Unsatisfactory conduct: Lawyer-executor fined proposed variation to will not implemented
This is a summary of a decision by a Lawyers Standards Committee under the Lawyers and Conveyancers Act 2006. This summary was published in LawTalk 786, 2 December 2011.
A lawyer who was the sole executor under a deceased client’s will was censured and fined by a Lawyers Standards Committee after he failed to notify one of the beneficiaries that a proposed variation to which the beneficiary had agreed had not been implemented, to the beneficiary’s disadvantage.
Mrs B, the client, had died in 2007 aged 81. She had earlier been in a de facto relationship with Mr C, who had predeceased her.
The house in which they had lived was owned by both of them as joint tenants and had passed to her when Mr C died. Apparently they had had an unwritten understanding that if Mr C died first, his assets would pass to Mrs B and then from her to his six children. One of those children, Ms D, was married to Mrs B’s lawyer, and was a partner in the same law firm.
Mrs B, the deceased client, had no children herself, and apparently the only relative who assisted her in any way was her nephew, who was the complainant in this case.
After Mr C had died, Mrs B told her lawyer (A) she wanted to change her will so that it would benefit only Ms D (the lawyer’s wife) and exclude Mr C’s other five children. A told Mrs B he wasn’t able to prepare a will for her to that effect and so she instructed another firm to do so. Under the terms of this will, signed in May 2004, A was appointed sole executor and the house passed to Ms D alone. The residue, which was likely to have been nil, was to pass to Mrs B’s nephew.
Mrs B later decided to change her will again. She told A she didn’t want to travel to see the firm who had prepared the last will, nor to pay their charges. A then prepared a new will, under which he was again the sole executor. The will allocated funds from Mrs B’s bank account and life insurance to pay debts and funeral and testamentary expenses, and it gave any surplus funds from her account (apparently there would have been none) to her nephew. The rest of the estate went to Ms D, A’s wife.
The nephew’s complaint concerned a proposal A had put to him by letter in August 2007, after Mrs B had died. The proposal was for the will to be varied to divide the house property seven ways ‒ between the nephew, Ms D, and Mr C’s other five children.
The nephew told the Standards Committee he had agreed to this orally and had believed the proposal would be implemented. However, he later discovered the property had been sold and the estate distributed, and he had not received a one-seventh share as he had expected. He apparently did receive household contents, plus the funds in the bank account (roughly $6,600) and the proceeds from the insurance policy (roughly $9,000).
A told the committee that his August 2007 letter had simply been a proposal. The nephew, however, viewed it as an offer that he had then accepted. He complained that he had now lost any right to bring a claim for undue influence or a claim under the Law Reform (Testamentary Promises) Act 1949. The nephew’s lawyers argued that in the letter putting the proposal, A should at the very least have advised the nephew to obtain independent advice, which would have ensured that the estate was distributed according to the proposal.
The committee found it had been unsatisfactory conduct for A not to have notified the nephew of the sale of the house or of the distribution of the proceeds, given that he had put a written proposal to the nephew, that the nephew had then accepted it, and that A had failed to notify him that the proposal would not be implemented.
The committee censured A and fined him $1,000. It also ordered him to pay $250 costs to the Law Society.