What happed to the inheritance?

An interesting case has recently been handed down from the Magistrates. 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 belief that Parents owe a duty to their Offspring to provide for them in some way upon their deaths. Well that reasoning may go by the board if the latest 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 Estate to Dad, the two Daughters fought over the Estate. 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 zero to his Daughters. He also left instructions with the Public Trust that they were not to tell his Daughters about his demise, his funeral or his Will.

Dad’s statement to the Public Trust went along the lines that his Daughters gave him nothing, not even respect and that is what he planned to give them on his fatality – Zero.

When Dad died the Public Trust actioned his directions. Here lies the problem. No fatality notice was published. The Public Trust did on the other hand advertise for creditors of the Estate to come forward but none ever did which is standard policy when dealing with a individual Fortune.

The Public Trust did not enlighten the Daughters and the Estate, 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 loss of life, about two years after the event, which is long time to try and follow up after a fatality, 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 passing away. If she won the claim, she would likely obtain 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 enlighten potential claimants about a fatality 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 Offspring?
Well to start with, we want all families to play as one and stay together. The emotional cost of falling out with each other is huge.

Secondly, we would like to see all possessions held in a Trust not in a person’s private name and capacity. Why? Because Trust belongings can be passed from Trust to Trust meaning they can be passed from a Parent’s Trust to a Trust established for their Children upon that Parent’s demise. This protects possessions from Creditors and the Authorized Assignee and of course, negates gift duty.

Thirdly, everyone should have an up to date Memo of Requirements. This record will tell your surviving Trustees what you want done with the assets of the Trust when you are dead.

Lastly, everyone should have a current Will which deals with the material goods 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 plan to do with your inheritance is often a easier said than done subject to broach. A way of opening up this type of discussion with your Parents is to tell your Parents what you plan to do with your own possessions for your individual offspring.

One of the lessons to be taken from this situation is if you want to defend the inheritances you are expecting to receive from your Parents and if you want to protect the inheritances you expect to leave to your own offspring, 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

What happed to the inheritance?

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