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Legal Tip 128: What if Deceased does not have enough money to fully pay gifts in Will

Discussion in 'Legal Issues' started by Terry_w, 29th Apr, 2016.

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  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    What happens if someone dies and doesn’t have enough money to pay for the gifts they have left in their will.

    Example
    Dad dies and leaves son $50,000. Dad’s only asset is $50,000 in the bank but the funeral costs amount to $20,000 - who takes priority?
    Son's gift will be reduced becase there will not be enough money to.


    Under NSW law the funeral costs must be paid first before gifts are made:

    Schedule 3 of the Probate and Administration Act 1898
    PROBATE AND ADMINISTRATION ACT 1898 - SCHEDULE 3
     
  2. Ed Barton

    Ed Barton Well-Known Member

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    What happens if dad leaves me his unencumbered mansion and my brother the $500k he had in the bank. When dad dies he's spent all the cash but still has the mansion?
     
  3. Blacky

    Blacky Well-Known Member

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    That was going to be my question too.

    What if you leave your 4 kids $250,000 each (total $1mil). But when you die you only have $800k.

    When my grandmother died her will split her estate by % rather than dollar amount. So each kid recieved 25% of the estate.

    Blacky
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Your brother will miss out!
    but he could make a family provision claim.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    After expenses they would share what's left.
     
  6. Cbrgirl

    Cbrgirl Well-Known Member

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    Family Provision Act - each State/Territory should have one.
    Ensures that the family of a deceased person receives adequate provision out of his or her estate.

    Best piece of legislation ever passed when you have a family like mine...although there are still some changes needed to it, but it's a good place to start :)
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    In NSW the Succession Act actually incorporates Family Provision Claims. There was a separate Family Provision act, but it was joined up with the Succession act in 2006.

    For more info on Family Provision see

    See Legal Tip 50: Family Provision Claims Against Estates

    I also plan to write about how trusts can be attacked in death under family provision claims.
     
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  8. Cbrgirl

    Cbrgirl Well-Known Member

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    That's great that NSW combined the two. Hopefully makes it easier for potential beneficiaries to work their way around the cumbersome laws :)
     
  9. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    I encountered a client where the solicitor managing an estate paid out expenses and then a fixed $ in cash to some beneficiaries entitled to 35% of the estate and then transferred the residual % to the main beneficiary as inspecie shares. Only problem was there was no allowance for the accrued CGT at the date of death (post CGT shares). So 65% wasnt. And there was no final distribution reporting to any beneficiary which would have confirmed the problem.

    PI claim
     
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