WHAT HAPPENS WHEN AN EXECUTOR OR BENEFICIARY IS NOT LEGALLY COMPETENT?

July 2, 2012

Often overlooked when we attend to estate planning matters is the appointment of an Attorney by an Enduring Power of Attorney and the appointment of a Guardian by Enduring Power of Guardianship. An Enduring Power of Attorney and an Enduring Power of Guardianship may only be executed at a time when the donor has legal capacity. The appointments endure beyond the donor’s legal capacity and enable the donee to manage the personal and financial affairs of the donor when they are no longer legally competent to manage their own affairs.

In the Estate of Desmond Graham Rake (Deceased) involves an application in the Testamentary Causes jurisdiction of the Supreme Court for an order dispensing with the requirement to pay over money to the Public Trustee in accordance with Section 65 of the Administration and Probate Act 1919. The Court upheld the application on the basis that the beneficiary’s interests in the deceased estate would be properly protected by the Administrators appointment pursuant to a grant of Letters of Administration and therefore the need to pay money to the Public Trustee did not arise.

Section 65 of the Act requires an Administrator of a deceased estate appointed under a grant of Letters of Administration to convey the property of a beneficiary who is not legally competent to the Public Trustee. The beneficiary’s interest in the estate would then be managed by the Public Trustee which would charge a commission.

In the Estate of Desmond Graham Rake, the deceased died leaving a Will which appointed his wife as the executor and sole beneficiary. Mrs Rake survived the deceased but suffered dementia and therefore did not have legal capacity to take up the role of executor. Mrs Rake’s children applied for and received a grant of Letters of Administration in the estate of the deceased.

In 2008 Mrs Rake had executed a Power of Attorney and Power of Guardianship, she appointed her son as her Attorney and Guardian. Since approximately 2010 her son had been managing his mother’s personal and financial affairs. The Court found that since 2010 he had managed his mother’s affairs well and found no reason to consider that he would not continue to manage his mother’s affairs competently in the future. The Court found that the son did not charge his mother’s estate for his time in managing her affairs, and considered that there would be some financial benefit to Mrs Rake’s estate of allowing him to continue to manage her affairs rather than conveying the assets to the Public Trustee which would charge a commission. Therefore the Court held that it was beneficial and expedient to dispense with the requirement for the Administrators of the deceased’s estate to convey Mrs Rake’s benefit in that estate to the Public Trustee.

Whether or not there is a will, issues arising out of deceased estates can become complex. For legal advice regarding an estate, obtaining a Grant of Probate or Letters of Administration, Websters Lawyers in Adelaide have specialist probate lawyers and can provide a free initial consultation to explain to you what is involved and how they can assist.

In the Estate of Desmond Graham Rake (deceased) [2012] SASC 87