What happed to the inheritance?
An interesting case has lately been handed down from the Courts. This case now provides Parents with the rights to strip their Offspring of inheritances. The judgment goes against what was previously believed to be good law.
To date, we have all thinking that Parents owe a duty to their Children to provide for them in some way upon their deaths. Well that reasoning may go by the board if the most recent case is anything to go by.
The case
The case goes something like this. Dad, Mum and two Daughters lived happily together but when Mum died and left her Worth to Dad, the two Daughters fought over the Worth. The result was the Daughters ended up with $56,000 whilst Dad received $20,000.
Dad decided that he would place his affairs with the Public Trust and so he completed a Will in which he left nothing to his Daughters. He also left directions with the Public Trust that they were not to tell his Daughters about his demise, his funeral or his Will.
Dad’s declaration to the Public Trust went along the lines that his Daughters gave him nothing, not even respect and that is what he intended to give them on his death – Zero.
When Dad died the Public Trust actioned his instructions. Herein lies the problem. No fatality notice was published. The Public Trust did however advertise for creditors of the Fortune to come forward but none ever did which is standard policy when dealing with a private Fortune.
The Public Trust did not enlighten the Daughters and the Worth, valued at circa $250,000, was passed to his de facto partner, in accordance with in his Will.
The eldest Daughter learned of her Father’s demise, about two years after the event, which is long time to try and follow up after a demise, on the other hand didn’t deter her. Instead, she sued the Public Trust, citing they had a legal duty to advise her of her Father’s loss of life. If she won the claim, she would likely collect approximately $62,000.
The Judgment
The Court on the other hand didn’t quite see the Daughter’s side of the story. Instead they issued a judgment stating that Executors (the Public Trust in this particular case) did not have a general duty to notify potential claimants about a demise or even a general duty to advertise for claimants. Rather, Executors have a duty to tell a person only when they know that person requirements to make a claim. So, Executors have to have actual knowledge of a potential claim rather than pre-supposing someone might make a claim.
The Court finished up by saying that the Public Trust did not have actual knowledge that the Daughter would make a claim and therefore, was not liable.
Lessons for us all to learn
So what does all this mean for Parents and Children?
Well to start with, we want all families to play together and stay together. The emotional cost of falling out with each other is huge.
Secondly, we would like to see all material goods held in a Trust not in a person’s individual name and capacity. Why? Because Trust assets can be passed from Trust to Trust meaning they can be passed from a Parent’s Trust to a Trust established for their Offspring upon that Parent’s loss of life. This protects possessions from Creditors and the Official Assignee and of course, negates gift duty.
Thirdly, everyone should have an up to date Memorandum of Requirements. This paper will tell your present Trustees what you want done with the possessions of the Trust when you are dead.
Lastly, everyone should have a current Will which deals with the assets that you do actually hold in your individual name at the time of your demise, such as tools, jewellery, etc.
Of course, asking your Parents what they have it in mind to do with your inheritance is often a tough subject to broach. A way of opening up this type of discussion with your Parents is to tell your Parents what you have it in mind to do with your own belongings for your individual children.
One of the lessons to be taken from this situation is if you want to look after the inheritances you are going to collect from your Parents and if you want to watch over the inheritances you plan to leave to your own children, ensure you take charge.
Janet Xuccoa BCom LLB, is a Family Trust specialist and accountant and partner at Gilligan Rowe & Associates Ltd (GRA). GRA is an accounting firm specialising in property and family trusts
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This entry was posted on Saturday, December 26th, 2009 at 1:55 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.