Rising dementia rates to impact estate planning: Australian Unity Trustees

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As Australia’s population ages, the number of people who will be affected by dementia is a growing issue, and as well as the personal and emotional impact of dementia on both the individual and their family, there is also a practical consideration.

“However, just because a person no longer has the capacity to make or update a Will, it doesn’t mean there is nothing that can be done.

“Each state in Australia allows for statutory Wills, which can be approved by the relevant Supreme Court for signing on a person’s behalf.

“For instance, there was a case recently where an elderly woman developed dementia and moved in with her son from her first marriage so he could care for her, as unfortunately her second husband was unable to act as her primary carer.

“Her second husband had applied for a family law property settlement and received a substantial portion of their combined estates in his own name.  This meant that the arrangements in her existing Will were no longer appropriate, as she had directed that her estate be divided between her husband and her children.

“Her son was able to apply to the Court to change his mother’s Will so that the majority of her estate went to her children and grand-children.  The Court accepted that this would have been her wish, if she still had capacity to change her Will.”

In order for a person to have a statutory Will made on their behalf, the Court must be satisfied that they lack testamentary capacity.

The Court will also decide whether the proposed Will is what the person would have wanted – not the family members or beneficiaries proposing the Will,” Ms Hacker says.

She also points out that dementia is not the only reason for needing a statutory Will.

“Another recent court case involved a young child who had severe physical disabilities as a result of problems at birth.  He had received $3.2 million in damages against the hospital which had been used to purchase a house for him, his mother and siblings, as well as produce an income.

“His father had had little to do with him since he was born, and his mother was his primary carer.

“The child was about to undergo serious surgery and an application was made for a statutory Will to be made on his behalf, as he had never had capacity to create his own Will.

“The Court eventually approved a Will that left the majority of the estate to the mother and siblings, with a small portion allocated to the father.

“Without the statutory Will, the father would have been able to claim part of the family home and the funds, which would have seriously affected the other children and their mother.

“While they are often a final resort, statutory Wills should always be considered when looking at estate planning options.  If a person has lost capacity, or indeed, never had capacity, it is entirely appropriate to look at whether a statutory Will can be made.

“Often, statutory Will applications are accepted by all parties and can allow for inclusion of strategies such as discretionary testamentary trusts,” Ms Hacker says.

Australian Unity Trustees was established earlier this year to provide a range of trustee services to all Australians including: estate planning; executor appointments and estate administration; financial attorney; financial and legal administration; and the establishment and management of personal, native title, community and charitable trusts. It is the first traditional trustee financial services licence issued since the establishment of a national licensing framework for traditional trustee activities.