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News

Changes of Law alters outcome for Beneficiaries of a Will

The Guardianship and Administration and other Legislation Amendment Act was recently passed. The provisions have not yet commenced. It makes a number of changes to the law relating to guardianship and powers of attorney which aim to strengthen protections for vulnerable adults.

One of the most significant changes are the new sections 61A to D, which introduce a statutory exemption to the ‘ademption’ (section 61B).  ‘Ademption’ commonly occurs where a person leaves their home to a family member in their will, the home is then sold by an attorney to fund aged care, and the will is not updated to reflect the change.  Upon that person’s death, the property is ‘adeemed’ as it no longer forms part of the estate, and any remaining proceeds form part of the residual estate, often leaving the intended beneficiary without an interest in the estate.

The changes to the legislation now provide for a statutory exemption to ademption.  This now means that where an attorney sells property that was specifically gifted to a beneficiary in will, the intended beneficiary will not lose the gift completely but will be able to trace and receive the sale proceeds, or property acquired with the sale proceeds. The beneficiary can also trace and receive income generated by the proceeds and a capital gain generated by the proceeds.

This may have significant implications where there is a specific gift of a residence, or shares in a will, which are then sold by an attorney to fund entry into care. Whilst the new law will be to the advantage of a specific legatee, it may disadvantage a residuary beneficiary.

When was the last time you reviewed your Will?

Our Director, Jon Wiedman, has over 20 years’ of experience in the Wills and Estates sector.

If you would like to have a confidential discussion with Jon or a member of our Estates team about your Will or your obligations as an Attorney, please call us on:

Alternatively, you are welcome to send your enquiry via email to hedemail@hede.com.au.