Recent decisions highlight the risks of incompetent advisors

supreme court victoria smsf


decision, About Maddock.Bailey vs Maddock [2022] VSC 346 involved the estate of the deceased Norman William Maddock to see if he had testamentary capacity in making his will.

Maddock died in June 2020, survived by his wife Shirley Maddock and two children, Norman Maddock and stepdaughter Nellie Thelma O’Connor Gunn.

During the 15 months between October 2018 and January 2020, when the deceased was 95 or 96 years old, his attorney, Anthony Norton, followed the deceased’s instructions, drafted and witnessed three wills and made them permanent. I prepared a power of attorney and attended the meeting.

In his 2018 will, the deceased named his friends Jeff Dixon, Jennifer Greenland, and plaintiffs as executors. He gave each executor $25,000 and $180,000 to various charities. , left $600,000 to his wife, 20 percent to his son, 20 percent to his daughter-in-law, and 60 percent to the Royal Children’s Hospital.

The 2019 will made many changes to the 2018 will. He appointed her friend Marsha Bailey as her sole executor, bequeathed her $75,000, and reduced his wife’s estate from her $600,000 to her $300,000. rice field.

The deceased’s last will was made on January 14, 2020. The 2020 will had the same terms as the 2019 will, except that Bentley his East property was conceived to Marsha his Bailey. A new clause was added that Shirley Maddock “has advanced dementia as her wife and has enough money to meet her needs.”

Written SECI Proceedings Filed December 17, 2020 2020 04648Ms. Maddock asked for a declaration that Bentley East’s property was in trust for her benefit.

Mr Maddock was an attorney for Australian Unity Trustees Limited until his death on 30 May 2022.

Children shall have a procedure for a declaration that the deceased has registered property registered in their name in trust for them, and Part IV of Administration and Probate Act 1958 (Vic).

Plaintiffs sought probate for the 2020 Will on a first motion filed on July 30, 2020.

An inventory of assets and liabilities revealed a property valued at $3,590,921, with the Bentleigh East property valued at $1,000,000 and the Rosebud vacation property valued at $350,000.

The Australian Unity Trustee as administrator of Mr Maddock has filed a warning against the grant of probate in 2020.

On its grounds of objection filed on September 1, 2020, defendants argued that the deceased lacked testamentary capacity immediately prior to or at the time of execution of the 2020 will and that the will was drawn up under dubious circumstances.

the lack of contemporaneous medical reports confirming the deceased’s testamentary capacity, and the steps taken by Mr. Norton to confirm that the deceased had testamentary capacity at the time the will was made; Concerns were raised about the lack of evidence.

The deceased was hospitalized after multiple falls in September 2019 and was discharged to a nursing home in October 2019, according to evidence filed by the Australian Unity Trustees.

A comprehensive medical evaluation of the deceased noted that the deceased had a primary diagnosis of cognitive impairment, among other conditions (2018), and noted that his mood was “fluctuating.” .

Judge Kate McMillan concluded that the deceased did not have testamentary capacity when he issued the 2020 will on January 13, 2020 and signed the 2020 will on January 14, 2020. I was.

Judge McMillan said that while the deceased had a general understanding of his property, his understanding of the value of his property far exceeded its actual value.

“He also claimed that the defendant and two persons on his estate were on January 13, 2020, when the deceased gave instructions regarding the 2020 will, or on January 14, 2020, when he signed the 2020 will. I was unable to understand or appreciate the child’s claims,” ​​she said.

“Perhaps most importantly, given the age and medical history of the deceased, the medical evidence presented by the plaintiff was insufficient to balance the likelihood that the deceased had testamentary capacity.”

Director of DBA Lawyers, Daniel Butler, said the decision is highly relevant to the SMSF world.

“If you look at all the creative and flexible real estate planning measures being encouraged in the market and a lot of advisors are involved in this flexible and creative work, it really lands them in the realm of legal work. I will let you,’ said Mr. Butler.

Therefore, Butler said it is very important for advisers to understand the risks associated with testamentary capacity.

He noted the fact that the court failed to recognize the warning signs that Mr. Norton, an attorney, had influenced the deceased at a very vulnerable time in his life.

McMillan Judge said Mr Naughton should have been more suspicious of the plaintiffs and their involvement in the proposed premortem transfer of the Bentleigh East property, and subsequent major changes in her favor in the 2020 will. rice field.

“Plaintiff appeared to be deeply involved with the deceased in a situation in which the deceased was likely to be vulnerable or impressionable as a result of his circumstances and became dependent on her,” she said. rice field.

Butler warned his advisers that they could end up in a similar situation, with their work and file notes being “raked through coal” in court.

“Usually in situations where you have someone who seems to be elderly or cognitively impaired, you need to go through the process of starting a conversation, but give them time. You need them.” [to be confident] They mentally digested the information and came up with logical answers,” he explained.

The court also emphasized the importance of securing evidence that the testator has testamentary capacity to approve the contents of the will at the time of execution.

“We really need to know [if they had capacity] Because some people have moments of clarity and moments of not,” Butler said.

Courts are generally considered prudent to obtain a medical opinion if the testator is elderly and whether any medical conditions or whether such conditions may affect their capacity. .

“Whether you are a lawyer or an advisor, the quality of your assessment is very important when you are considering testamentary capacity. You need simultaneous notes and records made. [They also need to consider] Are there any red flags that indicate a potential challenge to capacity,” Butler said.

“Therefore, advisors have a duty to dig deep. Especially when there is a risk of elder abuse, we just cannot accept.”


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