Basic questions about will and what some sentences actually mean

Discussion in 'Wills & Estate Planning' started by FredBear, 20th Jul, 2022.

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  1. FredBear

    FredBear Well-Known Member

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    I’ve recently been made both executor and trustee of a will, and this is the first time I’ve been in such a position, so have some basic questions. I’ll post them here as others may benefit from any answers that get posted.

    The will has this sentence:

    I give devise and bequeath after payment of all my just debts, funeral and testamentary expenses, the whole of my estate to my Trustees upon Trust for such of my sons as survive me and if more than one in equal shares…

    So does this mean that the will is creating a testamentary trust?

    Second question about this sentence:

    I empower my Trustees in their absolute discretion to apply the whole or any part of the income and of the capital of the expectant, contingent or vested share of any child taking under the trusts of this my Will in or towards the maintenance, education or advancement or otherwise for the benefit of that child…

    Does this mean the trustees can distribute both the income and capital at any time to the beneficiaries, provided it’s in equal shares over time?

    Third question:

    There are two trustees, one resident in NSW and the other (myself) lives aboard. Does this make any trust resident or non-resident?

    Fourth question:

    There is no mention of excluding non-resident beneficiaries. Can this be added as I understand that even the possibility of non-resident beneficiaries causes issues?

    Fifth question:

    There is no mention of grandchildren. Can the trustees decide to distribute to grandchildren instead of the two named beneficiaries?

    Sixth question:

    What happens if the trustees don’t agree on something?

    Thanks!
     
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  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You should be asking the solicitor who drafted the will these questions as sentences in isolation won't mean much.

    1. Yes, but it is probably a short term bare trust - not ideal
    2. basically
    3. If there is a resident trustee it should be a resident trust
    4. you need advice. once child could miss out completely if excluded
    5. no
    6. Trustee is one position they must agree unless the will specifies otherwise.
     
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  3. FredBear

    FredBear Well-Known Member

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    Thanks Terry for your quick response! (I was hoping you would reply :) )

    I would be asking the solicitor who wrote this, however the will is from 2007 and the solicitor retired long ago, and the office where this solicitor worked has closed. I have given it to another local solicitor to start the probate process but I'm open to all suggestions on how to proceed and options available. The will is only 3 pages so there isn't a lot of detail. Fortunately the estate is simple: an apartment that has been the PPOR and some cash in the bank. I live in a country with inheritance tax that doesn't recognize trusts, so it's messy if a trust is involved.
     
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  4. wylie

    wylie Moderator Staff Member

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    Maybe a dumb question, but I'm not clear from reading the post... is the person who made the will still alive? Or when you say you've been "made executor and trustee" is that because they have passed away?

    It almost sounds like you didn't know you were going to be put into this role.
     
  5. spludgey

    spludgey Well-Known Member

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    Got to love that lawyers while writing a contract, make sure that you've got to pay for more lawyer hours to understand the contract!

    [​IMG]
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You should seek legal advice on whether you should accept the role of executor, especially if you ar in a jurisdiction that doesn't recognise trusts. How would you be treat for tax in that country when a property is transferred into your name for example.

    With 3 pages it is going to be a pretty poor will too likely to be very inflexible so you would be executor and then trustee of a short lived trust.
     
  7. FredBear

    FredBear Well-Known Member

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    No, unfortunately the will maker has passed away. I did know I would be put into this role, but I had not seen the details in the will. The details are not quite what I was expecting.
     
  8. FredBear

    FredBear Well-Known Member

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    Yes I am seeking local advise for this situation. The trouble is finding a local lawyer who is knowledgeable about Australian law and trusts, and then is prepared to give advice on it. I've been searching a local legal case database at the tax office, and there are a couple of cases involving trusts and inheritance, but these are with the UK and USA. There are no cases or precedents involving Australian trusts.

    Is there some kind of international directory of lawyers and their specialties that I can search?

    Also can you excuse yourself as executor/trustee and nominate someone else?

    Thanks!
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    STEP https://www.step.org/

    If you haven't started yet you can, but once you start meddling in the affairs of the estate it is more difficult.

    But you can't nominate someone else - the other or a back up under will would take over.
     
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Completely incorrect. There is an abundance of common & statutory law. Not sure tax office database issues have relevance to issues pertaining to estates, wills and what may even be matters of probate. Tax cases are generally dealing with associated tax issues not that of trustee appointmnet, change or the like. eg a trustee can change but the estate remains the tax entity. The ATO has interest in the "trust estate" as a tax entity. A issue when the trustee and the ATO could pose a issue is where the ATO seeks to hold the trustee liable or to be assessed. eg s99, s99a, non-resident tax issues, CGT taxation elections, fraud, evasion, penalties etc. That tends to be looking back.

    Legal advice on appointmnet, refusal under a will etc may be matters of general practice.
     
  11. FredBear

    FredBear Well-Known Member

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    Thanks Terry, unfortunately there is no one listed for the country I live in :(
     
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  12. FredBear

    FredBear Well-Known Member

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    Thanks Paul for your reply. There is a misunderstanding, I'm not referring to law and cases in Australia for which there is plenty of information available.

    I'm referring to the situation locally (northern EU country), here it is the tax office that handles inheritance matters due to the fact that there is an inheritance tax. There would be very few people here that have ever received an inheritance from Australia, and I can't find any cases where an inheritance has been received via an Australian trust. As mentioned before there are a couple of cases where an inheritance has been received from US and UK trusts. Unfortunately what happens is that in these situations there is no clear law to apply, so the matter gets referred from the tax office to the high court for determination. This takes a lot of time and money, with no guarantee of a good result. You could end up paying inheritance tax immediately on the whole estate, not just the part you might receive at some point in the future.
     
  13. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Thats a narrow scope and a matter for legal and tax advice in the country of th beneficiary receipt. Most countries have a tax system where you can ask for guidance to limit penalties.
     
  14. FredBear

    FredBear Well-Known Member

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    Thanks Terry - does it make a difference if I was co-executor but excused myself from being a trustee? That would leave the estate in the hands of only one trustee who is also a beneficiary. There are no backups or appointers mentioned in the will.

    The only thing done so far is to lodge the "notice of intention to lodge probate". It's then 2 weeks wait to see if anything comes up.
     
  15. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It will make a difference and that will come down to the will and something you should get legal advice on.