Matsis; Charalambous v Charalambous & Ors [2012] QSC 349

The Supreme Court of Queensland was asked to consider whether it could authorise a codicil for Mr Matsis to amend the terms of his Will to provide for the establishment of separate testamentary trusts for the beneficiaries.

Mr Matsis had a very large estate. In 2001, he prepared a basic Will. Due to the large size of his estate the solicitor preparing Mr Matsis’ Will suggested that he incorporate testamentary trusts in his Will for asset protection reasons and tax purposes. As Mr Matsis was in a hurry to prepare his Will at the time, a basic Will was drafted without the inclusion of any trust provisions.

In 2005, Mr Matsis’ mental capacity began to decline and by 2009 he was a full time resident in a dementia unit. As a result of his illness, Mr Matsis was unable to update his Will as he had lost testamentary capacity.

Under the basic Will, the three grandsons of Mr Matsis were entitled to receive his estate equally. Two of the three grandsons were involved in businesses which carried a financial risk and it was likely that the third grandson would also soon be involved in a similar business. Whilst none of the grandsons were subject to any current claims from creditors it was important that their inheritances could be protected as much as possible. The incorporation of testamentary trusts would assist in providing that protection.

One of the grandsons made an application to the Supreme Court of Queensland pursuant to section 21 of the Succession Act 1981 (Qld) for an order that the Will be amended by way of a codicil to include testamentary trusts for each of the grandsons. The proposed codicil did not seek to alter the distribution of the estate, but rather to give the beneficiaries flexibility and protection around how they could hold their inheritance.

Section 21 of the Succession Act 1981 (Qld) gives the Court power to alter a Will for a person without testamentary capacity. When invoking this power the Court must consider what the willmaker may have done if he did have capacity.

After consideration of Mr Matsis’ history, the large size of the estate and the circumstances surrounding the preparation of his Will, Judge Lyons accepted that the proposed codicil incorporating the testamentary trusts for the benefit of the grandsons was one that Mr Matsis may have made had he had the capacity to do so.

The Court found that the incorporation of testamentary trusts would be consistent with Mr Matsis’ entrepreneurial nature, the fact that he was very supportive of his grandsons’ business enterprises and insistent that his wealth was kept within the family.

Comment - This case is somewhat unusual as the Court was asked to amend a Will purely for the purposes of estate planning reasons. It is unclear whether such a position will be accepted by other Australian States and Territories. Readers of previous editions of Wills Watch will recall the New South Wales case of Hausfield v Hausfield & Anor [2012] NSWSC 989 in which the Court refused to grant an application of the deceased’s son seeking that he be removed from the Will and instead the inheritance be gifted to the son’s wife on the basis that it was likely that the son was to become bankrupt.

If nothing else, the Queensland case highlights the importance of proper estate planning and the benefit testamentary trusts provide to beneficiaries, including asset protection and taxation benefits. If beneficiaries are in business, at risk to creditors, or in the midst of a matrimonial property settlement, it is wise to seek advice as to the options available for their Will to ensure that the estate is protected and beneficiaries receive their inheritance in the most effective manner.

Regular review of an individual’s Will is also vital to ensure that the Will is current and up to date with changing circumstances. Whilst in this case, the Court was able to and did accept to amend the Will, there was uncertainty, delay and costs which could have been avoided.