Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 29 April 2017.
When John, suffering dementia and incapable of managing his affairs, is admitted into a nursing home, his second wife of 20 years, Jane, sells all his property.
At John’s expense, Jane buys an expensive car and jewellery, enjoys holiday cruises with her side of the family and gambles.
With John’s money, Jane also purchases real estate in her children’s names with a view to building a granny flat on the property.
When John dies, his two children discover that although they are each entitled under his will to a quarter of the residue of his estate, his estate now consists of very little. They commence proceedings against Jane.
The court hears that 10 years earlier, Jane was appointed as John’s enduring power of attorney. The power of attorney did not contain a provision that allowed Jane to confer benefits on herself.
In her defence, Jane says that the relationship of husband and wife means that she has no obligation to account to anyone.
The court states that the power of attorney was executed for the purpose to allow Jane to manage John’s estate for his benefit during his incapacity and that any benefit that she might receive should not be more than “incidental”.
The court also states that Jane could have applied to the court, during John’s lifetime, to manage his affairs in a way that provided benefits to her.
The court ultimately finds that Jane is liable to account to John’s estate for mismanagement of his property and with the assistance of a forensic accountant, orders Jane to repay over $1 million to his estate. The funds used to purchase property in Jane’s children’s names can also be “traced” to satisfy the judgement.
If you would like Manny to address a particular legal issue, send your request to manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.
