Estate planning expert Rod Cunich has helped hundreds of YourLifeChoices members with their queries about wills, powers of attorney and difficulties relating to bequests. This selection of questions and answers may assist you.
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Q. Bernie*
I have two children with disabilities and no other family. I am 84 years old. My solicitor is executor for my will, but I have nobody to take on the role of enduring power of attorney. What would you suggest?
A. If there is no family or friend willing to take on the role, then you’ll have to approach the public guardian in your state. Each of these bodies has staff that will provide the service. I’d recommend that you make an appointment to see your local public guardian at your first opportunity, so that you can find out what they can offer. If you have sufficient funds, you might also consider one of the commercial trustee companies, many of whom offer excellent services – but at a significant cost.
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Q. Wanda*
My partner and I made new wills, enduring guardianship and power of attorney documents in NSW last year. We have now relocated to Queensland and our NSW solicitor advised that we need to update these documents with a Queensland solicitor to reflect our new address/state. Can you please advise if this is necessary?
A. It is rarely necessary to change your will merely because you change the state or territory you live in within Australia. There may be incidental reasons that require changes (they are too obscure to attempt to cover in this reply).
I’d recommend having a solicitor check your will to see if there is a particular reason for changing it, just to be certain. Each state and territory has its own laws governing enduring powers of attorney and enduring guardianship and, as a consequence, the documents vary in both form and substance from state to state.
There is no urgent need to swap over to the local version of these documents as each jurisdiction largely recognises the documents from other states and territories, although if your document purports to grant a power not available under the law in your new jurisdiction, then problems can arise.
I’d recommend that when you have the time that you redo these documents, so that they comply with the law in your new location. Making the change may avoid uncertainty and will assist with your (new) local authorities, who may not be familiar with the documents from other jurisdictions.
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Q. Brendan*
My wife and her sister held enduring power of attorney for their mother. Shortly before their mother’s recent death, they attempted to withdraw funds from her bank account to pay for her funeral, knowing that their power of attorney would expire on their mother’s death. One daughter had been operating this account for a number of years. The bank manager refused point blank to permit the withdrawal, referring vaguely to ‘the law’.
The manager said that she would make payment of funeral expenses on presentation of the funeral director’s account, after the event. To pay, in advance, for catering for the memorial function after the funeral, the manager required a written quote for the function.
My understanding is that while their mother was alive, the powers of attorney had full and unrestricted legal authority to operate her bank accounts.
I further understand that, on their mother’s death, all assets of the estate would be frozen by law, and held in trust by the executor, pending grant of probate, and distribution by the executor, in accordance with the will.
My questions are:
1. What law gives a bank manager the right to interpose him/herself between their mother’s funds and their powers of enduring attorney, and limit their access to funds?
A. The short answer is none, unless the power of attorney is defective, or the mother has lost mental capacity and the power of attorney is not an ‘enduring’ power of attorney. Only an enduring power will continue to operate once the mother loses mental capacity.
2. In particular, what law gives a bank manager the authority to withdraw funds from a deceased estate while it is in the sole custody of the executor?
A. None.
3. What actions do you recommend to permit powers of attorney to fulfil their responsibilities unhindered by third parties? This has been an unpleasant, confusing and distressing event, in a situation in which the parties had previously gone to the trouble and expense of setting up powers of attorney, in the clear understanding that this sort of debacle would not occur. If the law is as claimed by the bank manager, this should be waved around like a stinking fish, so as to warn others who might be planning responsibly to act, or who are in fact currently acting, for aged parents.
A. Have a lawyer write a letter to the bank, demanding that it comply with the power of attorney. The first step is to engage a lawyer who will advise whether there is a problem with the power of attorney. Once their mother passes, the executor has the sole power to gather in assets (including bank accounts) and pay expenses. By statute, funeral expenses enjoy priority over other debts and are paid once probate is granted. An executor has an obligation to pay the funeral expenses if there is money in the estate. Funeral directors commonly wait for probate to be granted before requiring payment of funeral expenses.
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Q. Jeff
I am an age pensioner and have been named the sole beneficiary in an aged relation’s will. The will is unlikely to be challenged, but I have the following questions.
Question 1
Is it possible to advise the solicitor that as the sole beneficiary and executor, I want a certain percentage of the inheritance diverted to my two siblings, so that they, too, can enjoy a benefit?
A. Theoretically, the answer is yes, but the solicitor may require you to execute a Family Settlement Deed that sets out your wishes to avoid any dispute in the future. If the inheritance is paid to you in cash, you can then pass it on to your other family members without the need for this arrangement. If the inheritance involves property, then there could be capital gains tax and stamp duty implications to consider.
Question 2
If so, to what extent will that affect the siblings for tax purposes?
A. If they receive cash, which is a gift from the deceased or you, it has no taxation implications for them. If the assets involve a transfer of property or shares (anything that may attract Capital Gains Tax) then the answer to your question can only be determined by a lawyer who has all the information.
Question 3
Will there be any negative impact on me by opting to share the inheritance with my siblings? The inheritance will, as I see it, allow me to buy a new home and a few more comforts in life, but I really want my siblings to enjoy some of the benefits as well.
A. If you receive an Age Pension and other entitlements, it is important that you consult a financial expert to find out what effect an inheritance might have. (Ed: Information here.)
Question 4
I have heard that there is an option for a ‘secret bestowment’, where the sole beneficiary feels it only fair to share some of an inheritance? Is that right?
A. That is a moral, social and family issue, not a legal one.
Question 5
Will gifting rules come into play?
A. If you mean for the purposes of assessing your Age Pension, the answer is yes. (Ed: General information here.) I recommend you see a specialist estate planning solicitor who can provide tailored advice.
* Not their real names.
Rod Cunich is a lawyer and author with more than 30 years’ experience who specialises in estate planning. If you have a question for Rod, simply email it to newsletters@yourlifechoices.com.au. His book, Understanding Wills and Estate Planning, has recently been updated and is available from all good bookshops.
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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
