COVID-19 – Five issues concerning Wills, Estate and Succession Planning
We have all needed to adjust to measures imposed by the federal and state governments in order to combat the spread of COVID-19, with impacts on both our professional and personal lives.
It might be optimistic to conclude that we have adjusted completely. But it now appears likely that social distancing and self isolation will be a new way of life for some months.
As we have worked through the immediate concerns about daily life - how to do the shopping, adjust our working habits, and keep in touch with loved ones – it might also now be time to return some issues to the ‘front’ burner regarding estate planning and other aspects of succession law.
The following five issues relate to the challenges of COVID-19, and include not only increased vulnerability to the pandemic but also increased isolation, limited travel, access to loved ones and legal proceedings.
Signing and witnessing estate and succession planning documents
Looking out for vulnerable loved ones and those with a disability
Acting as executors, administrators, and trustees
Issues with succession of business assets
Civil legal proceedings
1. Signing and witnessing estate and succession planning documents
Of immediate concern, to many of our clients, is the core of estate planning - wills and powers of attorney documents.
It’s never been more important to make arrangements to ensure that control of your decisions and/or your estate will pass to people you trust in accordance with your wishes.
The HOCW wills and estates team remain available to take your instructions, by phone or other electronic means for preparation of wills (including testamentary trusts), powers of attorney and appointment of medical treatment decision makers. We have adapted our practices to take into account the current requirements for social distancing – particularly, for those with an increased health risk.
There are currently strict rules about the signing and witnessing of these important estate planning documents. These strict rules generally require in-person meetings to make valid wills and powers of attorney.
However, with the passing of the COVID-19 Omnibus (Emergency Measures) Act 2020 (Act) in Victoria last week, changes can now be made more easily by regulations (rather than by legislation approved by parliament) to adapt these rules for signing valid legal documents to the particular circumstances of the COVID-19 pandemic. The Act allows the Governor in Council (on the recommendation of the Attorney General) to make regulations temporarily modifying existing legislation. This includes rules (section 4(1)(f)) relating to ‘the witnessing, execution or signing of legal documents such as affidavits, statutory declarations, deeds, powers of attorney, contracts or agreements, undertakings and wills’.
The explanatory memorandum to the Bill suggests this broad power, to make such temporary regulations, will soon be made to enable legal documents such as ‘wills and contracts, to [be] validly witnessed, executed and lodged whilst complying with social distancing rules. For example, allowing witnessing by audio-visual link and electronic lodgement’.
The HOCW wills and estates teams can advise you on how to proceed with making these arrangements.
2. Looking out for vulnerable loved ones and those with a disability
If you care for a loved one who suffers ill health or has a disability you might have been confronted with decisions about their care arrangements. Although there are exemptions from strict social distancing mandates for carers, there are other reasons that the supports available are more limited now, for example, aged care facilities in lock down, or the increased vulnerability of carers themselves.
If you care for or hold a power of attorney for a vulnerable loved one, are concerned about their welfare and are unable to continue providing assistance, we can advise you on the options available. For example, if the person has capacity, an appointment of an attorney can be made. If the person does not have capacity, it is possible to lodge a statement of wishes with the Victorian Civil and Administrative Tribunal (VCAT) to express your wish about whom you might want to be appointed an administrator or guardian in the future.
3. Acting as executors, administrators and trustees
If you are the executor or administrator of a deceased estate with assets in Victoria, your duties to act in that capacity continue even in these unusual circumstances.
In general, an executor will be required to either renounce probate or apply for a grant of probate of a valid will within a limited time.
Section 15 of the Administration and Probate Act 1958 contemplates this action should take place within a period of six weeks after the date of death. If an executor is ill it might be reasonable to assume that some delay in seeking a grant will be excused. However, in cases of unreasonable delay, in relation to an application for a grant of probate, the executor might be vulnerable to an adverse costs order if their delay results in a successful s 15 application (requiring the executor to produce the will and apply for or renounce probate).
In very extreme cases of delay it might be possible for a Court to make an order passing over an executor named in a will, which would prevent the executor from acting in that capacity at all.
Other issues to consider if you are an executor or administrator:
- Executors and administrators remain under a duty to administer estates efficiently and in the interest of their beneficiaries and to provide proper information about the estate when requested. Alternative means of communication with beneficiaries might need to be adopted.
- Undue delays in administration might result in an executor or administrator being vulnerable to an application by a beneficiary or creditors for removal. It might also impact the financial well-being of the estate; for example, if there are significant delays in paying pecuniary legacies which then attract interest.
- If you reside interstate or overseas, and the pandemic limits your ability to return to Victoria so that you will be absent from the state for a period exceeding 1 - 2 years (for trustees and executors / administrators, respectively) this might impact your ability to continue in that role.
- If you are an executor, the donor of a power of appointment, or trustee and you are concerned about your own health or ability to continue in those capacities, you should seek legal advice on the laws and terms governing your replacement or succession.
4. Issues with succession of business assets
If you are an executor or trustee whose appointment involves trading a business, there will be many other issues to consider. The current circumstances mean being on the look out for signs of financial distress and business impacts of the pandemic.
HOCW can assist with the following:
- contract review and advising on the interpretation and impact of key clauses (ipso facto, force majeure);
- employment law issues; and
- if you are a director, your duties and issues in relation to solvency.
5. Civil legal proceedings
The Courts continue to operate, albeit with new practices and protocols, and there have been no changes to the time limits for bringing proceedings. For example, proceedings to rectify a will or family provision proceedings after a loved one passes away are subject to statutory limitation periods, although, these can be extended in some circumstances. It is therefore preferable to ensure that steps are taken to bring any proceedings within those timeframes unless special circumstances apply, such as the prolonged illness of the plaintiff.
In existing proceedings, all parties and their representatives are obliged to conduct litigation in accordance with the overarching obligations under the Civil Procedure Act 2010 (CP Act). These include the obligation to further the administration of justice, narrow issues in dispute, act promptly and minimise delay.
Although these are extraordinary times, given the Courts’ efforts to adjust to the times and continue with legal proceedings, it is important to continue to be mindful to conducting litigation with the obligations under the CP Act.
Our wills and estates team are here to assist you. Please contact us on 03 9550 4600 with any queries.