An fascinating case has only just been handed down from the Magistrates. This case now gives Parents with the rights to strip their Children of inheritances. The judgment goes against what was previously believed to be good law.

To date, we have all belief that Parents owe a duty to their Offspring to provide for them in some way upon their deaths. Well that reasoning may go by the board if the most recent case is anything to go by.

The case

The case goes something like this. Dad, Mum and two Daughters lived happily together but when Mum died and left her Fortune to Dad, the two Daughters fought over the Estate. The result was the Daughters ended up with $56,000 whilst Dad received $20,000.

Dad decided that he would place his affairs with the Public Trust and so he completed a Will in which he left nothing to his Daughters. He also left directives with the Public Trust that they were not to tell his Daughters about his demise, his funeral or his Will.

Dad’s declaration to the Public Trust went along the lines that his Daughters gave him nothing, not even respect and that is what he intended to give them on his fatality – Nothing.

When Dad died the Public Trust actioned his directions. Herein lies the problem. No passing away notice was available. The Public Trust did however advertise for creditors of the Estate to come forward but none ever did which is standard policy when dealing with a individual Worth.

The Public Trust did not notify the Daughters and the Worth, valued at circa $250,000, was passed to his de facto partner, in accordance with in his Will.

The oldest Daughter learned of her Father’s passing away, about two years after the event, which is long time to try and follow up after a demise, however didn’t deter her. Instead, she sued the Public Trust, citing they had a legal duty to advise her of her Father’s passing away. If she won the claim, she would likely be given approximately $62,000.

The Judgment

The Court however didn’t quite see the Daughter’s side of the story. Instead they issued a judgment stating that Executors (the Public Trust in this particular case) did not have a general duty to report to potential claimants about a demise or even a general duty to advertise for claimants. Rather, Executors have a duty to tell a person only when they know that person wishes to make a claim. So, Executors have to have actual knowledge of a potential claim rather than pre-supposing someone might make a claim.

The Court completed up by saying that the Public Trust did not have actual knowledge that the Daughter would make a claim and therefore, was not liable.

Lessons for us all to learn

So what does all this mean for Parents and Offspring? Well to start with, we want all families to play together and stay together. The emotional cost of falling out with each other is huge.

Secondly, we would like to see all material goods held in a Trust not in a person’s private name and capacity. Why? Because Trust possessions can be passed from Trust to Trust meaning they can be passed from a Parent’s Trust to a Trust established for their Children upon that Parent’s loss of life. This protects material goods from Creditors and the Approved Assignee and of course, negates gift duty.

Thirdly, everyone should have an up to date Memorandum of Desires. This detail will tell your surviving Trustees what you want done with the belongings of the Trust when you are dead.

Lastly, everyone should have a current Will which deals with the assets that you do actually hold in your individual name at the time of your loss of life, such as tools, jewellery, etc.

Of course, asking your Parents what they have it in mind to do with your inheritance is often a easier said than done subject to broach. A way of opening up this type of discussion with your Parents is to tell your Parents what you plan to do with your individual belongings for your individual offspring.

One of the lessons to be taken from this case is if you want to watch over the inheritances you are expecting to collect from your Parents and if you want to protect the inheritances you have it in mind to leave to your individual children, ensure you take charge.

Related posts:

1. A Guideline on Inheritance Tax