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An interesting case has in recent times been handed down from the Courts. This case now provides Parents with the rights to strip their Offspring of inheritances. The judgment goes against what was previously believed to be good law.

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

The case

The case goes something like this. Dad, Mum and two Daughters lived cheerfully as one but when Mum died and left her Worth to Dad, the two Daughters fought over the Worth. 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 zero, not even respect and that is what he planned to give them on his fatality – Zero.

When Dad died the Public Trust actioned his directives. Here lies the problem. No demise notice was available. The Public Trust did however advertise for creditors of the Fortune to come forward but none ever did which is standard policy when dealing with a private Estate.

The Public Trust did not report to the Daughters and the Fortune, 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 loss of life, 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 demise. If she won the claim, she would likely receive 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 enlighten potential claimants about a passing away 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 Children? Well to start with, we want all families to play together and stay as one. 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 material goods 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 fatality. This protects belongings from Creditors and the Approved Assignee and of course, negates gift duty.

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

Lastly, everyone should have a current Will which deals with the material goods that you do actually hold in your private name at the time of your demise, such as tools, jewellery, etc.

Of course, asking your Parents what they expect to do with your inheritance is often a hard subject to broach. A way of opening up this type of discussion with your Parents is to tell your Parents what you expect to do with your individual possessions for your own offspring.

One of the lessons to be taken from this situation is if you want to shelter the inheritances you are expecting to obtain from your Parents and if you want to shelter the inheritances you intend to leave to your individual offspring, ensure you take charge.

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