Listen to our podcast with Legal Practice Director Jeff Garrett where he discusses the problems associated with doing your Will with the Public Trust Office or the NSW Trustee & Guardian. It could cost you hundreds of thousands of dollars…or more!
It seems everyone is after something for free these days. A recent post on social media where someone asked about getting a Will done cheaply resulted in literally hundreds of people providing backyard advice about where to get a ‘free’ Will. The standout suggestions were to go to the Public Trust Office where they will do your Will for ‘free’ or to do a do it yourself Will-kit. Although there were a couple of people who provided sage advice to obtain proper legal advice and get a valid Will prepared, it seemed that most people were only interested in getting something done for free.
A public speaker for the QLD Public Trust Office recently boasted that in the last financial year they prepared over 28,000 ‘free’ wills and the main incentive for members of the public was that it was ‘free’ – they had also administered over 2,500 estates and were acting as administrator in over 9000 matters. That is big business for the QLD Government!
We have had a lot of experience with so-called free Wills involving the Public Trust Office (Qld) or the NSW Trustee and Guardian. They are both state Government instrumentalities that look after people who have lost capacity or who cannot manage their own financial affairs. They also look after jail inmates’ affairs. Another function which they promote is to act as executor in the estates of people who make their Wills with them. Executors are the appointed representatives of the deceased who are responsible for obtaining Probate of the will and administering the estate (i.e. calling in the assets and distributing to the beneficiaries) and although they do the Wills free of charge, they have a significantly high set of fees and charges that they take out of the estate after the person dies and they administer the estate assets. Although the charges are on their website, they are very difficult to understand and at least some of the fees are calculated on a percentage basis of the value of the assets.
We have experienced many problems with both the Public Trust Office (PTO) in Queensland and the NSW Trustee and Guardian (NSW TAG). Some of the matters that we have directly dealt with on behalf of families of deceased estates include the following:-
1. Theft of assets by Trust Office staff
We have acted in matters where there was theft of assets of the deceased by PTO staff either during the management of their affairs while they are alive or after they have died. You may recall the reported stories of Public Trust Office employees rifling through the houses of deceased clients just after they have passed away and taking valuables before the family could get into the house. There were certain employees of the Southport Public Trust Office who were jailed for stealing from deceased estates. We also had matters where beneficiaries sued the PTO to recover damages for valuables that had been ‘misplaced’ or stolen;
2. Delay and inaction by Trust Office staff
Beneficiaries and family members have complained that the administration process takes far too long to conclude and that assets of the estate (e.g. the family home) are basically left to go to rack and ruin due to the inaction of the Public Trust Office. Likewise, other assets of the estate, including shares and other investments etc. were basically sold with the cash put into low yielding Government bonds (this is obviously a conflict of interest where they favour Government investment entities). In situations where prompt and decisive action was required to preserve the assets of the estate, the public servants responsible for the management of the estate have often done nothing to rectify situations or have delayed any action for so long that the value of the assets are substantially reduced;
3. Charging exorbitant fees to the estate and failing to properly disclose this to the public
The Public Trust Office and the NSW TAG charge their fees on a number of bases but it usually includes a percentage of the value of the assets under management. There are also other specific charges relating to certain steps in the administration based on a scale of fees but it is the percentage of the value of assets under management that usually racks up the most costs. In most cases, the administration of the estate is handled by unqualified public servants, who in many cases, charge an hourly rate that is higher than many lawyers! These fees are not properly disclosed to people having their ‘free’ wills done, nor are the ramifications of appointing them as executor.
On the other hand, Lawyers are required to disclose in writing full details of their charges and must also provide a written notice if they are appointed as an executor or co-executor;
4. Poor communication with the family and beneficiaries (and lawyers)
One of the biggest complaints from families and beneficiaries is that they do not receive any or enough adequate communication from the Public Trust Office or NSW TAG concerning the affairs of the estate and/or the management of the financial affairs of the deceased prior to their death. We constantly receive complaints from our clients that their phone calls, letters, emails, faxes are unanswered. When they do finally get to speak to someone about it they are treated very rudely and basically are told that they are not entitled to any information and that they will just have to wait until the estate is finalised. If you are a residuary beneficiary in an estate you are entitled to have regular reports from the executors about the progress of the administration of the estate. You are also entitled to a full accounting of the estate and any financial dealings concerning the assets of the estate. Another issue is the high turnover of staff and having to deal with several ‘officers’ during the course of the matter. The inevitable loss of information and further delay are very frustrating to family members.
We also experience problems in communication with both entities and their in-house legal arms (especially so for the NSW TAG). There is a high turnover of staff and they constantly say they are under-resourced. This increases legal costs in having to repeatedly follow up unanswered correspondence and phone calls;
5. Failing to proactively resolve disputes
Handling of disputes or contentious issues within the estate are ignored or a very passive attitude taken. There seems to be a common theme that where there is a claim brought against the estate or a dispute amongst the beneficiaries concerning the distribution of certain assets, this results in the Public Trust Office or NSW TAG referring the matter in-house to their legal division. The legal division then charge the estate legal fees to “handle the claim”. In many cases there are criticisms of the in-house lawyers for both institutions in that they simply let the matter proceed to trial and charge the maximum fees with respect to the ongoing Court matter. In some cases the beneficiaries or families in the dispute have complained that there is no real wish to resolve the matters in dispute and their preference is then for the matter to proceed to trial (which results in higher fees to the PTO or NSW TAG);
6. Failing to draft proper Wills in order to avoid potential disputes or properly deal with assets
Inappropriate “simple Wills” prepared for an unwitting public who do not know what their circumstances require. The majority of the Wills that are done by the Public Trust Office or NSW TAG are quite simple Wills and in many cases do not take into account the assets of the deceased in a proper way. For example, if a person has companies and trusts and is also in a second marriage with children on both sides, a simple Will is obviously not going to properly deal with all of the estate planning issues. Unfortunately, the unqualified public servants who draft the Will are not lawyers working in this area and do not properly understand estate planning. Having said this, there are many lawyers who do not properly understand estate planning as well but it is more than likely that if you obtain a “free Will”, it is only going to scratch the surface when it comes to proper estate planning.
These are just some of the issues that we regularly encounter in dealings with the Public Trust Office and NSW TAG. It is by no means exhaustive and we have been involved in many Court cases involving both institutions. We caution people who are considering having a free Will done with either of these entities and we strongly suggest that you do not under any circumstances appoint them as executor in your estate. If an estate is contested or court applications are required to remedy problems with the will, this could cost the estate and the family members hundreds of thousands of dollars in legal costs. In most cases, these costs are paid from the estate assets.
There are many other options in relation to appointment of executors to administer your estate. If you are concerned about having someone who is independent, another option is to appoint a lawyer as a co-executor with one or two of your family members to ensure that the administration of your estate or the handling of your affairs as attorneys is carried out in a proper fashion. Many people mistakenly believe that appointing a lawyer will cost a huge amount of money for them to conduct that role but this is not true. In many cases people take the administration of the estate to the lawyers who drafted the Will in any event and pay them fees to obtain Probate and assist them with the administration of the estate. Although the Probate costs in NSW are based on the value of the assets in the estate, most other work is carried out at the usual hourly rate charges. Lawyers are required to provide fee estimates and a Cost Agreement before commencing the work. If you have a lawyer as a co-executor, more often than not they do not charge any commission and simply charge for the usual work that they would have done had you engaged them as your lawyers anyway. In this respect you technically get a “free lawyer” as a co-executor on the basis that the lawyer would have performed that work anyway had you engaged them.
Another advantage of having a lawyer as an executor or co-executor is that they hold compulsory indemnity insurance and are covered by fidelity insurance with respect to their trust account. This means that if they make a mistake or are negligent, there is insurance to cover any losses to the estate. In the unlikely event they take off overseas with the trust account money, this is also covered by the fidelity insurance. This would not be available if it was a relative who was not a professional.
Obtaining Probate and administering the estate of deceased persons is becoming a very complex area with taxation issues for both the estate and the beneficiaries, including possible capital gains issues if there are properties involved. If the estate involves other entities such as companies, trusts and self-managed superannuation funds, it can become extremely complex to properly unwind all of the assets and ensure that they are paid to the proper beneficiaries. In many cases the lawyers need to consult experienced accountants in this area to ensure that the outcome of the distribution of the estate assets is done in the most tax effective manner possible.
Another area of concern is in relation to insurance policies held by the deceased. Despite the fact that binding nominations may have been made by the deceased in relation to payment of the proceeds of insurance policies, there can be disputes concerning the validity of these nominations which can end up with the matter being determined in the Superannuation Complaints Tribunal (SCT). Proceedings in this Tribunal are notoriously unpredictable and can cost the parties hundreds of thousands of dollars in legal costs. In many cases, legal costs are not recovered, even if you win the case. New complaints must be made to the Australian Financial Complaints Authority (AFCA). You can learn more about AFCA at www.afca.org.au.
So, if you are interested in getting a “free Will” with the Public Trust Office or the NSW TAG, you should think very seriously about having the Will done with them and certainly not appoint them as executor of your estate. We regularly assist people who are dealing with the Public Trust Office and NSW TAG and have issues with them concerning family members or loved ones.
The best way to avoid these problems is to have your Will done properly with an experienced estate planning lawyer. Attwood Marshall Lawyers have practiced in this area for over 70 years and can assist you with a legally valid last Will and Testament. With proper advice, you can avoid many of these issues and mitigate the risk of any disputes arising.
We have a dedicated Wills and Estates team that practices exclusively in this complicated area. You are welcome to contact our office with any enquiries concerning estate planning advice. Please contact our Wills and Estates Department Manager, Donna Tolley on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call 1800 621 071 to book your free 30 minutes estate planning review appointment with one of our dedicated Estate Planning lawyers.
