Lessons from Hausfeld v Hausfeld & Anor  NSWSC 989.
On 13 August 2012, the Supreme Court of New South Wales was asked to alter the will of Mr Hausfeld pursuant to section 18 of the Succession Act 2006 (NSW).
Mr Hausfeld prepared his Will in 2004, leaving his estate to his wife (who had since predeceased him) and in the alternative, equally between his three children. Mr Hausfeld suffered from dementia and had lost testamentary capacity to amend his will himself.
Mr Hausfeld’s son made an application to the Court seeking that they alter Mr Hausfeld’s will by removing him as one of the beneficiaries and instead gifting his share of the estate to his wife. The son no longer wished to be a beneficiary of his father’s will as he was a party to litigation proceedings, which had the possibility of making him bankrupt. The son did not want to see his share of the estate potentially lost to his creditors.
In determining whether to alter Mr Hausfeld’s will the Court considered:
- if it was reasonably likely that the proposed alteration would have been made by Mr Hausfeld if he had testamentary capacity, and
- whether it was appropriate for the order to be made.
The Court held that whilst it was reasonably likely that if he had the ability to do so, Mr Hausfeld may have amended his will in the terms sought by his son, it was not appropriate for the Court to authorise the alteration in order to defeat the son’s creditors. The policy of the law that individuals should pay their debts so far as they are able to do so was thought paramount.
Comment – Mr Hausfeld may have been in a position to alter his will himself prior to losing testamentary capacity and highlights the importance of reviewing your will regularly. A regular review will ensure that your will remains up to date to reflect any changes in the personal circumstances of yourself or your beneficiaries. If professional advice had been obtained in this case at the right time, it may have been possible to establish a testamentary trust for the benefit of the son and increase the ability to protect his inheritance from potential creditors.