2017-09-08
Ms PENNICUIK (Southern Metropolitan) — I am pleased to speak on the Administration and Probate and Other Acts Amendment (Succession and Related Matters) Bill 2016. This bill amends the Administration and Probate Act 1958, the Guardianship and Administration Act 1986 and the Powers of Attorney Act 2014 to implement some of the outstanding recommendations of the 2013 Succession Laws report of the Victorian Law Reform Commission relating in particular to intestacy, where a person dies without having made a will, and makes some amendments in regard to the distribution of property under those circumstances. It also makes some amendments with regard to executors fees and commissions and to the law relating to the issue of ademption.
In essence, the key proposed changes aim to ensure that when a person dies without a will their partner, if they have a partner, will gain a greater share of the estate so that they are adequately provided for and can continue to support their families. The bill also provides safeguards against estates being depleted by excessive executor fees, including the requirement that executors give the beneficiaries an estimate of their costs and that the Supreme Court will also have the power to review and reduce the fees or commission charged by an executor — usually an executor who is a lawyer in this case. The bill will also require the will-maker to provide a separate written consent to any clause in the will which gives the executor the right to charge fees or commission. If there is no such clause in the will, then the consent of the beneficiaries or the approval of the Supreme Court will be needed.
The Greens are supporting this bill. We note there have been some differences of opinion amongst certain parts of the legal profession about certain provisions, in particular the changes to the charging of executors fees and the oversight of the Supreme Court in that regard. But having considered the bill carefully and having considered the representations that have been made to us by certain solicitors and their representatives, we believe that overall the bill gives effect to the recommendations of the Victorian Law Reform Commission (VLRC) report in providing much of the further regulation that is needed in this area.
The Scrutiny of Acts and Regulations Committee (SARC) raised one concern about the bill, and that was in relation to clause 11. This clause inserts new section 70ZL, which in effect provides that if a person dies without a will and with no surviving partners, descendants, parents, grandparents, siblings, aunts, uncles, first cousin, or child of a deceased sibling — that is, a niece or nephew — then the intestate's property would pass to the Crown. SARC questioned whether this engages the charter right not to be deprived of property other than in accordance with the law and in particular the charter right of Aboriginal persons who maintain their kinship ties. This is an important issue that has been raised by SARC.
The minister has responded by saying that in effect the Department of Justice and Regulation is looking into this issue to meet the needs of the Indigenous community in Victoria and to see if further legislative amendments are needed. I would have preferred that if those legislative amendments were needed they were actually in this bill rather than in a subsequent bill, because it is an important area. But I am pleased to see that the government has taken it on board and is looking into it. I am looking forward to seeing what happens with regard to that important issue.
This bill is based on the chapter relating to executors costs and commissions in the Victorian Law Reform Commission report, which is particularly important for this bill and is an issue raised by Mr Rich-Phillips. In fact it is the issue that the Liberal Party's amendments go to. The report recognised that almost all executors are trusted friends and relatives of the will-maker. The remainder provide executorial services in a professional capacity and could include legal practitioners, accountants, financial advisers and trustee companies. Trustee companies are already regulated by other provisions.
Executors cannot claim money from the estate for their time and trouble unless they are authorised to do so. Trustee companies are authorised by legislation to charge for these services. All other executors need the informed consent of the will-maker or beneficiaries, or otherwise can seek authorisation from the Supreme Court. Payments to executors, which it should be noted are quite rare in the general scheme of things, are commonly in the form of a commission expressed as a percentage of the capital and income of the estate. Some professional executors charge fees instead of claiming commission; others claim commission for their executorial responsibilities and charge fees for any other additional services they provide.
The Victorian Law Reform Commission reviewed whether special rules should exist for legal practitioners who act as executors and also carry out legal work on the estate, including rules for the charging of costs and commission in relation to all executors, and whether a court should have the power to review and vary the costs and commission charged by them. At the heart of these issues lies a conflict between duty and interest that can arise when an executor charges for their time and trouble. That is, there is a duty to act in the interests of the beneficiaries of the will, but there is also the issue of the executor claiming from the estate moneys for meeting their responsibilities whereby they are drawing from assets to which a beneficiary or beneficiaries might otherwise be entitled. Unless the conflicts of duty and interest are carefully managed, as the commission noted, assets could be at risk of being depleted by excessive or unnecessary charges.
The commission noted that while most legal practitioners act in the best interests of the will-maker and beneficiaries, some legal practitioner executors have taken unfair advantage of their position by charging the estate without the informed consent of the will-maker or beneficiaries, claiming excessive amounts, receiving both commission and professional fees for the same services.
The Administration and Probate and Other Acts Amendment (Succession and Related Matters) Bill 2016 implements a number of reforms. Wholly or in part they are recommended by the VLRC in its review of executors fees and commission and of the role of legal practitioners as executors. I have acted as an executor myself and been involved with the death of a person who died without a will, and looking theoretically at the changes made by this bill, looking at what the commission recommended, looking at the amendments in the bill and looking at my own personal experience of these issues, I think the bill strikes the right balance in this regard. Of course, if a person dies without a will, that immediately engages the Supreme Court, so there has to be a finding by the Supreme Court as to who may be the beneficiaries. They have to go through a process of working out whether there are any beneficiaries somewhere that may not be immediately obvious.
The Supreme Court is very experienced in and has a very long history of dealing with probate. I say this because there have been some representations made to us about this bill and about the involvement of the Supreme Court in terms of where a beneficiary may make an application to the court about the commission claimed or the fees charged by a professional executor, which would be the situation in most cases, rather than by a family member or trusted friend. Some concerns have been raised about the involvement of the Supreme Court.
I do not really see any concern there given the very longstanding role of the Supreme Court in this area and their experience in dealing with these issues, some of which can be very complex. I would also say that my personal experience in acting in these regards is that the vast majority of people by far who act as executors are family members or trusted friends of the testator, and they do not get any remuneration, nor do they seek it; they act on behalf of their deceased relative or friend with no expectation to receive any remuneration for doing that. It is done out of the goodness of their hearts or the respect or duty they feel they owe their former relative or friend.
While I understand that the Victorian Law Reform Commission recommended that executors who are solicitors, accountants et cetera appointed by the will-maker can still be able to claim some remuneration or commission from the estate, this bill makes sure that that is not excessive. It also leaves in place the ability for legal practitioners to charge for their professional services, which is a separate issue.
An executor in any case, whether they be a family member or friend, may have to engage — and probably very often have to engage — some sort of legal professional advice to assist them in carrying out their duty, which is to make sure the wishes of the testator are carried out and that the beneficiaries as named in the will actually receive the benefits as desired by the testator. That is a separate issue from acting as an executor, and I think that needs to be seen as a separate issue. I am concerned that it has not necessarily always been seen that way. In fact Mr Pesutto, I think, in his contribution in the Assembly referred to professional executors being entitled to some commission. I do not know that it is an entitlement given that the vast majority of executors do not receive any remuneration or commission. I think that is a bit of a strong word. Certainly for rendering professional services they should be remunerated.
The other comment that was made was that the skills of an executor should be taken into account when deciding on a commission. I am really not convinced of that at all because, as I have said, most executors are family members or friends of the deceased person and may have no skills whatsoever in terms of legal skills, but they still carry out their role as best they can, and of course where they need legal advice or legal skills they would go to a legal professional.
There is quite a lot of detail in the bill with regard to how an estate will be attributed or divided where someone has died without a will. I will not go through all that detail except to say that it looks quite sensible to me. I was concerned that in the broader sense the issue of nieces and nephews did not come up, because there were aunts, uncles, grandparents, parents and first cousins but there was not a mention of nieces and nephews. But I did look at the particular provision and noted that in the case of a deceased sibling, the children of the deceased sibling would be entitled to be beneficiaries under the guidance of the Supreme Court looking at the estate of someone who has died without a will. So I am happy to see that.
As I say, I think there is an awful lot of detail with regard to that that does not necessarily have to be spelt out here. Suffice it to say I think this bill actually makes things a lot clearer. Having been through the process of a dear friend who died without a will, the long time it took to get through it and the amount of confusion and uncertainty that entailed for some beneficiaries, I am pleased to say it did work out well in the end. But it is good to see it now included in this bill to make very clear what will happen in that unfortunate circumstance.
The Greens are not able to support the amendments put forward by the Liberal Party for the reasons I have outlined in regard to the activities of executors and legal practitioners. I understand there is a contrary view amongst some of the legal profession. I have taken that into consideration, and I have thought a lot about it. I have asked the Attorney-General questions about it. His office has responded to those questions, and on balance I think the bill strikes the right balance in that regard.