“Can’t you wait till I’m dead?”
A client of mine, of German extraction, visited his elderly father several years ago who asked him to explain what the provisions made in his will. The heading to this article was the father’s response!
This response recently came to mind when reading Hedley Thomas’s articles in the “Australian” of March 7 & 8. Thomas reported on a case now before Brisbane’s Supreme Court where two daughters are currently suing their 91 year old father and their youngest sister over steps which were taken some 4 years ago to take assets owned or controlled by the father from the reach of the plaintiff’s by putting them into an entity controlled by their sibling during his life time.
It appears that this entity, which now is the repository of those assets, is a trust structure and as the re-structure occurred during the father’s life time, the assets which have been transferred to it will not form part of his estate at the date of his death and therefore will not be included in any claim for “further provision” brought against his estate by his two elder children. It may well be as the father now resides with his youngest daughter that his estate has been “stripped” of any assets and an application for probate of his will shall not be necessary.
The issue of the father’s capacity is also before the court, despite him scoring 28 out of 30 when being tested by his doctor as to his cognition at the time of the restructure. This is because the main thrust of the proceeding seeking to overturn the re-structure appears to not only be based upon the premise that the father was unduly influenced by the youngest daughter, but in addition it appears from the article that his capacity at the time of the re-structure to fully understand the resultant outcomes has also been called into question.
The reported reason for the restructure was the patriarch’s dissatisfaction with the behaviour of his two eldest children and one of their spouses. The behaviour complained of was the anticipated interference of the spouse in trying to gain control (or at least have some involvement in the management) of an investment portfolio of public company shares and property with an estimated worth of $10m; which the father had accumulated during his lifetime and general interference (real or threatened) by the two daughters in relation this asset pool.
The “fall out” has been an estrangement of the father from his two eldest children due to their disinheritance and possibly also that of their children. It is not apparent from the articles whether such disinheritance was only as to part or they are excluded from any share of the asset pool.
The outcome
The proceeding has not only pitted sibling against sibling but the elderly father has been subjected to cross-examination in court over the manner in which he has elected to divide his asset pool, and as a result, becoming clearly affected from the involvement in what would be very stressful to anyone, let alone someone who should be enjoying his longevity with an abundance of assets from which to make provision for not only himself, but also all the members of his immediate family. It appears that his cognition some four years after the restructure is not as clear as it once was. Anyone who has been subjected to cross-examination can only sympathise with the father’s distress and possible confusion. The family asset pool has unfortunately become a “poisoned chalice”, rather than a cup from which all family members can drink.
Could the outcome have been avoided?
Perhaps with more open discussion and the involvement of a trusted advisor, this could have been avoided. However, the interference of partners is not an unusual cause of family disharmony (if that is what has occurred here as the articles have so reported).
My experience over my 45 years post admission is that it is normally vital that beneficiaries are brought “into the tent”. If conflict is anticipated over the estate “carve up” then independent executors and or trustees should be appointed to keep the peace. The irony of this case is that the asset pool of $10m would normally be considered as “abundance” and a third of this pool for each child is more than adequate to underwrite the security of each of them and their family.
It will also be interesting to see how the restructure was documented and the diary notes that hopefully were kept. This is because capacity is also an issue that any lawyer involved in advising an elderly client in such circumstances must be satisfied with. In essence, the test is concerned with whether the father understood what the asset pool either owned or controlled by him at the date of the re-structure and who he wished to benefit as a result of the restructure and the reasons for that outcome.
Here the unfortunate outcomes have been an alienation of his children by the formation of the two warring “camps”, an unseemly airing of the family’s “dirty washing” in a very public manner, the incurring of what is obviously a significant amount of legal fees and great emotional distress to the family’s patriarch, all because his children couldn’t wait to fight over their legacies until after he was dead.
TONY KELLY LAWYER & ESTATE PLANNER