As the number of Australians diagnosed with dementia continues to increase, it is important for all parties to understand how the effects of dementia may potentially alter the outcomes of Wills and estate planning. A recent case in the Supreme Court of Victoria casts a light on the impact of dementia in family law matters and its effects on future estate planning issues for those suffering from dementia.
Re Gillam is a decision by Judge McMillan of the Victorian Supreme Court published on 21 January 2016. At the time of this decision, Mrs Gillam was 92 years of age and had been suffering from dementia since 2012. She made her last Will in 2011 before the onset of dementia. Her husband, Noel was due to receive substantial benefits under the Will, as was her step-daughter. Both Mrs Gillam and her husband had adult children from their previous marriages.
In July 2015, Mrs Gillam’s husband commenced property settlement proceedings and sought Final Orders in the Federal Circuit Court. In late 2015, Final Orders were made and Mrs Gillam’s husband received a distribution of property from the then existing property pool. This scenario is more common than one might imagine. Mrs Gillam’s lack of capacity was not a barrier to her husband seeking Orders from the Federal Circuit Court to divide their marital assets. Ultimately, the division was 53%/47% in Mrs Gillam’s favour. After the financial settlement, her husband no longer provided her with financial support.
As Mrs Gillam no longer had capacity to change her Will, Mrs Gillam’s son then brought an Application for a Statutory Will. A Statutory Will is a Court made Will for people who do not have capacity to make a Will. The proposed Will did not provide for Mrs Gillam’s husband to the extent of the 2011 Will.
The Judge found in favour of the Application for a Statutory Will. The Judge was satisfied that if Mrs Gillam had testamentary capacity, then after the financial settlement with her husband, her intention would have been to leave the residue to her sons, excluding any benefit to her husband. The Court considered the three previous Wills that Mrs Gillam had made between 2005 and 2011. Under her three previous Wills, Mrs Gillam did not ever leave her husband anything close to the equivalent sum he received under the financial settlement. The 2011 Will was the most generous Will to Mr Gillam. It provided a life interest in a property and one third of the residue of the estate. This Will was made when Mrs Gillam was the owner of that property and some months after the Will was made, she transferred one half of the property to her husband. As a result of the financial settlement, Mr Gillam became the sole proprietor of the property.
“As elderly couples grapple with dementia, it is likely that the number of applications for family law settlements will increase in the future.”
This decision highlights the importance of protecting the assets of vulnerable people who have already divided their property with their separated spouse but do not have capacity to change their Will. If you or someone you know are facing a similar circumstance or have any queries in relation to the law’s role in Wills and dementia, please contact us on (02) 6212 7600.
Alison Osmand is a Senior Associate of the firm.
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phone (02) 6212 7600