Posted in the Coffs Coast Advocate on 18 April 2015
In 2002, James makes a will leaving his home to his son John and the rest of his estate to his other son Joseph. John had always expressed a wish to receive the family home and James had sufficient assets in the rest of his estate, including a substantial bank account, to properly cater for Joseph.
At the same time as making his will, James executes a power of attorney that allows John to manage James’ assets should he lose the capacity to do so himself.
In 2012, it became evident to John that James was no longer able to reside in the family home on his own and decided that the home should be sold to fund the purchase of a bond that would allow John to enter a nursing home.
By this time, James had lost capacity but John was satisfied that his father agreed that it was best for the family home to be sold. The sale proceeds and after the purchase of the bond, James resides in the nursing home for a number of years before his recent death.
When John seeks legal advice regarding his late father’s estate, he is advised that because the family home had been sold, John receives nothing under his father’s will. More specifically, he is advised that the gift of the home “adeems” and the nursing home bond forms part of the “residue” of the estate which is gifted to Joseph.
This injustice has since been remedied by changes to the legislation that apply to powers of attorney. The new legislation would allow John to receive the proceeds of the nursing home bond in substitution for the gift of the family home. Unfortunately, the changes to the legislation are not retrospective and only apply to powers of attorney that are executed after 16 February 2004.
John is advised that if his late father had updated his power of attorney after 16 February 2004, the new legislation would apply and the injustice could have been avoided.
This case demonstrates the importance of updating your legal documentation and particularly your powers of attorney, if it is likely that it will be used to sell property that is referred to in your will.
