Bowen Buchbinder Vilensky

Archive for May, 2016

Blended Complications – Tetris for Estate Planners
Friday, May 27th, 2016

This one (3)

By Daniel Yazdani, Solicitor at Bowen Buchbinder Vilensky Lawyers

27 May 2016

Today, there are increasing numbers of blended families, which often causes confusion and concern when decisions must be made as to who will be provided for in a Will and in what proportions. The definition of a child in the eyes of the law obviously includes biological children. However, it also includes adopted children. Therefore, any such “child” has standing to bring a claim against their deceased parent’s Estate.

An example of a child’s right to adequate provision under a parent’s Will is the decision of Mead v Lemon [2015] WASC 71 which saw the Supreme Court of Western Australia determine that $25 million was adequate provision for mining heiress Olivia Mead – the daughter of mining magnate Michael Wright (“the deceased”) – who commenced proceedings in the Supreme Court under the Family Provision Act 1972 (WA) for further provision from her late father’s Will.

In this case, the deceased died on 26 April 2012. The deceased married four times in his life. He had three children from one marriage and Olivia (his youngest child) was the result of a relationship the deceased had with Olivia’s mother. Olivia’s mother and the deceased never married.  In the deceased’s Will, Olivia was to inherit $3 million (subject to strict conditions), compared to her half siblings who stood to inherit approximately $400 million each. The Executor of the Will has appealed the Court’s decision to award Olivia $25 million and the matter is currently before the Court of Appeal.

This case highlights that making appropriate provision for your children is a crucial consideration in the estate planning process. It also demonstrates that, failing to make adequate provision for your children – even though you may not have had a close relationship with them – may result in those disinherited children bringing a claim against your Estate.

Another issue arising from blended families is the provision for stepchildren.  Until recently, stepchildren were unable to make a claim under the Family Provision Act. The recent amendments to the Family Provision Act provide that a stepchild can make a claim in specific circumstances and usually in circumstances where the stepchild was financially dependent on the stepparent, or where the stepchild’s biological parent left his or her entire estate to their new spouse or partner, who in turn does not leave adequate provision for that stepchild.  Accordingly, even though a stepchild may not be a “child” in the eyes of the law, he or she may still be able to bring a claim against your Estate.

The fact that your children and other close family members can challenge your testamentary wishes highlights the reason why it is crucial to seek sound legal advice when dealing with your estate planning and business succession planning. The benefits of carefully and effectively arranging your estate planning far outweigh the dire consequences of not doing so and leaving important matters unaddressed.

Please contact Daniel Yazdani at dyazdani@bbvlegal.com.au if you wish to discuss this matter further or wish to address your estate planning objectives.

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Who Inherits Prince’s Diamonds and Pearls?
Monday, May 9th, 2016

This one (2)

By Laura Di Cristofaro, Solicitor at Bowen Buchbinder Vilensky Lawyers

9 May 2016

Despite achieving the status of music royalty, Prince’s untimely death at the young age of 57 years has once again highlighted the simple fact that no one can avoid the emotional and financial hardship invariably suffered by a deceased’s family when the deceased dies without a Will.

Whilst hard to believe that a superstar of Prince’s status would not execute a single document to say who inherits his wealth,  his family have filed papers to declare that Prince died without a Will. This means that Prince died ‘intestate’ and his family and the Courts are left to deal with the resulting mess that is likely to take years to sort out.  Whilst there have been many tributes in the media as of late, the media is more consumed with the twists and controversies of Prince’s intestate estate – not a legacy that Prince is likely to have wished to leave behind.

So, the question is, what happens to Prince’s ‘Little Red Corvette’ and other assets?

Prince’s Estate will be distributed in accordance to the laws of intestacy (in Minnesota).  Had Prince died in Western Australia however, there is a formula imposed by section 14 of the Administration Act 1903 that dictates who inherits the Estate and in what proportions. Although each person’s intentions are different, it is very unlikely that this formula will mirror exactly what each person wishes to happen to their estate.

Relying on the section 14 formula can be problematic in many different scenarios, including for blended families, de facto partners or even for a widowed spouse. For example, if Prince died in Western Australia leaving a wife and children, the wife would receive a statutory legacy of $50,000 and one third of the remainder of the Estate. The other two thirds would be divided between his children. For many widows or widowers left behind, $50,000 plus a third of the Estate would not be a sufficient distribution.  In fact, the statutory legacy of $50,000 has not increased since 1982.  The sum of $50,000 was definitely a ‘Sign o’ the Times’ in the 1980′s as it represented the median house price was considered a sufficient distribution.

If a beneficiary is not sufficiently provided for by the section 14 formula, their only recourse is to commence proceedings under the Family Provision Act 1972, which normally incurs significant legal costs and lengthy delays in finalising the Estate.

The lesson to learn from this unfortunate story is that everyone should have (at the very least) a basic estate plan.  This is even more so the case with respect to those individuals with interests in entities such as businesses and family trusts. By delaying the crucial exercise of making a Will, you run the real risk of dying intestate.  A current and complete estate plan, including an up to date and valid Will,  is vital to your estate being distributed in accordance with your wishes and in an efficient and cost effective mannerwhilst at the same time protecting potentially vulnerable beneficiaries and the estate assets at a time where arguments over money should not take precedence over mourning the loss of a loved one. 

Please contact Laura Di Cristofaro at ldicristofaro@bbvlegal.com.au if you wish to discuss your estate planning objectives.

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