Susan had not had an easy life. Married early to an unpleasant man she had divorced with two young children and worked as a bookkeeper and administration manager most of her life. Her daughter committed suicide 10 years earlier and left Susan to raise a young boy who was now a brooding 15 year old. Her son was unemployed and still living at home in his mid 30’s with a marijuana problem.
Susan’s on again off again boyfriend Phil was a great help around the house, taking care of the yard maintenance and doing various “man jobs”. Phil was receiving a single person’s Newstart Allowance and listed his address as his mother’s home several km away.
Despite her difficulties, Susan had paid the house off, built up a reasonable amount in super and had been looking forward to easing into retirement in a few years when she turned age pension age.
Susan was introduced to me having been diagnosed with stage 4 lung cancer caused by smoking her entire life. She had no will, no powers of attorney and wanted to “get my affairs in order while I can…”.
A new will was prepared creating a trust for the teenage grandson, and an instruction to the executors to retain the house in trust for 6 years so that the son and grandson had somewhere to live. Everything was to be split equally between the son and grandson so a binding death nomination was established on Susan’s super directing payment to her estate.
She passed shortly after these documents were put in place. Then the problems began, not for Susan but for her executor – her sister Irene.
Susan had been living with Phil on and off for several years and he felt he was entitled to a share of the house from the estate “…for looking after it, y’know I put a lot of effort in…”. In all states of Australia spouses have a right to challenge the will if they feel they have been unfairly provided for. This is an example of The Girlfriend Law operating as “the Boyfriend Law”.
But the plot thickens, property searches showed that Susan did not in fact own the house, it was still in her ex husband’s name 25 years after their divorce. Susan had not noticed his name on the Valuer General statement and the local council had accepted her at face value and changed the rates notices. The bank had changed the names on mortgage paperwork but not bothered to tell her that she was not the owner of the property.
Susan and her ex-husband had never finalised the divorce paperwork and transferred the property to Susan’s name. The law firm that assisted during the divorce was quite derelict in their duties, had not followed the issue up and in any event were no longer in business. Nonetheless pointing the finger would not solve the problems confronting the executor Irene.
So now, despite having gone to a lot of effort to plan her estate Susan’s legacy looked like it was going to be a mess with her son and grandson left to fight a battle with Susan’s boyfriend and possibly losing their home.
There is a lesson in this story for every professional adviser be they legal, financial and tax oriented. Clients entrust us with their affairs, they are often completely mistaken about their facts and we have a duty of care to be diligent in our investigation into their situation once we are asked. Banks hold a tremendous amount of information that can be provided with a simple phone call. Title deeds or rates notices can be checked easily to confirm ownership and identification of possible financial dependants is quite simple by drawing a family tree and working through who in that tree is dependant emotionally or financially on your client.
Checking ownership of assets that are expected to be included in the estate and clarifying who has a right to be considered as beneficiary of the estate is a minimum standard all advisers should meet in “ticking the estate planning box”.
I doubt there is a reader of this story that would fail to appreciate the value created for this client by a diligent review of these issues – it was all she wanted to get right before she passed away.
The Solution For Susan’s Estate
Despite Phil possibly having the right to make a Family Provision Claim against the estate it was pointed out that pursuit of his claim might result in Centrelink fraud charges being brought against him. Ultimately Phil weighed up the possible windfall from the estate against criminal fraud charges and he dropped his claim.
It was extremely fortuitous that the ex husband was able to be coerced into behaving with some ethics in this case as it was not his initial intent. In many situations like this greed becomes a dominant motive with a difficult settlement and legal fees being the normal outcome.