June 2019 | James Freidman
Welcome to Statutory Wills 101.
A few important estate planning terms to be aware of before we start:
Capacity: The term ‘capacity’ has no single legal definition. A person may have capacity to make certain decisions and not others. For example, the Supreme Court found that a person was incapable of managing their financial affairs but was mentally capable of making a will.
Testator: A ‘testator’ is a person who has made a valid will.
Testamentary Capacity: ‘Testamentary capacity’ is the ability of an individual to understand:
- What it means to be making a will;
- What assets he/she owns; and
- Who may be entitled to make a claim on the estate and the moral obligations owed to those people.
Statutory Wills 101
Now, to the topic of this article: Statutory Wills! This is a serious area of estate planning and can have very important ramifications for surviving relatives, friends and contacts of the deceased.
Statutory Wills are a tool used by the Courts to ensure a person’s testamentary intentions are fulfilled even if they lack the requisite capacity to make a valid will.
There are two relevant sections of the Succession Act 2006 (NSW):
1.S 18 which provides that the Court may authorise a will to be made, altered or revoked for a person without testamentary capacity, and
2.S 22 which provides that the Court must be satisfied:
- The person is, or is reasonably likely to be, incapable of making a will;
- The proposed will, alteration or revocation is or is reasonably likely to be, one that would have been made by the person if he/she had testamentary capacity.
Essentially, these sections state that the Court can make, alter or revoke a will if a person lacks testamentary capacity and the proposed terms reflect, or are reasonably likely to reflect, how the person would have requested their assets to be distributed anyway.
So, if Grandma loses capacity and hasn’t updated her will for a number of years, a person (on behalf of Grandma) can ask the Supreme Court to make a Statutory Will.
The Supreme Court, generally, deals with two types of Statutory Will applications:
- Lost capacity: ‘Lost capacity’ refers to a situation where an individual loses capacity later in their life. For example, an elderly person who is diagnosed with dementia. Such cases are usually relatively simple for the Courts because the person is likely to have already made a Will or discussed their intentions with family/friends.
- Nil capacity: A ‘nil capacity case’ concerns an individual who has never had capacity. This can be a result of lifelong cognitive impairment or disability. These cases are more difficult for the Courts to deal with and depend largely on a subjective/objective analysis on a case by case basis.
Evidence
The Court requires evidence of what is reasonably likely to have been the person’s intentions.
The Succession Act 2006 (NSW) contains detailed provisions of the information required to support an application for leave. For example, evidence of the terms of any previous Will must be given.
Summing Up…
Statutory Will’s are a complex area of estate planning. If you are close to someone who has lost capacity and you feel their Will does not reflect their current wishes, please contact Jonathan Harris or Scott Freidman on 9231 2466.
Publications