Administration and Probate and Other Acts Amendment (Succession and Related Matters) Bill 2016


Debate resumed from 9 March; motion of Ms TIERNEY (Minister for Training and Skills).

Mr RICH-PHILLIPS (South Eastern Metropolitan) — I am pleased to make some remarks this morning on the Administration and Probate and Other Acts Amendment (Succession and Related Matters) Bill 2016, which has been in the Parliament for some time, having been first introduced in the other place in November of last year. The bill itself is a relatively straightforward bill and is one that the coalition parties do not intend to oppose.

Obviously the area of administration and probate is an area of great importance to all Victorians. It is an area of law which determines the way in which a person's final wishes are extinguished and the way in which their estate and related matters are dealt with after their death, and for that reason it is a matter that this Parliament needs to take particularly seriously, because law administration and probate come into play of course in an environment where the person concerned — the deceased person, the testator — is not able to look after their own interests. By its very definition the field of law we are talking about, where administration and probate law is engaged, applies in circumstances where the person concerned is no longer able to administer their own affairs, and therefore the framework that this Parliament puts in place to provide for a person's wishes to be carried out is incredibly important, and it is incredibly important that we as legislators ensure that that framework serves the community well and indeed reflects the expectations of a contemporary society.

The bill before the house today is relatively short and relatively concise in the matters with which it deals. There are basically three key provisions in this bill, which I will run through in turn. The first relates to the issue of intestacy, which is circumstances where a person dies without leaving a valid will. This can be in circumstances where they have made a will which they believe is valid but turns out not to be or they have simply not made a will prior to their death. In circumstances where a person dies without a will a statute is engaged to determine the way in which the assets and other interests of the deceased party are dealt with.

What the bill before the house today seeks to do with respect to the issue of intestacy is to change the way in which assets are distributed in the event of a person dying without leaving a valid will, basically to reflect a more contemporary approach to the traditional structure of the distribution of assets under intestacy, to reduce the pool of descendants who would have a claim or would benefit from the settlement of an intestate estate and limit that pool to essentially family out to first cousins of the deceased.

The advice that we have received from State Trustees, which of course administers a large number of estates, is that limiting the pool of beneficiaries to relatives out to first cousins will basically cover around 95 per cent of estates that are administered by State Trustees and would not have an effect on the beneficiaries of 95 per cent of intestate estates, based on State Trustees' experience. That of course means that there is a small pool of people who are currently beneficiaries in the intestate framework who, with the passage of this legislation, would no longer be beneficiaries where a will has not been left.

The other element in respect of intestacy relates to circumstances where the deceased person has children with their surviving partner, or the children that the deceased person has are also the children of their surviving partner, and in those circumstances the surviving partner will receive the whole estate under an intestate settlement rather than their joint children, which again reflects a more common arrangement that you would expect to find where a person had left a will, provided their surviving partner is the beneficiary before any joint children. Obviously increasingly we see blended families with children from different relationships, and the provision in those circumstances would not be affected by that proposed change. The coalition does not object to any of the proposed changes in respect of the issue of intestacy.

The second issue the bill deals with is in relation to the law of ademption — basically circumstances where a bequest has been earmarked for a particular beneficiary but that particular asset or piece of property that had been identified in a will has been disposed of prior to the person's death and cannot be provided to the intended beneficiary. The provisions in the bill relating to ademption are also not contested by the coalition parties.

The third element of the bill relates to fees charged where a legal representative or a personal representative performs the function of an executor or administrator. I say up-front that the coalition is very much of the view that the role undertaken by administrators or executors is a role of great trust. As I said at the outset, in the administration of an estate it is by definition a necessity that that administration take place in the absence of the deceased party, and the responsibility that falls to an executor or administrator to carry out, in good faith, the wishes of the deceased party is a very heavy duty and one that needs to be undertaken with great diligence and great propriety.

Where that role of executor or administrator falls not on a friend or a relative but on a legal representative or personal representative, that duty is even stronger, and that responsibility, by virtue of it being a professional undertaking that role, is even stronger. It is appropriate therefore that there is a strong legal framework surrounding the role of legal practitioners acting as executors and/or administrators of individual estates. That is something that the coalition welcomes. We do believe that it is appropriate that there is a high level of accountability by the legal profession to its clients in respect of the administration of estates, as we indeed expect of legal practitioners for any clients, whether it is in administration or probate law or other areas of law. But as I indicated, with the unique circumstances surrounding the administration of probate, with the client being deceased, the expectations of probity and accountability are necessarily much higher. That is something the coalition welcomes.

With respect to this particular bill, the bill seeks to put in place a framework which provides the Supreme Court with the power to review and reduce fees which are charged by legal practitioners with respect to the administration of deceased estates. Part 3 of the bill puts in place this framework, particularly in clauses 16 and 17, with clause 17 inserting a requirement that a personal representative who is an executor will not be entitled to receive payment under a remuneration clause in a will unless that person has received informed written consent from the person who made the will. Clause 17 inserts proposed section 65C to provide that where there is no remuneration clause the executor will need the informed consent of interested beneficiaries.

The bill seeks to provide clarity around the circumstances in which a legal representative can charge fees, be they fixed fees or fees charged as a proportion of the value of an estate, to ensure that there is clarity for the person making the will and that in the absence of their informed consent it is with the agreement of the beneficiaries. The coalition believes that while such a mechanism is appropriate, there also needs to be a degree of flexibility provided to the Supreme Court in the way in which these provisions are implemented. For that reason I propose that in committee the Council consider a number of amendments with respect to the operation of clauses 16 and 17, and I ask that those amendments now be circulated.

Opposition amendments circulated by Mr RICH-PHILLIPS (South Eastern Metropolitan) pursuant to standing orders.

Mr RICH-PHILLIPS — The amendments which are now in the hands of members seek to clarify the operation of part 3 of the bill with respect to the new framework provided for the Supreme Court to oversee the imposition of fees and charges for the administration of an estate, basically to streamline the provisions with respect to informed consent from the testator to the legal practitioner and to ensure that the court, in seeking to intervene under these provisions, has the capacity to exercise discretion in seeking to vary or reduce a fee or a charge which has been imposed for the administration of a will.

In particular what we are seeking to do with amendment 13 is to put in place a provision which provides that where the technical aspects of informed consent may not have been fully complied with, if the executor has acted honestly and in good faith on behalf of an estate, the court can take the fact that the executor has acted in good faith into consideration in determining whether the fees and charges imposed on the estate are reasonable in making an order accordingly. We believe that it is appropriate that there be some discretion for the court.

We note that this provision in the bill is one which has raised concerns among the legal profession, in particular the Law Institute of Victoria, as well as individual practitioners, who have raised concerns about the potential way in which this oversight mechanism for the Supreme Court could work. We believe that the amendments we are proposing to provide some flexibility to the court and also to simplify the proposed structure of informed consent will make this provision more effective and ensure that there are not perverse outcomes for practitioners in the same way as the overall purpose of the bill is to ensure that there are not perverse outcomes for testators or beneficiaries under the administration of estates.

The coalition believes on the whole that this bill is a step forward. There need to be strong, robust provisions on administration and probate law to protect the interests of testators and to protect the interests of beneficiaries. The provisions with respect to intestacy are not opposed by the coalition, the provisions in respect of ademption are not opposed by the coalition and we believe that with some minor amendments the provisions with respect to Supreme Court oversight of fees and charges imposed on the administration of estates are also worthy enhancements to the oversight of administration and probate law.

  • SHARE:
  • Email
  • Permalink