This is the third in our series answering common questions about Estate and Probate disputes.
It is a common feature of estate planning for a person to appoint someone to act for them in the event they lose capacity.
This is typically done through an Enduring Power of Attorney.
The role of an Attorney is becoming more complex and so are the obligations of the Attorney.
An increasingly common scenario is a need for a person’s house to be sold to fund an aged care facility accommodation bond – which can easily be in the order of several hundred thousand dollars.
What if the well-meaning and well-intentioned attorney sells the house but the incapacitated person’s Will gifts the house to a (soon to be disappointed) beneficiary ??
That is exactly what happened in a recent case before the Queensland Supreme Court (Outram v. Public Trustee of Queensland [2020] QSC 80)
Does the beneficiary miss out?
Was the Attorney at fault?
OUTCOME
Section 107 of the Powers of Attorney Act 1998 (“the Act”) offers a remedy to the disappointed beneficiary in those circumstances.
This section empowers the Court to order compensation be paid from the estate to the disappointed beneficiary.
Often the real issue is how to quantify the appropriate compensation.
The power in the Court is to order the amount “the Court considers appropriate”.
Although some matters the Court will consider will change from case to case, they will typically include:-
- The size of the estate;
- The “competing” gifts to other beneficiaries;
- The actions of the Attorney and whether there was any improper conduct by the Attorney;
- What was done with the funds after the sale took place;
Importantly, the compensation to a beneficiary under Section 107 is not a loss based on need, but on the loss of the benefit under the Will.