Attwood Marshall Lawyers Estate Litigation Special Counsel Lucy McPherson looks at a recent New South Wales case where one of the beneficiaries in the administration of an estate had been missing and presumed dead for 38 years.
What do you do as an executor when a beneficiary of an estate is missing? How far do you have to go to prove the beneficiary is missing and presumed deceased?
A recent decision of Justice Hallen in the NSW Supreme Court in Sydney released an executor from his promise not to distribute shares of a deceased’s estate until a search for a missing beneficiary was completed.
The case confirmed the basic legal principles involved when a beneficiary cannot be found and is missing or presumed deceased.
The delays in administering such an estate can be significant, with substantial costs incurred in attempts to locate beneficiaries.
Michael Galanakis died intestate (without a valid Will) on 29 November 2019, leaving property behind in New South Wales and an estate worth about $5.63 million. Michael was 92 years old at the time of his death. He had migrated to Australia in 1955, had never married and had no children.
His parents had died before him, as had two of his three siblings. The third sibling died in January 2021, before the case went to court.
He had only two nephews, Konstantinos Galanakis and Kyriakos Galanakis. Under the laws of intestacy, the estate was to be divided between Michael’s third sibling, named Eirini, and his two nephews.
The problem was, Kyriakos had disappeared while traveling with his father in 1985 to Russia via Crete.
According to the ruling, Kyriakos had left his hotel during the holiday and was not seen again, despite searches and enquiries made in Greece and Turkey at the time. After decades had passed and still nobody had heard from him, the family obtained a court order from Crete in 2008 declaring Kyriakos “dead in absentia” as there was no clue as to his whereabouts and his death was very probable.
The Case: Application of Jordan; Estate of Michael Galanis (aka Michael Galanakis)  NSWSC 221
After Michael died in Australia, the Supreme Court of New South Wales granted Letters of Administration to James Jordan, the solicitor for Konstantinos, who lived out of the country at the time. Letters of Administration are required when somebody dies without a Will and involves the Supreme Court appointing an administrator to attend to the administration of the estate.
Mr Jordan had promised the court that he would not distribute one quarter of Michael’s estate, which represented the amount his client’s missing brother Kyriakos may have been entitled.
Mr Jordan later returned to court, however, needing a judge to allow him to renege on that promise.
He also asked the court to declare he could distribute the estate to the exclusion of Kyriakos, and order that if Kyriakos was found to be alive, then Konstantinos would repay half of the amount he received from Michael’s estate so that there was equal division between the brothers.
When dealing with an estate that has a missing beneficiary, the court looks back to a 1902 decision that allowed an executor or administrator to distribute that estate under a so-called Benjamin order, named after the case: Re Benjamin; Neville v Benjamin  1 Ch 723.
Justice Hallan said that “the effect of the order sought is to protect the executor or administrator and enable the estate to be distributed without having to wait until what might be unprovable can be proved.”
“It also applies where every reasonable step has been taken to trace the individual in question and it is most improbable that any such individual would ever establish a claim,” the judge said.
To release Mr Jordan from his undertaking not to distribute Kyriakos’s share of the estate, the judge had to consider whether it would be “unjust” if the undertaking were to remain in force.
Mr Jordan made his promise not to distribute the missing nephew’s money when the search for his whereabouts was still ongoing. Now that the search had ended, there was no need for the undertaking to remain in place.
When he granted the orders sought, Justice Hallen said that the Galanakis family had taken sufficient steps to determine what had happened to Kyriakos and attempted to find him. No-one came forward to contradict that evidence.
Another big part of the judge’s decision was the fact that 38 years had passed since anyone had seen or heard from Kyriakos.
He also considered the “substantial” amount of money that was at stake. The nephews were both set to inherit from Michael $1.4 million each, with the remaining $2.83 million earmarked for Michael’s brother Eirini, who died in 2021.
Justice Hallan concluded that nobody would be affected if Mr Jordan was released from his undertaking. He said there was no public interest for it to remain in place and that revoking it would be practical as it would allow Mr Jordan to complete the administration of Michael’s estate.
The judge said that “all avenues of search have been exhausted” and that there was “no useful purpose” in delaying the distribution of the estate any further.
In coming to that decision, the court also had to look at:
- The sufficiency of inquiries that had been made into the whereabouts of the missing person, both before and after the death of the deceased,
- How much time had lapsed since the death of the deceased,
- How much time had lapsed since the missing person was last heard from,
- That a qualified municipal court has considered the matter,
- Whether pursuing further avenues of query and deferring the decision would result in a claim made by the missing person or otherwise generate further information,
- The likely delay associated with pursuing those further avenues, and
- The likelihood that such investigations would result in additional information.
Attempts to locate beneficiaries should not be underestimated, nor should the huge amount of work that is required to convince a judge that all the factors above should rest in favour of an executor or administrator.
In addition to a significant delay in administering the estate, there are also costs to consider. In the case above, for example, the plaintiff’s costs to bring the court proceedings were paid out of Michael’s estate.
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