Consulting a lawyer might seem expensive to some. A defective Will, however, can prove even more costly.
Will making is a significant component of later life planning, and in nearly all situations will require professional legal advice. On a basic level, legal advice should ensure that the Will itself is a legally sound document and will ultimately contribute to safeguarding the distribution of the assets in accordance with the intention of the testator. Poorly drafted Wills – such as those containing ambiguous directions or which fail to incorporate fundamental terms – can prove costly, as the parties will often need to go to court seeking an order for clarification or rectification.
The recent Victorian case of Re Hely; Application by Arbuthnot & Donoghue [2018] VSC 614 provides one such example:
In late 2014, Daryl Hely engaged lawyers to prepare his Will. This Will consisted of seven testamentary trusts and dealt with a number of relevant issues, such as capital gains tax and the distribution of residuary funds.
Less than a year later and without the assistance of a lawyer, Mr Hely and his daughter decided to simplify the 2014 Will. Mr Hely crossed out provisions which he no longer thought necessary and his daughter implemented her own additional changes.
Mr Hely died on 10 December 2017 and probate was granted on 25 May 2017. At time of death, Mr Hely’s Estate had a total gross value of over $25 million. The re-drafted Will was his final Will and due to its alterations, proved deficient in several respects.
Unfortunately for everyone involved, the executors of the Estate had to make an application pursuant to Order 54 of the Supreme Court (General Civil Procedure) Rules 2015, seeking clarification regarding the construction of the final Will. In the alternate, the executors made an application for the rectification of the Will pursuant to section 31 of the Wills Act 1997.
Justice McDonald of the Supreme Court of Victoria saw three main deficiencies with the final Will.
(1) Seven testamentary trusts and no beneficiaries
Similarly to the 2014 drafting, the final Will sought to establish seven testamentary trusts over Mr Hely’s Estate, which at time of death included title to 14 properties, a sizeable shareholding and cash. While the trust property was meticulously detailed, the Will established no beneficiaries. Mr Hely’s daughter gave evidence to the effect that this was an oversight on her behalf. The effect, however, was that the trusts were defective and would not serve the purpose of distributing the trust property to the intended recipients. As a result, the Court had to rectify the Will by re-inserting the beneficiaries named in the original 2014 document.
(2) Unequal distribution of capital gains tax liability
The Court considered that the final Will did not adequately reflect Mr Hely’s intention for each of his children to be treated equally in respect to capital gains tax liability. On this occasion, however, the Court refrained from rectifying the Will on the basis that insufficient evidence had been submitted regarding the extent of any potential tax liability on the properties gifted under the trusts. Ultimately, it is likely that the parties will now incur additional costs in relation to this aspect.
(3) Gifts to the grandchildren with conflicting vesting dates
Clause 4.1 of the final Will provided that gifts bequeathed to the grandchildren were to vest in each child upon attaining the age of eighteen years. Clause 5, however, asserted that all gifts made under the Will would not vest in any beneficiary until that beneficiary reached the age of twenty-one years. The Court had to reconcile these conflicting provisions by assessing the original intention of the testator. On this basis, the final Will was rectified so that references to twenty-one years was replaced with eighteen years.
Legal proceedings such as the matter of Re Hely can be costly, time consuming, have uncertain outcomes and can bring added stress during an already difficult time. These situations, however, can be easily avoided by seeking professional legal advice when undertaking later life estate planning. Further, having a lawyer draft your Will or the Will of a loved one can help provide peace of mind that the last wishes of the deceased will ultimately be honoured before the eyes of the law.
