’s decision-making in this case”. He was well-prepared with relevant documents and evidence.

Making guardianship applications is a usually a complex, lengthy and demanding task: a solicitor’s assistance improves the odds of getting a good result. Lynn Flanagan can also advise beforehand if making such an application is likely to succeed.

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Carolyn Flanagan Carolyn Flanagan

WILL DRAFTING PROBLEMS

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PROBLEMS WITH WILL DRAFTING

It is vital when drafting a will that the drafter uses language which reflects the wishes of the will maker.

A CASE STUDY: WRONG WORDING IN THE WILL

In the Will of Thomas Henry Finch (dec’d) [2018] QSC the will maker gave instructions that he wanted to give his “house” to his daughter. The inexperienced drafter used the following words: “ I give the following: any real property owned by me at the date of my death to my Daughter”.

The difficulty was that the will maker’s house (it was a substantial dwelling which consisted of two bedrooms, two bathrooms and included wraparound verandahs which cost in excess of $400,00 when purchased in in 2007, and was situated in a residential estate in a suburban street) was actually a relocatable home and as such it did not fit under the definition of real property (real property is “affixed” to land).

The intended gift to the daughter therefore failed.

This meant the will was challenged in court. The daughter was successful however such challenges are very expensive and time-consuming and often the costs come out of the estate.

it is vital that a will maker is given the correct advice so that the will does indeed reflect the will maker’s intentions.

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Carolyn Flanagan Carolyn Flanagan

BLENDED FAMILY SOLUTIONS

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BLENDED FAMILIES

When a will maker wishes to cater for the needs of the current partner and also those of the children of current and former relationships, one possible solution is to create a Life Estate for the current partner.

LIFE ESTATES

One option when a will-maker is not rich and their major asset is a house, is to give the partner a Life Interest in the house. This is not an absolute gift as there is a provision that the property will later pass to the children. This may keep the children happy as they know they will get something eventually. One big disadvantage is that the partner may live to a ripe old age and so the children may wait a very long time before they inherit


LIFE ESTATE WITH CONTINGENCY/CONDITIONS

A life interest may have limitations placed on it, for example the life interest will end if the partner remarries or s/he leaves the property permanently. If the condition is breached the life tenant will lose ownership of the land and the property returns to the deceased estate to be distributed in accordance with the will.

LIFE ESTATE NO CONTINGENCY/CONDITIONS

  • A life interest in a property provides a person a propriety right to occupy the property until they die or leave the property permanently.

  • The life estate will be registered with the Land Titles Office and the life tenant then has the right to occupy and use the property.

  • The new owner, or person who will inherit after the life estate ends, has an interest in the house or land, but he or she has no right of occupying the property. This also means he or she cannot sell it, rent it or alter it until the life tenant dies or leaves permanently.

  • The person with the life interest can rent the property out but cannot sell it without the future inheritors’ permission.

  • It can cause unnecessary conflict between the life tenant and the future inheritors. The life tenant has no motive to improve the asset. It is vital that the will includes an obligation to repair the property to keep in good repair (and also some funds to enable that).

PORTABLE LIFE ESTATE

A Life Estate can leave the partner in financial difficulty if they need to move to more suitable accommodation in later years. A Portable Life Estate is a more flexible arrangement. When the partner is forced to move into a nursing home, for example, they can use some of the property’s value to enable this.

Any value not used then passes immediately to the children. Later, when the partner dies, the children will receive the rest of their inheritance.

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Carolyn Flanagan Carolyn Flanagan

CHOOSE YOUR ATTORNEY CAREFULLY

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ENDURING POWERS OF ATTORNEY: BE CAREFUL HOW YOU TREAD

CHOOSING AN ATTORNEY
If you (called the principal, or the donor) lose capacity your attorney has enormous power to deal with your affairs.

HOW ATTORNEYS ARE SUPPOSED TO ACT

These powers are constrained by legislation which specifies how these powers are to be used.

In summary:

  • The attorney must exercise their powers to protect and benefit the principal’s interest and not their own.

  • They must keep the principal’s finances and their own separate and they must be able to account for how they have used the principal’s assets.

  • They must not give gifts or confer a benefit on themselves or someone else unless expressly authorised to do so by the power of attorney.

  • The principal when completing the Enduring Power of Attorney form can place conditions on how the attorney is to act.

SOMETIMES THOSE WITH POWER OF ATTORNEY ABUSE THEIR POWERS: ELDER ABUSE

Smith v Smith [2017] NSWSC demonstrated that even when the principal has done everything they can to direct the way the attorney acts, it doesn't always end up well.

Mr Smith had not given Mrs Smith the authority to give gifts or to confer benefits on the herself or on others. Nonetheless when Mr Smith lost capacity and was placed in a nursing home, Mrs Smith “rushed, headlong, into the cash economy, liquidating all property owned by the Mr Smith (including his share portfolio which he had left to his children from a previous marriage) .. dissipating his property as if entitled to do so in disregard of his interests”.
Mrs Smith used her husband’s money to fund the purchase of a residence in the names of her daughter by an earlier marriage and the daughter’s husband and, a little later, funded the construction of a granny flat for herself on that property. This all despite the fact that, in the will, she was still to receive the defendant’s residence, car and proceeds of a bank account.

Mr Smith’s children did take her to court but were able to recoup only a nominal amount of the property she had misappropriated.

WHAT CAN PRINCIPALS LEARN FROM CASES SUCH AS THIS?

Considerations:

  • make sure you have an attorney you feel you can trust (Mr Smith did trust Mrs Smith!) and perhaps appoint more than one attorney so they can keep a check on one another

  • make sure potential attorneys understand their duties thoroughly before they accept the role and

  • make sure they understand that there are potential civil and criminal penalties if they do not obey their duties to the principal.

 
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