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Greedy relatives? How to minimise the damage of a Part IV claim

Whilst laws in relation to challenging a deceased estate in Victoria tightened since 1 January 2015, there is still a significant class of aggrieved beneficiaries or non-beneficiaries who can challenge an estate.

Although the laws in relation to challenging a deceased estate in Victoria have tightened up since 1 January 2015, there is still a significant class of aggrieved beneficiaries or non-beneficiaries who can challenge an estate.

Such challenges can't be prevented, however with the right advice there are strategies that can be implemented to minimise the impact of a contest on your estate.

A recent decision of the Supreme Court of Victoria Court of Appeal (Daunt v Daunt (2015) VSCA 58), delivered last Friday is a great example of these types of strategies. The decision supports the use of lifetime (inter vivos) gifts as an effective approach in some circumstances.

The matter concerned Mrs Daunt, who transferred her property to one of her 3 children, Michael, and her husband, Mr Gaunt, as joint tenants. Michael had a harmonious relationship with his parents and indeed assumed a "carer's relationship", whereas the other 2 children were essentially estranged.

Upon Mr Gaunt's death, the property transferred directly to Michael "bypassing" Mr Gaunt's estate and effectively bypassing the estate of Mrs Gaunt when she passes away, as she no longer has an interest in the property.

The aggrieved brother argued that Michael breached his fiduciary duties, exercised undue influence over his parents and that the transfer was designed to defeat any claims he and his sister may have in reference to their parent's estate.

The Court found in favour of Michael and that the transfer was valid.

The benefit of such a strategy is that the estate assets of a deceased person are reduced, potentially to nothing. Therefore, although the estate can be challenged there are no assets that can come under attack.

Inter vivos (lifetime) gifting is just one strategy that can assist in minimising or totally defeating the impact of any challenge on your estate.

If you need some advice around a difficult provisioning decision, or just need to speak to someone about the "what if's" of estate planning, contact David Patkin on 1300 LegalHelp.

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