Part 1
Jordan Vaka
Hello and welcome back to another episode of Life, Loss & Legacy, a podcast series by PlanningSolo to help people that are going through bereavement navigate those first few years after the loss.
My name is Jordan Vaka. I’m an independent financial planner with PlanningSolo and we specialise in helping people walk this very path.
So the idea of this series is to bring experts in to answer some of the very particular and very specific questions that we get asked on a regular basis that, frankly, I don’t have the answers to.
I’m very excited today to say that I am joined by a special guest, Claire Stollery. Claire, thanks for joining me.
Claire Stollery
Thanks, Jordan, thanks for having me.
Jordan Vaka
Now Claire holds a Bachelor of Laws with honours and a Bachelor of Arts from Monash University. She has a graduate diploma… I’ll start that again!
A graduate diploma of legal practice from Leo Cussen Centre for Law and she is a partner at Tony Kelly Lawyer and Estate Planning.
Claire relishes the challenges that this dynamic area of law can bring. Her areas of expertise include discretionary trusts, testamentary trust structures, probate applications and powers of attorney.
And I’m particularly excited to have Claire join me today to talk about testamentary trusts, what they are, who they can help, and also the on-the-ground reality of actually using a testamentary trust.
So, Claire, again, thank you for joining us.
Can you talk a little bit about, I guess, the work you’re doing in the estate planning space for people?
Claire Stollery
Yeah, absolutely.
We work with clients from a range of different backgrounds, but our specialty is people with sort of complex or different needs in terms of their estate planning.
So particularly people who have either a large asset pool or different types of trust structures, business structures, something that just needs a bit of a bespoke approach, as opposed to just a will-kit sort of formula approach.
We are looking to help people get that really smooth transition from one generation to the next and ensuring that their assets are protected for the future generations to come.
Jordan Vaka
I think that smooth transition point is so important and not as common as I think we all wish it were.
So some of the people listening to this may be going through one that isn’t quite as smooth, but buried in there is that testamentary trust that they’ve got or that they’re now having to take care of.
So we’ll be talking about three different areas in today’s episode.
The first one is a background of what a testamentary trust actually is and why people use them.
The second area we’ll walk into will be an overview of what actually happens when somebody dies. And how that trust comes into existence, because it doesn’t exist until that point. And then finally, what I’m most interested in covering are those real life mechanics of actually running a testamentary trust, because there can be a little bit of complexity in that.
And if, like most of our listeners, you haven’t really been super involved in the financial side of things, it can be a little bit complicated.
So, Claire, I’m going to throw some questions at you, and we’ll see how we go through them.
But the first one I’d really like to explore is pretty fundamental: What is a testamentary trust?
Claire Stollery
Yeah, of course. So sort of breaking it down into two sections.
The word testamentary simply means something that’s created in a will. A testamentary trust is a trust created in a will.
But then we go to, well, what is a trust?
So the main feature of a trust is that rather than someone holding an asset in their own name, absolutely, it’s theirs. They do what they want with it, they own it. That’s it.
We have a situation where we have a person or a group of people who own the legal title to their assets or a pool of assets.
That means their names on the certificate of title of a property or their names on the bank account, but they’re not holding it for themselves.
They’re holding it for the benefit of a group of people or another person.
Sometimes it’s easy to think about.
When you think about testamentary trusts, it’s easier to think about sort of what they’re not.
So a classic will would be, “I leave my estate in three shares to each of my three children”, and when everything’s said and done, each child walks away with their own pot, and that’s it.
A testamentary trust sort of creates more of an ongoing relationship between your trustee, so the person holding the assets and the beneficiary, who is all beneficiaries, who are the ones who will eventually receive benefit from those assets, but they don’t hold them in their own name.
Jordan Vaka
And I think, again, if you’re not very experienced in this area of finances, that trust concept can be quite hard to get your head around, because it is. It is kind of a…when you think about it’s quite an odd structure, but it’s very commonly used and it’s used for very good reasons.
And we’ll come back to kind of why people use trusts, particularly testamentary trusts. But if we could also just maybe define sort of ‘who’s who in the zoo’ here a little bit.
Can you tell me who the ‘will maker’ is. Sounds like a silly question, but who the will maker would be?
Claire Stollery
Yeah, I mean, it’s what it says on the tin. It’s the person who has written the will. And in this case, when we’re talking about testamentary trusts, the will is the instrument that creates the trust.
The will maker is the person who sat down with their lawyer, how to think about what they want to happen with their assets, and then put pen to paper.
Jordan Vaka
And then within the will, there will be an ‘executor’ nominated. Where does the executor fit in?
Claire Stollery
Yeah. So the executor is the person responsible for the initial administration of the estate.
When someone dies, they’re the person who is responsible for obtaining a grant of probate. So that means going to the court saying, “here’s the will, here’s the death certificate, here’s what the person owned”, and the court gives you the stamp to be able to go ahead and deal with that person’s assets.
The executor is really the person that stands in the shoes of the deceased, and they’re carrying out things like closing bank accounts, paying off any debts, closing your electricity bill.
If there’s property that needs to be sold, they’re the ones selling the property.
And then once all those assets are called in and the debts are paid out, they’re the ones that are distributing the estate into the next stage.
So either making requests to people, for example, there might be a $10,000 gift to a charity, they’re the ones sending out the check, or they’re the ones that then pass over to the next stage, the trust stage.
When we’re talking about testamentary trust, it’s not a small job.
Jordan Vaka
I think maybe traditionally people have seen it as kind of a glib thing, but it seems we’re doing a whole episode on it because it is such a significant role.
So they’re the ones that. I like that phrase, ‘standing in the shoes of the will maker’ or the deceased, and then the beneficiary.
How do they fit into the picture?
Claire Stollery
Yeah, so the beneficiary is the person who is receiving some sort of benefit or entitlement under a will.
We can have people who receive an absolute bequest. Again, a gift of $10,000, which can be paid by a check or a direct deposit.
But when we’re talking about a testamentary trust, they’re the people who are receiving the benefit of the assets. So that can be distributions of capital, that can be distributions of income.
We’ll get into that, I think, a little bit more later, but they’re the ones who are receiving the benefit.
Jordan Vaka
And just to complicate things further, there’s a vaguely different kind of outline for who can be a beneficiary through super, but we’ll leave that for another episode as well.
And then we’ve got the trustee. So I think you’ve talked a little bit about where they fit. Can you also expand, maybe on the differences between the ‘trustee’ and the executor?
Because I think there’s a lot of confusion around that.
Claire Stollery
Yeah, it can be confusing, especially because sometimes they are the same, often they are the same people, but it’s sort of two stages in a process.
So the executor is performing those jobs we said before about administering the estate, selling assets and paying off debts, those sort of tasks.
The trustee has an ongoing role as the person who holds the title to the trusts.
When we get to the end stage of that estate administration, everything’s paid in. We’re all ready to sort of go.
That’s when the roles transition and the trustee is the one who’s holding those assets in a bank account or in their names, and they’re responsible for the next however many years we’re looking after those assets and making distributions to beneficiaries.
So they can often they are the same person as the executor, and it’s just that the roles sort of roll over, but sometimes they’re not.
We might have a situation where executives do all that initial administration, and then we have a number of trusts and each has their own trustee. But again, it’s just that ongoing role of responsibility for those assets and looking after the beneficiaries.
Jordan Vaka
And so if you are both, this is kind of ad libbing, this bit, but if you are both the executor and the trustee, your roles are slightly different, aren’t they?
Because as the executor, your responsibility is to stand in for the deceased, but as trustee, your responsibility is to act in service of the beneficiaries.
Claire Stollery
Yeah, absolutely.
Most of the time it is a fairly smooth sort of process, but you do sort of have to think about changing those hats a little bit.
That when initially, in the first, however many months after the person place has died, that’s when you’re really wearing that executor hat, and it’s all about administration of those assets.
Then you sort of start to put on your trustee hat in the long term to think about beneficiaries.
Jordan Vaka
I like that. Yeah, that hat distinction.
I think it’s a good one, particularly for our audience. It’s that idea of you are moving into a slightly different role, similar responsibilities.
I’m aware a little bit about other trusts, and I know that the appointor is a very important role in other trusts. Is that applicable in testamentary trusts?
Claire Stollery
It is.
It’s probably something we don’t enunciate as much in the will, but it does exist.
So the appointor is the person with the power to appoint or remove a trustee.
When we’re talking about other types of trust, that’s a really powerful sort of role, because if you’re the appointor, you sort of have the ultimate control.
In discretionary testamentary trusts. Sometimes we’ll find that the will does specify someone to be an appointor, but often the trustee and the appointor are the same person, and the trustee will have the power to remove themselves down the line.
I mean, a trust can last for 80 years since it’s created, and that includes a trust in the will. So someone you appoint as a trustee in 2024 probably won’t want to be a trustee in 2104.So 2104, so they do have that power to step down, usually at some point, and appoint someone else to take over.
Jordan Vaka
And I’m assuming here that if they do want to be trustee, but maybe the beneficiaries don’t want them to be anymore, can they be removed?
Claire Stollery
It would depend on the terms of the deed and terms of the will.
Generally, beneficiaries, I would say, can’t just team up and remove a trustee. But we can talk a bit about if one thing later, when we talk about things that go wrong, there might be an opportunity there to go to the court to remove them.
But generally no. And usually a trustee has sort of been put in place for a reason. And sometimes the will maker may anticipate a situation where there’s a bit of hostility between the trustees and the beneficiaries.
But that’s sort of the reasoning why they put that person in place.
Jordan Vaka
And I think in estates, that’s one of the most fascinating things to me is the perspective you need to have as a practitioner, that you’re kind of looking at these branching realities and possibilities over a very long time frame that you then need to document.
And I noticed you said kind of the estate lawyers mantra, “it depends on what the deed says, and it depends on what the will says”.
It’s very much, you need to be very familiar with those documents as trustee and executor. Of what they actually say.
Claire Stollery
Yeah, absolutely.
And it is really difficult to forecast, and that’s something that we find when people come in to talk about their wills and talk about these testamentary trusts.
We’re trying to safeguard things as much as possible for the future, but you really don’t know how things are going to go. We try to approach it with the mantra of “what would have happened if you died yesterday”, sort of thinking about the immediate realities.
But at the same time, when we’re drafting a will with a discretionary testamentary trust, we’re really looking at clauses that have some flexibility for the long term so they can adapt to the changing needs of the beneficiaries and the trustees in future.
Jordan Vaka
That makes total sense.
I think the last role I’d just like to expand on a little bit and how it interacts with testamentary trust are guardians for children.
How do they fit into the picture?
Claire Stollery
Yeah, absolutely.
So if you’ve got kids who are under the age of 18, your will should appoint someone to be their guardian in the event that both parents were to die.
Some people choose to have the trustee and the guardian as the same person.
For example, there’s a family with two kids who are aged three and five. The will sets up a trust for the benefit of those children when both parents have died, or their assets are going to be on this trust for the benefit of the children.
Separately, there’s another clause in the will that says, I appoint my brother Steve to be the guardian of my children if something happens to me.
If Steve was also the trustee of that trust for the children, generally he would be able to advance money to himself out of the trust to look after the kids.
Sometimes people then say, okay, I want a bit more oversight, or, I’ve got people in my life who are good at different things. I really want my brother Steve to look after the kids. He’s got kids of his own. He’s great with kids.
But my sister Fiona is an accountant. I know she’ll be really great with the money. And so generally we would draft the will. Again, all sort of depends on the drafting.
But saying, my trustee, Fiona, has the power to advance sums out of the trust for my kids to the guardian, Steve, so he can pay for their day-to-day expenses. We might also have other powers in there.
There might be a residential property in the trust and we say, okay, Steve can live in the residential property in the trust with my kids to look after them.
So it can be a little bit complicated.
We do also find that the choice of appointing a guardian for children is difficult. It’s emotional. And that whole decision about whether you appoint someone different or the same person, it is really hard.
But they do. Ideally, we do want people who are going to interact with each other well because they are going to have that ongoing relationship while the kids are under 18, to be able to advance funds for the children’s benefit.
Jordan Vaka
Yeah, I think it can tend to be a bit of a roadblock for some people, prevents them getting it even drafted, because they can’t agree.
Thank you. It’s good to know the different roles because we use this terminology easily and frequently.
But for people going through it can be a little bit of a new language.
I’m keen to move on to the testamentary trust piece now.
Not every will has a testamentary trust, so I’m curious to hear your thoughts on who do you think or who uses testamentary trusts in your experience, and who do you think should use them?
Claire Stollery
Yeah, so I think sometimes when people sort of hear the word trusts, they think it’s something for the super-wealthy. They think it’s all sort of something that billionaires have.
But in reality, a testamentary trust is a great vehicle for anyone who wants to protect a sum of capital for the long term.
It may be you think, well, I haven’t got that many assets, but if you have a house, if you’re a couple and you’ve got a house that’s paid off, you know, a house in Melbourne these days, average price is a million dollars.
You’ve got nearly…if you’ve got two kids, that’s $500,000 each. It’s not an insubstantial sum, and you might want to think about how that can be best protected for them. We are particularly looking at.
Yes, so talking about sort of ongoing asset protection, it’s not necessarily about ruling from the grave.
I think some people are concerned that they’re really locking up assets in future, but that’s not the reasons we do it.
We’re sort of looking at how to keep things going for as many generations as possible and allowing your children and your grandchildren to have the benefit of what you’ve accumulated during your lifetime.
And they’re especially important where you’ve got a situation where there’s any sort of risk for your children.
For example, if one of your kids. I mean, it’s not just for children as well, but that’s sort of the more typical scenario.
But if one of your children is someone who owns their own business or they’re in an industry like, for example, construction, where they could be sued down the track for something that went wrong.
Jordan Vaka
Or law or financial advice or something.
Claire Stollery
Yes, absolutely.
If you’ve got that trust, that’s sort of a separate entity. It’s not something…any assets in there are not assets they own personally, so they’re better protected against creditors when things go wrong in their business.
Similarly, we do get clients who are concerned about children’s spouses. They feel that the relationship’s rocky, or maybe that their child’s partner is not a great financial manager.
And if you had left a bequest to that child outright, they probably put it on their mortgage. It would get scrambled up with all the marital assets, and then if something goes wrong in the relationship, those assets, that inheritance is lost quite easily.
Having it in a trust means it’s more secure. We can put extra protections in to exclude that spouse from having access to it. And again, just protecting things for the future.
And then probably another situation we do have is where the beneficiary themselves sort of needs protection from themselves.
So, again, might not be a good many money manager, might be someone who has addiction issues, and we want to make sure that there’s someone supervising the use of that money and making sure it’s properly applied to them in the long term for their ongoing benefit.
Jordan Vaka
I think that protective mechanism is something that maybe isn’t always passed down to the trustee or executor.
For the people that we speak with, they kind of get lumped with this thing and they don’t always know why it’s been put in place.
And I think there are really powerful reasons to use one.
I mean, from our side of the pond, there’s taxation benefits that come with having assets within there. And that idea of not owning the asset but still receiving the benefit is really powerful.
Can you maybe walk us through, kind of, the people leaving the guardianship to Steve and the financial side of Fiona?
How would a testamentary trust work in that case, where you’ve got mum and dad, two kids, what’s a common structure you’d look at using for that?
Claire Stollery
Yeah, absolutely. So something that we like to do is, rather than saying, mum and dad leave everything to each other, and when we’re both died, we’ll make a testamentary trust.
We like to have the surviving spouse and the kids all in one trust.
So let’s say mum’s names Amy, and Dad’s name’s Ben.
Amy’s will would say, I leave my estate on trust for the benefit of Ben and my two children. Ben would be the trustee of that trust.
He still gets to look after the assets.
But when any money from that trust is invested and there’s a return on it, he can split the income of that trust between himself and the two children, which, as you pointed out, the tax benefits of a testamentary trust are really great, because you do have the ability to split the trust income between a class of beneficiaries.
Particularly when you’ve got minor children, their distributions to them from a trust are taxed as if it’s regular adult income, which means the current income free threshold, I think, is about $18,200.
So every year, Ben can say, “okay, I’m on a good income, but we’ve earned $40,000 this year from the assets in this trust that my wife Amy left us when she died, I’m going to split that income between my two kids. I can use that income to pay for their school fees”.And it means the tax implication is minimal compared to if Ben had invested those assets in his own name and he was just getting that extra $40,000 whacked on into his own tax return, or if.
Jordan Vaka
The kids otherwise can earn $416 before they start paying really punitive tax rates. So just that differential there makes a huge difference.
Claire Stollery
Yeah, absolutely.
So then when…if Ben also dies and the kids are still young, that trust is going to keep going for them.
We would also set up Ben’s will as a mirror so his assets can go into the one trust. And so it makes it just…just easier administration. There’ll be one trust going forward for the benefit of the two kids.
Jordan Vaka
Oh, okay.
Claire Stollery
Sorry.
Jordan Vaka
So his assets, if he’s accumulated future assets over the intervening ten years, that can drop back into the same trust?
Claire Stollery
Yes. Absolutely.
Jordan Vaka
Cool.
Claire Stollery
Yeah, it just makes that much easier.
From an administration perspective, that’s just one trust going forward.
And so then Fiona’s going to step in. She’ll be the trustee of that trust. She’ll be looking after those assets for, let’s say, they’re her niece and nephew. So she’ll be investing them year on year and every year, making distributions.
And that can include distributions to Steve for, again, those sort of child rearing expenses, like school fees, food, accommodation, all the basics.
When the kids are a bit older, Steve will step out of the picture once they’re over 18. And we usually set a certain age that the kids can start to have more involvement in the trust.
They can become trustees themselves, they can access more of the capital, but we try to keep that bucket sort of intact as much as possible. Going forward for the asset protection.
Jordan Vaka
And what’s the common age that people are setting their testamentary trust to pass on to the beneficiaries of it?
Claire Stollery
We usually like to say as a guide, and again, this is really subjective, it depends on individuals, but we like to say about 25.
As an age where the kids can start to act as trustees, we might say that when they’re both over 30, that’s when they can act without, say, their aunt or uncle’s involvement, and they can just run it themselves.
We also like to say that the kids can’t receive distributions of capital until they’re 25, unless the trustee says, you need some for your maintenance, upkeep, your wellbeing. Only after kids get to a certain age, they can say, I would like to take a bigger chunk of capital out of this trust.
But again, that’s not something we sort of recommend, because the whole point of the trust is to keep everything really protected.
So what we would say is that, say, if I was the beneficiary of a trust, a testamentary trust, and I wanted to purchase a house with my partner, instead of saying to my aunt or uncle, who is the trustee, “can I please have $500,000? Thank you”.
And taking it with me, I would enter into a loan with the trust.
So I would borrow an amount of money from the trust. There would be a proper loan agreement documented. If I was buying the house to my partner and were both going to be on the title to the house, we should both also be on the loan agreement. We sign off on that, then if something goes wrong, my partner and I separate or he’s sued in the course of his business.
The testamentary trust is a creditor needs to be repaid.
Those assets go back to the trust and they stay protected. That chunk of money isn’t coming out to then be scrambled up with my partner’s assets and then potentially become lost.
The idea is that for years, going forward, as much as possible, the capital is nice and tied up in this little pot.
Beneficiaries can still access it as needed with larger chunks through loans or smaller distributions as they need it. But again, just trying to preserve this pot as much as possible, I think.
Jordan Vaka
It’s a really important distinction. It’s a really good point that these things, like anything in estate planning, they’re not a fixed document.
You should be working with your advisors on an ongoing basis to make sure you’re optimizing and making the most of the benefits that come with the testamentary trust.
We talked about the positives of a testamentary trust.
Are there some negatives that kind of come to mind when you talk about them?
Claire Stollery
Yeah, I mean, I would say there’s not too many. There aren’t too many negatives, but there are a couple of things to keep in mind when you’re deciding whether it’s right for you.
Firstly, to set up a testamentary trust requires a more complex will than you would have otherwise.
So sometimes if people don’t have a lot of assets, their advisor might say, look, for the cost of setting this up. It might not be worth it for you because you’re looking at maybe paying two or three times as much for a will as you would for a more simple will.
There is also an ongoing cost every year, and we’ll talk a bit more about the ongoing obligations later.
But every year there does need to be a tax return put in, so you’ll need to engage an accountant.
So that’s sort of a bit of an ongoing cost.
And the other thing is that testamentary trusts are really great when your beneficiaries are in Australia. We do have a lot of clients who have beneficiaries who live overseas, and it might not be practical for them to have their assets sitting in an account in Australia.
There might be tax implications of sort of foreign beneficiary, foreign trustee laws, and it might just.
It might be that where they’re living overseas, there’s not sort of an option to have an equivalent structure over there with the same protection.So sometimes if you have a beneficiary who is going to reside long term in the States, for example, it might be easier for them to just receive their inheritance as a lump sum so they can put it in their account in the US and deal with it there.
Jordan Vaka
And you mentioned earlier that all of this is very subjective and it’s very contextual.
Obviously, it really does matter on the lawyer and the advisors knowing the client sufficiently to be able to draft a really bespoke document, which is where the value is.
I imagine that’s why you engage somebody to do this – it’s not a post office will that we’re talking about here.
Claire Stollery
Absolutely. And that’s something that.
So when someone calls our office and says, “how do I make a will? How much is a will? What do I do?” We say, “come in, sit down. We need to chat to you.”
We need to figure out where, you know, the lay of the land, where your assets are, who owns them, and what you actually need to create something that’s quite bespoke and personal it’s not just a tick-a-box sort of situation.
Jordan Vaka
And so I think, I’m curious as well. You mentioned the testamentary trust is one that comes into force through a will when somebody dies.
I’m curious, what are the steps that occur when somebody actually dies from the testamentary trust perspective?
So, for instance, when does the actual instrument come into effect?
Claire Stollery
Yeah.
So what we would usually say is we have this initial period of administering the estate, as you talked about before, the role of the executor, calling in the assets.
When that administration is done and the asset pool is sitting there, that’s when it rolls into the trust.
That’s the point in time when the trust really comes into effect. And the actual mechanics to set up the trust are actually quite simple because all the hard work has sort of been done in the will.
All that really needs to be done to get that trust rolling is to have the assets in the name of the trust. So what would happen is we’d have an estate bank account that’s used while we’re managing the estate.
It pays off any expenses, anything that’s sold, you know, the car, any property, any shares.
Those proceeds are sitting…there’s an estate banking account.
Once all the administration’s done, we then say, okay, we’re rolling all these into a bank account in the name of the trust.
So the ‘Bob Jones will trust account’, and that sits there. And that’s really when the trust starts to work.
Same thing with property titles. So to be held by the trust, it just needs, the property needs to be in the name of the trustee.
Interestingly, on the actual property title, it doesn’t say the name of the trust, it usually just says the name of the trustee.
If Fiona Jones is the trustee for the Ben Jones Testamentary Trust, the title to that property will just say Fiona Jones, but the trustee sort of sits behind that.
Jordan Vaka
And it would be the same with shares and any other assets that aren’t to be cashed out, they need to have their ownership transferred to the name of the trust?
Claire Stollery
Yes. Yes. So share registries usually either transferred into the name of the estate.
Sometimes the share registries let you put the name of the estate on it, or otherwise just into the name of the trustee.
Jordan Vaka
This is probably a bit of a silly or random question, but do you ever come across a trustee that wasn’t aware they were to be the trustee and sort of thrust upon them?
Claire Stollery
Sort of. I’ve had situations where people have known that they’re an executor of a will.
They’ve been told that, but they haven’t sort of been given an overview that there’s going to be a trust or what those trusts entail.
And, yeah, definitely.
People can be quite taken aback, especially I’ve had situations where people knew they were going to be an executor, but they didn’t realise that the trust, the will, created four separate testamentary trusts and they were going to be trustees of all of them.
And so, I mean, that can be quite a surprise.
And I would say that, you know, during the lifetime of a will maker, there’s no obligation to tell anyone what’s in your will. You absolutely don’t have to.It’s not like, for example, a power of attorney, where you need to get someone to sign to agree that they’re going to be your attorney.
No one needs to sign anything to be agreed to agree to be your executor or your trustee.
But I definitely think it is worth having that conversation. We actually sometimes have meetings with the children or who are often also the trustees of our clients.
Just say, come in, we’ll do a little diagram for you and just show you how it’s all going to work and explain to you some of the benefits that we’ve chatted about so far and some of your obligations, because it absolutely can be a shock and it can be quite overwhelming.
And people say, I had no idea that Dad did this. Sometimes they don’t understand the reasoning why.
And it’s already a very stressful time when a person dies and you’re an executor and having that sort of extra confusion and surprise is not particularly helpful at that time.
Jordan Vaka
And this is probably a very big question, so feel free to sort of prune it down as you see fit.
But what happens if there’s a dispute to the will and there’s a testamentary trust there as well?
Claire Stollery
Yeah. So, in terms of disputes to the will, generally, the timeframe for bringing forward a claim for what we call further provision is six months.
There’s a class of people in the Administration and Probate Act who are eligible persons to make a claim for further provision from the will.
So it’s someone who’s either been excluded completely or they’ve received something and they don’t think it’s enough, and they fit into these categories, which is defined by their relationship to the deceased. So children, spouses, members of the household, and then sort of a wider class of people who might have been dependent on the deceased.
They have the ability to make a claim if there are grounds, and a lawyer needs to advise them about that and sign off saying, yes, I think they have a proper basis to make a claim, but generally they have a six month period in which to bring that claim.
What we say then to our executors is we’re not going to distribute the estate and we’re not going to roll into that new trust phase until that six months is up.
If someone does come forward in that six months to make a claim, the sort of ongoing administration of the estate is put on hold a bit because you have to just keep those assets sort of as intact as possible in case, because you don’t know what the payout to that claimant is going to be.
But there might be circumstances, if someone has a real need, that they might be able to apply to the court and get a little bit of money out of the estate in the interim. But generally that dispute just sort of puts everything on hold for however long it takes to resolve it.
