Statutory wills are underutilised in estate planning

Statutory wills are being neglected in situations where a family member has lost capacity with the absence of an established will, according to Australian Unity Trustees.

         

 

Australian Unity Trustee’s national manager of estate planning, Anna Hacker said one of the main issues she sees as an estate planner is families who “don’t realise” that they can establish a statutory will in the case that their loved one had not formed a will prior to developing the disease.

A statutory will functions the same as a personal will, however is proposed by someone else, she explained.

“I think it's certainly an important thing for people to remember. A lot of people don't realise you can do it [propose a statutory will], and they think: ‘oh no, well, mum's got dementia, so there's no way we can do a will now’.

“[However] the reality is you can and it can mean that the court can look at it in a much more objective way and really think about what that person wanted whereas after someone passes away there's more litigation.”

She said that, to her, “it makes a lot more sense” to propose a statutory will before the parent or family member passes away, especially if “you know it’s going to be a fight”.

Pointing to a recent case where a young child had severe physical disabilities due to problems at birth, Ms Hacker said statutory wills don’t just apply to the elderly.

She explained that this child had received $3.2 million in damages against the hospital which had been used to produce an income and buy a house for him, his siblings and his mother. His father had had little to do with him and his mother was the primary carer.

“The child was about to undergo serious surgery and an application was made for a statutory will to be made on his behalf, as he had never had capacity to create his own will.

“The court eventually approved a will that left the majority of the estate to the mother and siblings, with a small portion allocated to the father.

“Without the statutory will, the father would have been able to claim part of the family home and the funds, which would have seriously affected the other children and their mother.”

Ms Hacker added that while statutory wills are often considered as a last resort, there can be a greater role for them in estate planning.

“If a person has lost capacity, or indeed, never had capacity, it is entirely appropriate to look at whether a statutory will can be made.

“Often, statutory will applications are accepted by all parties and can allow for inclusion of strategies such as discretionary testamentary trusts,” she continued.

 

By: Lucy Dean
23 NOVEMBER 2017
smsfadviser.com

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Sofie Korac is an Authorised Representative (No. 400164) of Prudentia Financial Planning Pty Ltd, AFSL 544118 and a member of the Association of Financial Advisers.

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