Seeking legal counsel is advisable whenever a person undertakes the estate planning process, but is especially important when it comes to establishing a special disability trust. If this step isn't taken, it can easily lead to an estate dispute.
A recent legal case before the NSW Supreme Court has demonstrated the confusion that formulating a trust during the estate planning process can create once you pass away, with a family seeking legal guidance over the correct execution of an estate.
The case centred around the deceased's daughter and two sons, who had each been given a share of the deceased's estate. The younger son had a disability, so his father's will established a special disability trust to provide for his ongoing financial support.
The special disability trust was established to include a property and one-third of the deceased's residue estate, with the other two-thirds of the residue estate to be held on trust for the older son and daughter. Trusteeship of the special disability trust was granted to the deceased's daughter.
While the distribution of the estate was not contested, the deceased's older son appealed to the NSW Supreme Court to clarify a number of positions, including whether the construction of the will violated public policy.
Central to the case was the daughter's position as special trustee of her brother's special disability trust, as well as both the beneficiary and trustee of the second trust. A number of further issues were also raised, including inconsistencies within the will itself.
The judge ruled that, although it was unusual for the beneficiary to also be a trustee, given the circumstances it was an appropriate arrangement. Although it would be possible for the daughter to abuse the position as a special trustee for her own benefit, the court ruled that this arrangement was consistent with the deceased's wishes. However, the judge did advise that financial advice and support may be necessary in the future.
Further guidance was also provided on a number of points relating to the construction of the will, clearing up the inconsistencies that originally existed within the document.
For other individuals undertaking the estate planning process, this case highlights the range of challenges that can arise, especially when it comes to creating a trust arrangement. For other individuals in this position, consulting with a wills and estates lawyer is going to be essential for ensuring this documentation is in order.