Estate planning – requires capacity

Posted on November 27th, 2015

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by Felicity Wardhaugh

Felicity Wardhaugh is a Special Counsel at Mullane & Lindsay in Newcastle and specialises in commercial dispute resolution & litigation, and employment law.

In the recent case of The Estate of Kati Tsilfidis; Stavrakakis v Tsilfidis [2015] NSWSC 1720 a 79 year old mother rewrote her Will a year before she died. The Will made no provision of any substance for her daughter. Her daughter contested the Will arguing that her mother lacked capacity when she executed it. This dispute led to court proceedings where a doctor was called to give evidence about the mother’s capacity. Ultimately the court held that the mother did have capacity to write the Will and the Will was valid.

However, the case serves as a reminder that when a Will is prepared the person making the Will (the testator) must have legal capacity. The Court discussed the legal test for capacity which is in 4 parts: the testator must understand the nature of the document they are signing, what property they have, who the members of their family are and what decisions they should make about dividing up their property. The testator will not lack capacity if they make the wrong moral decision as long as it can be shown they knew what decision they were making.

However, it must be borne in mind that close family members left out of a Will can challenge the decision. The daughter made a claim for family provision from her mother’s estate and the Court awarded her property despite her mother’s decision to exclude her. The whole exercise therefore involved 2 court claims which are best avoided.

The lessons to be learnt from the case are: avoid putting off decisions about writing a Will – it is important to remember to write one whilst you have capacity to do so, and; it is preferable not to exclude major family members because the Court may rewrite the Will after you are gone.

Felicity Wardhaugh is a Special Counsel at Mullane & Lindsay, and practises extensively in  Commercial and other Litigation and Employment Law. If you require any assistance in these areas please contact Felicity Wardhaugh or contact our Newcastle office.

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