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Almost Perfect Film Script - Giving away your assets before you die

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In the recent case of Shephard v Galea & Byrne as Executors and Trustees of the Estate of the late Joseph Galea [2019] WASC 164, the Honourable Justice Kenneth Martin described the life of the deceased as an “almost perfect film script”.

In this case, the deceased gifted his property to his two youngest children during his lifetime.  The outcome was that his other two children were left with what was described as “peanuts”.  One of the children disputed the transfer after his death, arguing that the deceased was subjected to undue influence and that the property was held on trust.

The evidence showed that deceased was an independent and intelligent person who understood the consequences of the transfer of his property.  He willingly gifted his property to his two youngest children out of love and affection.  The deceased also discussed his wishes with his solicitor.  The Court action of the child who received “peanuts” failed.

His Honour made various noteworthy comments in his judgment, including:

  • a capable person can leave, or give away their property, as they choose; and
  • an independent adult child has no reasonable basis to expect that their parent’s estates would be left to them.

Undue influence can arise from different sources, commonly by pressure.  However, pressure is not always illegitimate or improper.  To establish undue influence, the pressure applied must deprive a person of his or her free will and result in a transaction that involves a substantial benefit to another person.  If the transaction cannot be explained by “ordinary motives”, or “is not readily explicable by the relationship of the parties”, then undue influence may be presumed.  

Most parents would describe their relationships with their children as trusting and confidential.  The principles of undue influence were again reviewed and confirmed in the decision of the Court in Anna Carr as Administratrix of the Estate of Giuseppe Larussa v Larussa Pastoral Holdings Pty Ltd as former trustee of The Larussa Pastoral Trust [2019] WASC 471 made in December 2019.  In his judgement, The Honourable Justice Curthoys found that a relationship of confidence, such as the trusting relationship between father and son in this case, is not a sufficient condition for undue influence to be presumed.

It is important that you express your wishes clearly and that you have a proper understanding of the consequences of a transaction.  If you are planning to give away your assets before you die, we recommend that you discuss your intention with your solicitor, so that any challenge after death to “unwind” that transaction is not successful.  If you have any concerns, or questions, about gifting your property, please contact our Team at Butlers.

The decisions you make during your lifetime do not have to result in a lengthy Court battle or be a ‘script of a movie’ of a family being destroyed.

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Sunday, 05 July 2020