An Update on Statutory Wills

May 18, 2016 Suzana Popovic-Montag Capacity, Wills Tags: , , , 0 Comments

Testamentary capacity is a prerequisite to the creation of a valid will. For those who do not possess testamentary capacity, either due to a change in cognitive abilities or because they never possessed it to begin with, this means they are unable to make, change, or revoke a will.

In many cases, these individuals did not have a valid will in place prior to losing the ability to create one. These estates are distributed in accordance with the laws of intestacy. In other cases, circumstances have changed significantly such that if the testator had retained testamentary capacity, he or she almost certainly would have changed the dispositions made in a previous will. However, as a result of the loss of testamentary capacity, he or she is no longer able to do so, sometimes giving effect to absurd results.

EGBB06MSDCTo address these difficulties, some jurisdictions have enacted legislation that permits an application to be made for a statutory will. A statutory will involves providing the courts with the authority to make, change, or revoke a will, on behalf of incapable persons. For more details surrounding the background of these legislative enactments, please see our previous blog posts on the subject here and here.

Following the enactment of legislation granting the courts with this authority, there have been discussions surrounding some of the practical effects that at the time, remained yet to be seen. An update on some of the issues is as follows:

The Mental Capacity Act 2005 (“MCA”), which came into force in England and Wales in 2007, provides the court with the ability to make, change, or revoke an incapable person’s will by determining what would be in the person’s best interests. This is considered a contrast to previous legislation which provided for a “substituted judgment” approach. One argument that has since been raised against the application of the best interests approach has been whether it is compatible with the right to equal recognition under the UN Convention on the Rights of Persons with Disabilities.

A common observation that has been made in support of the use of statutory wills is that they can, at times, be more tax effective than if a person were to die intestate. Accordingly, in some jurisdictions, the use of testamentary trusts has been applied within the creation of a statutory will. For instance, in Australia, the Queensland Supreme Court allowed a statutory will including testamentary trusts in Doughan v Straguszi [2013] QSC 295, where it was shown that the testamentary trusts would protect a wider array of family members and future interests.

Another issue is under what circumstances service can be dispensed with in cases of an application for a statutory will. In the UK, it was submitted in Re: AB [2013] EWHC B39 (COP) that this decision should be taken in accordance with s. 1(5) of the MCA which provides that “An act done, or decision made, under this Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests.” The court held that the principles of the MCA could not be strictly applied to such a decision and that it should be made in exceptional circumstances in accordance with the Court of Protection Rules.

Thank you for reading.

Suzana Popovic-Montag

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