Wills & Estates Law Update - changes to probate costs & a criminal son denied family provision relief

Probate Costs Increase from 1 January 2009

The fixed legal costs for legal services for probate and administration matters have been increased generally in line with movements in the Consumer Price Index.

The changes were made by the Legal Profession Further Amendment (Fixed Costs) Regulation 2008.  The Regulation was made pursuant to the Legal Profession Act 2004.

Following is an example of how the Regulation has increased fixed legal costs for obtaining probate or resealing a grant for the first time:

• disclosed value of assets of $1 million, legal costs $5,470 plus GST;
• disclosed value of assets of $3 million, legal costs $8,800 plus GST;
• disclosed value of assets of $5 million, legal costs of $11,000 plus GST;
• disclosed value of assets exceeding $10 million, legal costs of $15,500 plus GST.

Increased charges affecting Trusts and Estates in NSW Mini-Budget

The recent NSW Mini-Budget introduced a number of measures to enhance the Government's revenue base.  It included changes relating to duty and land tax that will increase the amount paid by trusts and estates for various transactions.

The changes were contained in the NSW State Revenue and Other Legislation Amendment (Budget Measures) Act 2008 and took effect from 1 January 2009.  The following is a summary of these changes.

New nominal duty on the stamping of trust and estate documents

The rate of certain nominal or flat rate duties were increased from $2 to $10, $10 to $50, and $200 to $500 respectively.  The minimum duty on any transaction is now $10.  The revised nominal duties include the following changes:

• Duty on a duplicate where ad valorem duty was paid on the original document is now $10.  
• Duty on the transfer of dutiable property pursuant to a will, a change of trustees, or the passing of property to beneficiaries under a trust is now $50.
• The establishment of a trust relating to unidentified or non-dutiable property has increased from $200 to $500.

New marginal rate of land tax to affect some land holdings

A marginal rate of 2% will apply to land tax payers with total taxable land holdings worth above $2.25 million.  Land tax holdings between the tax free threshold of $368,000 and $2.25 million will be subject to the existing rate of 1.6%.  Future increases in the 2% rate threshold will be indexed in line with the existing threshold at which the 1.6% rate applies.

The land tax exemption for the principal place of residence and for rural properties will remain. 

It is important to remember the above changes took effect from 1 January 2009.

Criminal History Defeats Prodigal Son's Family Provision Claim

The case of Hastings v Hastings [2008] NSWSC 1310 involved the issue of whether a family provision plaintiff's criminal conduct and long absences disentitled him from being considered as a proper object of his mother's testamentary bounty.

The testatrix died on 29 February 2008.  By her last Will made on 18 February 2005 she appointed her son John sole executor and left her estate (about $643,789) to him.  In that Will and in previous wills, the deceased made no provision for her son Phillip.

The solicitor for the deceased provided evidence of the reasons given to him by his client as to why she had made no provision for her son Phillip.  The reasons included very little contact, his criminal history (drug dealing and drug trafficking) and the fact that her other son John (and his two sons) had got on well with her, assisted her and looked after her.

The plaintiff Phillip gave evidence that all of his assets were seized by the drug enforcement authorities and forfeited.  He only returned to visit his mother in the last months of her life after being told she had been diagnosed with cancer.  The other brother John was substantially better off than the plaintiff, but was not wealthy.  An important aspect of the case was the judge's adverse assessment of the plaintiff's credit partly due to the plaintiff's criminal record.

The Court's judgment was delivered by Justice White.  He stated that the plaintiff's character and conduct was relevant in determining the claim.  The plaintiff's claim was dismissed and he was ordered to pay the defendant's costs of the proceedings.
In his judgment, Justice White said:

"The deceased was well able to judge the relative desserts of her children. The defendant had substantial claims on her as she recognised.  The plaintiff's character and conduct, the fact that his financial needs are due to his own fault, the shame his conduct brought on the deceased and the family, and the very slight contact he had with his mother during his adult life, indicate that he does not have a legitimate claim on his mother's property.  That is so notwithstanding his impecuniosity, his health problems and his belated care for his mother at the very end of her life".

New NSW Family Provision Law

The New South Wales Succession Amendment (Family Provision) Act 2008 was assented to on 28 October 2008 and is expected to commence operation on 1 March 2009.

The purposes of the Act include to repeal the Family Provision Act 1982 and to amend the Succession Act 2006 to ensure that adequate provision is made for members of the family of a deceased person, and certain other persons, from the estate of a deceased person.

Our next Bartier Bulletin will look in detail at some of the important changes to be introduced by the new family provision law.

Authors: Gerard Basha & Philip Davis