New Administration and Probate and Other Acts Amendment (Succession and Related Matters) Bill 2016 (VIC)

On 22 November 2016, the Victorian Parliament introduced the Administration and Probate and Other Acts Amendment (Succession and Related Matters) Bill 2016 (VIC) (the Bill). The Bill aims to amend the Administration and Probate Act 1958 in relation to intestacy and other matters relating to the administration of estates, including fees and commissions, to amend that act, the Guardianship and Administration Act 1986 and the Powers of Attorney Act 2014 in relation to ademption, to consequentially amend other acts and for other purposes.

Background to the Bill

According to the Second Reading Speech, the Bill will implement most of the outstanding recommendations from the Victorian Law Reform Commission's 2013 Succession Laws Report (the report). These recommendations relate to intestacy (where a person dies without a valid will), executors' fees, and the law of ademption. The report found that Victoria's intestacy regime needs to be modernised, to better reflect the way that families operate in the 21st century.

Intestacy

In particular, the report identified a need to improve the position of the deceased's partner in the case of an intestacy. For example, currently where the deceased and the deceased's partner were a couple with a young child, and the deceased owned the property that the family lived in, then the minor child would often inherit a greater share of the property than the partner.

The Bill implements the report's recommendation that where all the deceased's children are also the children of the deceased's surviving partner, the partner should receive the whole of the estate, and the children should not receive anything. The partner can then remain in their home, and can use the property that they have inherited to take care of the children, and eventually make distributions to the children upon the partner's death. Where the deceased's partner is the not the parent of all the deceased's children, the estate will still be distributed between the partner and the children, but the bill will provide the partner with a much greater share of the estate and an expanded right to elect to acquire property of the estate.

Executor’s Fees

The Bill will also implement recommendations from the report in relation to executors' fees. Most executors of deceased estates are family members of the deceased and are not paid for their work (although they are entitled to be reimbursed for out of pocket expenses). However, sometimes a will appoints an individual professional (such as a lawyer or an accountant) as an executor, and a clause in the will gives the executor the right to charge for their work, or an executor asks beneficiaries to consent to payment, or makes application to the court for approval.

The Bill will require the informed consent of the will-maker, or of the beneficiaries, to payment of an executor. It will compel a paid executor to provide a costs estimate to the beneficiaries and it will allow an executor to elect to charge fees rather than commission as long as the fees do not exceed the commission that would otherwise be payable.

Law of Ademption

The Bill will amend the Powers of Attorney Act 2014 to provide that an exception to ademption should also apply in the case of an enduring power of attorney. It is illogical that an exception applies to property dealt with by an administrator, but not by an attorney acting under an enduring power of attorney. The Bill will also allow a person acting under an enduring power of attorney, where the person has lost testamentary capacity, to apply to the Victorian Civil and Administrative Tribunal for access to a will or part of a will, so that they can determine which specific assets are to become gifts and are at risk of ademption if they are disposed of.

The Bill will also amend the Administration and Probate Act 1958 to give beneficiaries the right to apply to the Supreme Court, where applying the exception to ademption would lead to an unjust outcome. The court would be able to make such orders as it thinks fit to adjust the benefits under the will. The bill will also give beneficiaries the right to any income that the gift has earned since it has been sold. For example, if the car in the above example was sold and the money invested, the beneficiary would be entitled to any income or capital growth from that investment

The Bill is currently awaiting second reading debate in the Legislative Assembly.

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