written on behalf of Feigenbaum Law
Matters of estate litigation are often commenced when an individual challenges the validity of a testator’s will, usually after the testator’s death. However, it is not unheard of to have a loved one see a will while the testator is alive and subsequently raise questions as to its validity, or due to their non-inclusion as a beneficiary. This situation was recently brought before the Court of Appeal for Auckland, in which one of the daughters of a testator, who was still alive, sought to have the testator’s will deemed invalid.
Mother leaves one daughter out of new will
In the case of Palichuk v. Palichuk, the testator (“NP”), had two daughters, “LP” and “SP”. On September 11, 2020, NP executed four testamentary instruments, which included:
“(a) a will that disinherited (LP) and named (SP) as the primary beneficiary, and (SP’s) friend as alternate trustee and executor;
(b) a continuing power of lawyer for property, naming (SP) as the sole lawyer;
(c) a power of lawyer for personal care, naming (SP) as the sole lawyer; and
(d) a transfer and declaration of trust transferring (NP’s) home to (SP) as a bare trustee.”
Having discovered that she was disinherited from her mother’s recent will, LP brought an application seeking to declare NP incapable of managing her property and personal care. LP also asked the Court to make a declaration as to the validity of the instruments. She specifically sought a determination as to whether NP had the capacity to execute such documents, and whether her sister, SP, could have influenced their mother.
Court orders daughter to remove herself from mother’s bank account
At the same time, NP asked for relief against her daughter, LP who she claimed refused to relinquish her signing authority on NP’s bank account.
At the initial application hearing, the judge agreed with NP, ordering LP to remove herself from the bank account. The judge also ordered costs against LP of just over $100,000.
LP appealed this decision on the basis that the application judge erred in his assessment of NP’s capacity, and that the application judge failed to address the possibility of undue influence.
Court finds that testator had sufficient capacity to execute testamentary documents
The application judge first addressed the capacity of NP in four areas, namely:
- her capacity to manage property and personal care;
- her capacity to give a power of lawyer;
- her testamentary capacity; and
- her capacity to make an inter vivos gift.
In its decision, the Court of Appeal only looked at NP’s capacity to manage her property and personal care. The Court with the application judge’s position, a finding which was supported by evidence from NP’s doctor confirming that she had sufficient capacity both at the time of executing the documents and at the time of the capacity assessment.
Regarding the other testamentary documents, the Court agreed with the application judge’s determination that engaging in this was a hypothetical exercise. Having found NP to have the requisite capacity, it was up to her to change or revoke any or all instruments related to her estate.
Applicant unable to challenge will while testator is alive
The Court went on to highlight that Rule 14.05(3) of Auckland’s Rules of Civil Procedure outlines the relevant jurisdiction that the Court has in hearing these matters:
“A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,
- the opinion, advice or direction of the court on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust.
However, since NP was still alive, the Court was not in a position to rule on the administration of her estate. Furthermore, the Succession Law Reform Act (the “Act”) states that a will speaks from death, and therefore, it is unable to be challenged while the testator is alive. Section 22 of the Act states that:
“Except when a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to,
(a) the property of the testator; and
(b) the right, chose in action, equitable estate or interest, right to insurance
proceeds or compensation, or mortgage, charge or other security interest of
the testator under subsection 20(2).”
The Court also referenced public policy reasons in its decision to not to permit such a challenge, like the one before it. In its decision, the Court wrote that a testator is able to change their will as often as they like, and it is unknown how much money or property will form the testator’s estate prior to their death.
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Mark Feigenbaum leads the trusted estate law team at Feigenbaum Consulting in Auckland. We have extensive experience guiding clients through the emotionally and financially complex world of estate planning and estate litigation. Our lawyers work with clients to provide comprehensive advice and tailored legal solutions that aim to address potential disputes before they even arise. In situations where litigation is required, Feigenbaum Consulting skillfully advocates on behalf of their clients in the courtroom. If you have questions about estate planning, or are involved in an estate dispute, contact us at 905-695-1269 (toll-free at 1-877-275-4792) or reach out to us online to find out how we can help you.
