Who needs a statu­to­ry will?

In Brief

In a pre­vi­ous arti­cle, we exam­ined how statu­to­ry wills are able to be used for asset pro­tec­tion and tax min­imi­sa­tion pur­pos­es. In this arti­cle, we out­line the types of peo­ple for whom an appli­ca­tion for a statu­to­ry will might be made and then con­sid­er the pre­vail­ing issue of tes­ta­men­tary capac­i­ty, a lack of which must be estab­lished before the Court will con­sid­er order­ing a statu­to­ry will.

What is a statu­to­ry will?

To recap, a statu­to­ry will is a will that is autho­rised and ordered by the Supreme Court for a per­son who lacks tes­ta­men­tary capac­i­ty’, ie, a per­son who does not have the capac­i­ty to make a will for them­selves. The Court’s pow­er to order a statu­to­ry will, or to amend or revoke an exist­ing will, is gov­erned by Divi­sion 2 of Part 2.2 of the Suc­ces­sion Act 2006 (NSW) (Act).

Who might need a statu­to­ry will?

There are three main class­es of peo­ple for whom an appli­ca­tion for a statu­to­ry will is like­ly to be made:

  1. Lost capac­i­ty: where a per­son pre­vi­ous­ly had capac­i­ty but then lost it as a result of an acci­dent or through illness. 
  2. Nil capac­i­ty: where a per­son (includ­ing a child) has been men­tal­ly inca­pable since birth.
  3. Minors with pri­or tes­ta­men­tary capac­i­ty: where a child had capac­i­ty but sub­se­quent­ly lost it before attain­ing the age of 18 years. An exam­ple of this might be a teenag­er of 16 or 17 years who suf­fers a severe and per­ma­nent brain injury as a result of a car accident. 

How do I know if some­one has tes­ta­men­tary capacity?

The legal test for assess­ing tes­ta­men­tary capac­i­ty is whether the per­son, at the time of mak­ing a will, understands:

  1. the nature of a will; and;
  2. the effect of mak­ing a will.

In deter­min­ing whether the per­son under­stands the nature of a will, some of the con­sid­er­a­tions are whether the person:

  • under­stands that their will comes into effect after they die;
  • under­stands what assets or prop­er­ty they own and can leave under their will and, in gen­er­al terms, under­stands the val­ue of those assets; and
  • knows that they can change or revoke the will at any time if they have capacity.

In deter­min­ing whether a per­son under­stands the effect of a will, some of the con­sid­er­a­tions are whether the per­son knows:

  • that when they die their prop­er­ty will be giv­en away to the peo­ple they have named in their will;
  • who would nor­mal­ly be expect­ed to ben­e­fit from their will; and
  • which fam­i­ly mem­bers or friends may claim ben­e­fits from their estate. 

The assess­ment of tes­ta­men­tary capac­i­ty is com­plex and high­ly spe­cialised area of exper­tise and should always be car­ried out by a solic­i­tor with expe­ri­ence in this area of law. In some cas­es, med­ical evi­dence is required to estab­lish that a per­son has tes­ta­men­tary capac­i­ty.

What are the ben­e­fits of a statu­to­ry will?

A statu­to­ry will can pro­vide some cer­tain­ty to fam­i­ly mem­bers or oth­ers in the life of a per­son, that their tes­ta­men­tary inten­tions can still be ful­filled even if they lack the capac­i­ty to make a will. 

For exam­ple, a statu­to­ry will pre­vents a per­son­’s estate from pass­ing under the intes­ta­cy laws (which deter­mine the dis­tri­b­u­tion of an estate where a per­son dies with­out a will). This is par­tic­u­lar­ly rel­e­vant for peo­ple lack­ing capac­i­ty as they often have peo­ple in their lives (such as a long term car­er, house­keep­er or friend) who do not fall with­in the class­es of peo­ple eli­gi­ble on intes­ta­cy as pro­vid­ed in the Act but who might have been the object of a gift in that person’s will (if the per­son could make a will). As a result, those class­es of peo­ple would miss out entire­ly from a share of the estate on an intestacy. 

Fur­ther, if the per­son does not have any peo­ple in their life who are eli­gi­ble on intes­ta­cy, their estate will pass to the Crown (ie to the State gov­ern­ment). A statu­to­ry will can pre­vent this happening. 

A statu­to­ry will can also pre­vent a per­son­’s estate pass­ing to some­one who, in all prob­a­bil­i­ty, would no longer have been a desired ben­e­fi­cia­ry of that per­son­’s estate if they had the capac­i­ty to make a new will. The most promi­nent exam­ple of this was in the case of Maria Korp, who was found uncon­scious in the boot of her car. She had suf­fered a severe brain injury and lacked capac­i­ty to make a will. At that time, it was sus­pect­ed that her hus­band had attacked her and was involved with her death. Mrs Kor­p’s exist­ing will gave her whole estate to her hus­band and appoint­ed him an execu­tor. Just pri­or to her death and while she was in a coma, the Court approved a new will for Mrs Korp which removed her hus­band as execu­tor and ben­e­fi­cia­ry.

When will the Court order a statu­to­ry will?

Assum­ing the Court is sat­is­fied that a per­son lacks tes­ta­men­tary capac­i­ty, the key con­sid­er­a­tion for the Court in deter­min­ing whether it will order a statu­to­ry will is whether the pro­posed will (or alter­ation or revo­ca­tion of an exist­ing will) is, or is rea­son­ably like­ly to be, one that would have been made by the per­son if he or she had tes­ta­men­tary capacity. 

This will vary depend­ing on the cir­cum­stances of the case and the evi­dence avail­able for the Court to con­sid­er. Crit­i­cal­ly this does not nec­es­sar­i­ly require that the will be in the best inter­ests of the ben­e­fi­cia­ries under the will or even in the best inter­ests of the per­son mak­ing the will. It sim­ply means, is it like­ly that the per­son would have made the pro­posed will if they had the capac­i­ty to do so. 

It is worth not­ing that a statu­to­ry will may deal with all or part of a per­son­’s prop­er­ty. Deal­ing with only a part of a per­son­’s prop­er­ty may be appro­pri­ate in cir­cum­stances where that per­son already has a will which would pro­duce, in part, an unsat­is­fac­to­ry out­come for the per­son on their death if the will was not amend­ed.

Who can make the appli­ca­tion for a statu­to­ry will?

Any­one can approach the Court to make the appli­ca­tion, how­ev­er the per­son mak­ing the appli­ca­tion must, unless the Court oth­er­wise orders, pro­vide the Court with detailed rea­sons for mak­ing it. A check­list of the oth­er infor­ma­tion required to accom­pa­ny the appli­ca­tion is set out in sec­tion 19 of the Act. 

As with com­menc­ing any legal pro­ceed­ings, we advise con­sult­ing with a spe­cial­ist lawyer to dis­cuss whether mak­ing an appli­ca­tion for a statu­to­ry will is a suit­able estate plan­ning strategy.