Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 2 April 2016.
Jane makes a will leaving her house to her daughter. She leaves the rest of her estate to her grandchildren.
Jane also makes a power of attorney, appointing her son Andrew as her attorney. The power of attorney contains a condition that it only comes into effect when a medical practitioner certifies that Jane was no longer able to manage her affairs.
Before Jane’s death, Jane needs to be admitted into a nursing home.
Jane’s doctor states; “Jane is suffering from significant dementia. She has reached the stage which I feel that she may not be capable of looking after her own affairs”.
Andrew was not aware that Jane had left the house to her daughter in the will.
Andrew discusses the sale of the house with Jane and although having difficulty understanding, she agrees to the sale.
A purchaser is found and Andrew executes the contract as Jane’s attorney.
After settlement, Andrew puts the proceeds of sale into Jane’s bank account.
The proceeds of sale remain in Jane’s account until her death.
When Jane passes away, the terms of her will are revealed.
Jane’s daughter is concerned that because the house has been sold, she may not receive anything under her mother’s will and that the proceeds of sale will go to the grandchildren.
Court action is commenced and the court rules that the doctor did not specifically address the condition contained in the power of attorney and accordingly, that Andrew did not have authority to sell the house.
The result was that the gift of the house under Jane’s will to her daughter did not “fail” and that she was entitled to the proceeds of sale “in substitution”.
