Minimising Estate Disputes
Recording your intentions clearly in your Will.
Time and time again we see disputes about a person’s estate end up in costly Court litigation. Time and money aside, the biggest damage these disputes leave is undeniably the way they tear relationships apart and pit former family and friends at odds. You can take steps to minimise issues from arising after your death by having an up-to-date Will that clearly records your intentions.
A Recent Case
The Court of Appeal case of Harvey v Beveridge is another recent demonstration of the problems that can arise if the deceased does not put their intentions in writing. The deceased died in 2012. Mr Beveridge was the deceased’s close friend and had been occupying the deceased’s property at Christchurch rent-free since 2008. There was some evidence that the deceased intended the property to belong to Mr Beveridge. However the deceased did not transfer the property to him during his lifetime, nor did his Will mention Mr Beveridge or the property.
The executrix of the deceased’s Will gave notice to Mr Beveridge to vacate the property. Mr Beveridge refused on the basis that he was the beneficiary of a constructive trust founded because the deceased and he had formed a “common intention” that the deceased was holding the property on trust for him. Mr Beveridge also lodged a caveat against the property to prevent anyone else from dealing with the property. The executrix applied to the Court to remove the caveat and sought a declaration that Mr Beveridge give up possession of the property. These applications became the subject of proceedings in the High Court and then the Court of Appeal.
Evidence was lead by Mr Beveridge that the deceased repeated statements several times to Mr Beveridge to the effect that the property ‘is his’. The deceased did not require Mr Beveridge to pay rent or outgoings during his occupation of the property from 2008 onwards and refused any offers of payment. Mr Beveridge undertook and paid for some improvements to the property. He had sought permission to do so from the deceased but the deceased indicated that he could do as he chose. At no stage did the deceased inspect the property or undertook any duties expected of an owner or landlord of the property. Mr Beveridge also organised all insurance claims for the property after the 2010 Canterbury earthquakes.
Under Trust Law the Court can find a “constructive trust” based on the implication that a claimant and a legal owner had formed a “common intention” to do something by their words or conduct. In this case Mr Beveridge contended that a “constructive trust” exists because he and the deceased had, by their conduct, formed a “common intention” that the deceased was holding the property on “constructive trust” for Mr Beveridge’s benefit from 2008 onwards.
The Court’s view
The Court had several difficulties with Mr Beveridge’s contention. Firstly, Mr Beveridge’s own evidence was that the deceased’s intention was to give the property to him rather than hold it on trust for him. Secondly, there is nothing in writing to support the terms and existence of the alleged “constructive trust”. Thirdly, an orthodox “constructive trust” would have required Mr Beveridge to establish his contributions to the property supported an ownership interest in the property. Mr Beveridge did not make the significant contributions as required to support this limb of his argument. Fourthly, without evidence that the deceased intended to hold the property on trust for Mr Beveridge, it was always open for the deceased to resile from any intention that he otherwise had to gift the property to Mr Beveridge.
The Court therefore considered that the absence of any provision in the deceased’s Will relating to the property or to Mr Beveridge was fatal to Mr Beveridge’s claim. By his Will, the deceased resiled from any intention he may have had to gift and transfer legal ownership of the property to Mr Beveridge.
The lessons from the case are clear. Record your testamentary intentions clearly in your Will. This will save your loved ones, your family and your friends much grief, money and time in applying to the Court to determine any disputes.
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