Publications

Statutory Wills: Making a Will for a person who lacks capacity

Published on July 9, 2018 by Rebecca Tidswell

The birth of the statutory Will

Statutory will provisions were introduced into succession legislation in all Australian states and territories between 1996 and 2010 and can be found in the following:

• the Wills Act 1968 (ACT), Pt3A
• the Succession Act 2006 (NSW), Ch2
• the Wills Act 2000 (NT), Pt3
• the Succession Act 1981 (QLD), Pt2
• the Wills Act 1936 (SA), s7
• the Wills Act 2008 (Tas), Pt3
• the Wills Act 1997 (Vic), Pt3
• the Wills Act 1970 (WA), PtXI

The test of testamentary capacity is still the test in Banks v Goodfellow.[5] For a person to have testamentary capacity he or she must:

• understand the nature of a will and its effect;
• comprehend the extent of the estate to be disposed of under the will; and
• understand the claims on the estate to which he/she ought to give effect.

Medical reports by experts such as a treating physician, neuropsychologist or geriatrician provide the best evidence to satisfy the court as to a person’s lack of testamentary capacity. That expert can also provide an opinion as to whether the person is likely to acquire or regain capacity in the future (the court will be interested in this issue, especially if there is no apparent immediate need for the statutory will).

Evidence from family members and friends concerning capacity does hold some weight, but the independent evidence of medical practitioners is often preferred by the court.

 How does the court determine the testamentary intentions of the incapacitated person?

 This is where the provisions differ slightly across the states and territories.

In the ACT, NSW, Tasmania and Victoria, the court authorises the will if ‘the proposed will…is or is reasonably likely to be, one that would have been made by the person if he or she had testamentary capacity’.[6]

In WA, the test appears a little more lenient; the proposed will must be ‘one which could be made by the person concerned if the person were not lacking testamentary capacity’.[7]

In the NT and QLD, the court must be satisfied that the proposed will ‘is or may be one that would have been made by the proposed testator if he or she had testamentary capacity’.[8]

In SA, the proposed will must ‘accurately reflect the likely intentions of the person if he or she had testamentary capacity’.[9]

Although there are some variations in the specific wording used in the various statutes, the principles which guide the court in addressing the issue of ‘intention’ have much in common.

In Re Application of JR Fenwick and Re Charles,[10] Palmer J considered ‘intention’ in three types of cases in which the nuances of each scenario influences the questions to be posed by the court. This was one of the first statutory will cases in NSW and is referred to by many jurisdictions as the case laying the foundations on which nearly all cases are now considered.

 Lost capacity cases

 These are probably the simplest type of application for the court to consider. A lost capacity case is one in which the incapacitated person is an adult who has lost capacity as a result of, for example, dementia or a brain injury. This person is likely to have already formed various relationships with family and friends, may already have a will, or may already have discussed their testamentary wishes before losing capacity. The previous, outdated will can be used by the court as a yardstick against which to consider the previous testamentary intentions of the person and the proposed will (for example, after the death of a beneficiary). Affidavit evidence can also be used to provide expressions of testamentary intentions and details of relationships.

The more difficult lost capacity case is the one in which the person did not make a will, despite previously having testamentary capacity and therefore the legal right to do so. In that scenario, the court will also need to consider what the incapacitated person is reasonably likely to have done, if anything. Was it the intention of the person to die intestate? Is that the reason why they did not make a will? Palmer J commented:

‘In my opinion, in a lost capacity case in which the incapacitated person has never made a will, the Court ought not to start with a presumed intention against intestacy. The Court must be satisfied by the evidence that is “reasonably likely” – in the sense of “a fairly good chance” – that the person would have made a will at some time or other, had not testamentary incapacity supervened.’[11]

The court’s main concern is to ascertain the actual, or reasonably likely, subjective intention of the incapacitated person.[12]

Nil capacity cases

 There can be no subjective intention in a nil capacity case, as this person has never had any testamentary capacity. The considerations are therefore entirely objective. These types of cases include those people who have been born with brain injuries or serious cognitive impairment. The court is mindful that it may be desirable for a will to be authorised for this category of incapacitated person as the minor may, for example, have received a large compensation settlement related to the cause of their brain injury and the size of the estate (often in the millions of dollars) makes it reasonably likely that he or she would make a will if they had capacity.

Palmer J provided the following guidance:

‘I think the Court must start from the position that, if there are assets of any significance in the minor’s estate, it should authorise some kind of statutory will unless it is satisfied that what would occur on intestacy would provide adequately for all the reasonable claims on the estate.’[13]

 Pre-empted capacity cases

 This category of case covers the middle ground between the lost capacity and nil capacity cases. It is for those minors who have had some capacity during their lifetime to develop and form relationships, but who have lost capacity (for example, by way of an accident as a teenager) prior to turning 18. In this category, the question to be pondered by the court has a mixture of both subjective and objective elements:

‘Is there a fairly good chance that the proposed statutory will reflects the testamentary intention that this particular teenager, acting reasonably, would express if he or she were at least eighteen years of age?’[14]

The ‘test’ appears to have two elements: consideration of size of the estate and, if it is large, it is reasonably likely the teenager would have made a will rather than die intestate (objective element); and is it reasonably likely the teenager would have made the proposed will given his or her relationships and history (subjective element).

Evidence of intentions

What evidence will the court take into account when deciding whether a proposed will reflects a person’s intentions?

The application to the court must give relevant information on various subjects, as would be expected to be taken into consideration by any person when making a will. Examination of individual provisions within the legislation and relevant case law suggests the following evidence should be provided to the court:

• reasonable estimate of the size and nature of the estate;
• draft of the proposed will;
• copies of any previous wills drafted or signed by the incapacitated person;
• evidence concerning the wishes of the incapacitated person;
• confirmation of who will be entitled to the estate if the person were to die without a will. What would happen on intestacy?;
• who might make a family provision claim against the estate? Would the proposed will provoke or deter a later claim under family provision legislation?; and
• evidence about who might reasonably expect to be provided for in the will, including carers or charities.

Is it reasonable to make the orders?

 Prior to making the orders, the court will need to ensure that the application has been made by an appropriate person, such as a family member, close friend or carer, trustee or a guardian or professional involved in the incapacitated person’s affairs (lawyers and accountants, for example). The court also wants to ensure that adequate steps have been taken to inform persons with a proper interest in the estate of the application, including those who may have reason to expect a benefit or provision from the estate.

The person must also be alive when the order is made by the court. A statutory will cannot be authorised if the person has died, leading to some urgency for those applications concerning the sick or people about to undertake serious medical treatment.

If satisfied of the above, the court will usually make the orders to authorise the will.

Some examples of statutory will applications that have been considered by the court 

 State Trustees v Do and Nguyen [2011] VSC 45 (23 February 2011)

An application for a statutory will was made on behalf of a Mrs Auckland, who lacked capacity and was a widow with no children. She had made a number of wills since 1989 and Bell J found that they were of doubtful validity. His Honour found that, despite the problems of validity, the previous wills were helpful as they demonstrated her testamentary intentions. The previous ‘wills’ were focused on her family (siblings), godson and two neighbours. On that basis, his Honour authorised a will providing legacies to those parties.

R v J [2017] WASC 53

This case is one of very few statutory will matters in WA and probably the first in which the Court discussed what it would consider when deciding whether to authorise a proposed will. J was an elderly lady who suffered dementia. Her family applied for a statutory will, capping some of the beneficiaries’ entitlements to a share in the proceeds of real estate rather than the entire estate. The application was dismissed as the Court was not satisfied that J’s wishes were to cap entitlements to her estate. Chaney J commented:

‘A feature of this case is that the likely beneficiaries of J’s estate, whether under the proposed will or under intestacy, consent to the making of the proposed will. That is not an insignificant factor in favour of making the proposed will. It is not, however, determinative. The object of s40 is not to, in effect, confer will making power of an incapable person on the likely beneficiaries of that person’s deceased estate. It is for the court to exercise its discretion, having regard to the information provided in accordance with s41 of the Wills Act, as to whether a will in the terms proposed should be made.’[15]

Doughan v Straguszi [2013] QSC 295

An application was made for a statutory will to rectify an error in a previous will. The testator had signed a will but it did not adequately deal with the family farm and she had since developed dementia. It was argued that the application had been made for an improper reason, as one of the beneficiaries was facing bankruptcy proceedings. However, the Court held that a prudent testator would have wished to rectify the error to address the whole family’s beneficial interest in the farm. Any impact on the creditors of a single beneficiary was an ‘ancillary consequence’. The will was authorised, as it was found likely that the testator would have wished to rectify her error.

Re CGB [2017] QSC 128

An application for a statutory will in a $17.3 million estate was refused. CGB was aged 83 years and had been a quadriplegic since he was 40 years of age. He had a lucrative empire which he had been running from his house after he became a quadriplegic. He had a live-in carer, a personal carer, two children (with whom he had no contact until a few years prior to his death), an assistant/driver, an accountant (long-term advisor and friend), a mortgage broker, a solicitor and a brother. Many became parties to the proceedings. The proposed will included a number of legacies to the parties, as well as to the Spinal Research Institute Limited.

Despite lengthy and considerable evidence from all involved, the Court was not convinced that the proposed will was one that may have been made by CGB. In fact, the Court was not convinced that CGB would have made a will at all. Brown J commented:

‘The protective nature of the court’s jurisdiction is a paramount consideration in relation to applications such as the present. I have considered carefully the fact that CGB is a man of considerable wealth who will leave a large estate. While it is undesirable for a person in CGB’s position to die intestate, CGB is an unusual man.

Throughout his life and when he had unquestionable capacity, he never made a will despite advice to do so, prior to his taking steps in 2013. Even then, he was indifferent to the prospect of dying intestate when given advice as to the effect of intestacy.’[16]

When CGB had seen a solicitor in 2013 to discuss making a will, he had later revoked his will instructions and thereafter never committed to any instructions. Due to this equivocal attitude as to whether he had a will or not, the Court did not authorise the will proposed.

A Limited v J [2017] NSWSC 736

This was an urgent application as the 13-year-old minor was due to undergo life-threatening surgery and had never had capacity due to a birth injury. A Limited had been appointed to manage the estate which comprised a large sum of damages related to a birth injury claim. J’s mother and father had separated when J was young and her mother was entirely responsible for her care. The proposed will excluded the father, and left the estate to the mother and J’s siblings. If the will was not authorised, intestacy rules would give half of the estate to the father and ignore the siblings.

The Court was concerned about excluding the father entirely, given the potential for a family provision claim. Unconventionally, the Court adjourned the decision to allow the mother and father (albeit that day) to try to reach an agreement on the terms of the proposed will or give the Court the power to decide. The Court authorised the terms of the will proposed by the mother, which was based on provision of 15 per cent of the estate to the father, 42.5 per cent to the mother and 42.5 per cent to be split between J’s siblings. In A Limited v J (No. 2),[17] the Court held that the apportionment reflects what a reasonable person, in the position of J, would have done to recognise potential claims on the estate by her father and her siblings.

Conclusion

 Essentially, the purpose of the statutory will provisions is to give effect to the testamentary intentions of the incapacitated person, as ascertained by the court. There must be an evidentiary basis for the court to authorise the proposed will, therefore the thorough preparation and provision of evidence will be the key to a successful application. Practitioners in this field should carefully follow the case law in all jurisdictions, as the courts are continuing to navigate a difficult and developing area of law.