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Compensating an Attorney when a gift in a Will is destroyed, sold or given away prior to the Will maker’s death

The Powers of Attorney Act 1998 (Qld) allows the Court to compensate Attorneys when their benefit from a principal’s Estate is lost due to the sale or other dealing with the principal’s property. For example, if a principal gifted their house to their Attorney in their Will, and the Attorney then sold the house to pay for the principal’s nursing home bond, the Court can compensate the Attorney for the loss of the gift.

Neuendorf v the Public Trustee of QLD

I read with interest a decision in the Queensland Supreme Court which provides clarification of some of the factors the Court will consider when determining how much compensation may be due to an Attorney in these circumstances.

Background of the case

The background of Neuendorf v the Public Trustee of QLD is as follows:

  1. Ms N and Ms B were close friends of Ms D and Ms S;
  2. Ms N and Ms B had taken care of Ms D and Ms S for the years preceding their deaths;
  3. Ms D and Ms S both appointed Ms N as their Attorney under Enduring Powers of Attorney for personal and health matters;
  4. Ms D and Ms S owned a house together at Bald Hills (“the Bald Hills house”);
  5. Ms D distributed her entire Estate to Ms S in her Will. However, in the event that Ms S did not survive Ms D, the Will provided that the house at Bald Hills be distributed to Ms N and Ms B, with the residue of Ms D’s Estate distributed to a charity;
  6. Ms D and Ms S subsequently moved into a nursing home in 2010;
  7. Ms D and Ms S directed Ms N to sell the Bald Hills house to pay for Ms S’s nursing home bond;
  8. The Bald Hills house was then sold and the bond paid;
  9. Ms S died in June 2011;
  10. Ms D died in August 2012;
  11. In November 2012, Ms N and Ms B were advised that the gift to them of the Bald Hills house in Ms D’s Will had failed, as the house had been sold to pay for Ms S’s nursing home bond;
  12.  Ms N and Ms B applied to the Court for compensation.

What will the Court consider when determining the compensation due to an Attorney?

In determining the compensation due to Ms N and Ms B, the judge considered the following:

  1. The size of Ms D’s Estate;
  2. The identity of other beneficiaries and the nature of their gifts;
  3. The proportions that the gifts to the beneficiaries bore to the whole Estate;
  4. The actions of Ms N as Attorney;
  5. Whether Ms N had acted inappropriately as Attorney;
  6. What was done with the funds after the sale of the Bald Hills house;
  7. The costs which have been incurred and which will be paid out of Ms D’s Estate; and
  8. What would have happened if the Bald Hills house had not been sold.

What did the Court decide?

The Judge found that:

  1. Ms N had been consistent in her duty as an Attorney when she sold the Bald Hills house to pay for Ms S’s bond;
  2. The charity was innocent of wrong doing, and so its interests should be taken into account; and
  3. If the costs of Ms N and Ms B’s application were ordered to be paid out of Ms D’s Estate, the charity would lose a significant amount, which did not seem to be consistent with Ms D’s wishes.

An order was consequently made that Ms N and Ms B be compensated out of Ms D’s Estate in an amount equal to 84.5% of the value of the Estate remaining after payment of Ms D’s funeral, the costs of the application, the charity’s legal costs and other Estate administration expenses.

I think I have lost my benefit under a Will, what should I do?

If you were acting as an Attorney under an Enduring Power of Attorney for someone who has now passed away, and you are concerned that you may have lost your benefit under their Will, you should contact an estate litigation lawyer. Please contact me should you require advice or assistance regarding compensating an attorney or any estate planning issues.

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Written by—

Chloe Kopilovic

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