Estate planning lawyer Rod Cunich answers the questions that are most regularly asked.
YourLifeChoices members send estate planning lawyer Rod Cunich dozens of email queries every month. He would love to answer them all – and does manage to get to most – but here are some of the most-asked questions and his responses.
Q1. My father keeps threatening to write me out of his will, even though I have looked after him for several years. I don't think he has his full mental capacity but he won't visit a medical professional to be assessed. Is there anything I can do to protect my rights in his will?
A. First, let’s understand what capacity is required to write a will, as it’s much more basic than is commonly believed. In simple terms, your father only needs to understand what assets he owns, who he wishes to leave them to, and who he is leaving out from those who may have a claim on his estate. If he understands those matters when he signs his will, then the will is likely to be valid. Even people with dementia can execute a valid will in a lucid moment if they meet this test at the time they sign the document. If he doesn’t, it is not valid. One option to head off a new will might be to apply to have a guardian appointed over his personal and financial affairs on the basis that he lacks capacity. Search the internet for ‘Appointment of Financial Guardian’ and you’ll find that your local state authority can assist in this regard. You do not need a solicitor to do this. You’ll have to provide evidence of his conduct to prove incapacity and through the relevant tribunal you can obtain a medical opinion.
But what if he does sign a new will? If he does, you have two possible remedies and both involve challenging the will once he passes away. First, you could assert he didn’t have capacity to make the will. But absent medical evidence means you’ll have had to maintain a diary to record his behaviour and level of cognitive understanding to help prove his mental capacity.
Given the test referred to above, it is very difficult to prove mental incapacity in the absence of medical evidence, but the more evidence you have of impaired cognitive function, the better your chances. Second, as the son, you have a statutory right to challenge the Will on the basis that, in all the circumstances, your father failed to make adequate provision for you.
The court will examine a comprehensive list of issues, including the care you provided, the competing interests of other beneficiaries and their respective financial circumstances, and if satisfied that you should have received an inheritance, they have the power to re-write the Will to make appropriate provision for you.
This type of application is very common and the courts are quite skilled at working out ‘what your father should have done’. You’ll often find competent lawyers who will conduct this type of case on the basis that they only charge if you are successful.
Q2. Is there a certain amount I can bequeath so my will cannot be contested?
A. There is a common misconception that if you leave someone a small amount of money in your will that it will prevent them challenging the will. Whether you leave them nothing or something makes no difference. If they believe they are entitled to more, then they can commence proceedings to challenge your will.
Certain family members, by virtue of statutory right, and others (who can demonstrate to the courts that they have an entitlement to a share of your estate) can challenge your will.
In assessing their claim, the court looks at about 18 different factors. It is a complex exercise that involves as much art as it does science.
If the challenger satisfies the court that they have an entitlement, the court will make orders to ensure they receive their entitlement regardless of the sum left to them in your will.
Q3. Is there a way to avoid my will being contested if I leave more money to one child than to another?
A. You can leave your estate to whoever you wish. That said, if you favour one child over the other, the less favoured may challenge the will on the basis that you made inadequate provision for him. There is no ‘magic’ percentage or recipe to avoid a challenge. The best thing you can do is chat to the one who has done well and tell him what you plan to do and see what the reaction is.
Q4. We are a married couple with one married daughter and two grandchildren. When making a power of attorney document, should I nominate my husband and daughter to act on my behalf? And should my husband name me and my daughter to act on his behalf? Would this document still be legal if either of us was incapacitated and both our names and our daughter’s name were on the document?
A. Commonly, couples first nominate each other as their sole attorney, and then name their child – in this case, your daughter – or children as back-up if the spouse can’t do the job due to illness or death.
For those who do appoint their children, it’s recommended that you appoint them jointly so that they can share the burden and also keep an eye on each other to minimise the chances of abuse of powers.
Joint appointments can cause inconvenience if, for some reason, it’s hard for the attorneys to communicate. Some recommend using a solicitor, accountant or professional friend to minimise the chance of an attorney misusing his/her powers and using your money for unauthorised purposes. The downside of this is that they would charge a fee for the work they do.
Q5. Is it safe to prepay a funeral?
A. All reputable funeral directors place moneys received from prepaid funerals into an interest-bearing trust account so it is always available and safe if the funeral director becomes insolvent. Funeral insurance and similar products are problematic because people often live so long that they pay more in premiums than the funeral costs, and if you stop paying you get nothing in return.
Rod Cunich is a lawyer with more than 30 years’ experience who specialises in estate planning. If you have a question for Rod, simply email it to firstname.lastname@example.org
Disclaimer: This information has been provided by Rod Cunich and should be considered general in nature – legal advice should be sought.