A new set of tighter rules around remuneration for executors (the people you appoint to administer your estate after you die) is amongst a raft of changes that looks set to go through Victorian Parliament.
The changes are intended to provide greater protection for beneficiaries against attempts to charge excessive commission, by providing for:
- the ability for beneficiaries or creditors to apply to the Court to have excessive fees or charges reduced or repaid to the estate;
- nullifying any remuneration clause in a will made after the commencement of the legislation, unless the will-maker gave informed written consent to it, before the will is executed; and
- disqualifying an executor from receiving fees or commission if they seek to charge without first disclosing certain detailed information to all interested beneficiaries.
So, for professional executors, it will be extremely important to ensure that any Wills in which they are appointed are prepared in a manner that complies with the new consent requirements.
These changes are all set out in the Administration and Probate and Other Acts (Succession and Related Matters) Bill 2016, which was read in Victorian Parliament last week. The Bill builds on changes to Testator Family Maintenance legislation made in 2014, by implementing some of the further recommendations from the Victorian Law Reform Commission’s 2013 Succession Laws Report.
Other proposed changes include:
- A significant update to the legislative scheme that determines who receives your assets if you die without a Will - described further below.
- Provisions to deal with the consequence of the sale of property by an attorney that is gifted by a will, and bring that in line with the existing rules for administrators.
- Setting an interest rate on gifts of money under a will and on the amount the deceased's partner receives on an intestacy, at two per cent above the Reserve Bank's cash rate.
New intestacy scheme
At present, if you die “intestate” (without a will), but leave a partner and children, the children may often stand to inherit a greater share than your partner under a statutory formula. The new rules mean that the partner will receive a much greater share than previously. In particular:
- If the children are those of your surviving partner, your partner will receive your whole estate – this brings the law in line with other states like NSW.
- If the children are from a different relationship, your surviving partner will receive the deceased’s chattels, a statutory legacy of $451,909.00 indexed to CPI (increased from $100,000) plus one half of the balance (increased from one third). The children from the previous relationship receive the other half of the balance.
The changes may be seen to align more closely with contemporary practice, and reduce the likelihood of a widow or widower needing to go to Court to avoid an unfair division of an estate. However, whilst they are an improvement to the existing law, the new provisions are certainly no substitute for having a carefully drawn will – particularly in a blended family situation.
If passed, the Bill is set to commence in November 2017 (unless proclaimed sooner) and the new rules will apply to estates of persons who died after that date.