Experience with The Public Trustee

[Terryw]

Fees for public trustee in QLD are here
http://www.pt.qld.gov.au/publications/fees-and-charges.html

We thought it was pretty straight forward:
If I die it all goes to my wife
If she dies it all goes to me
If we both die, who cares, we'll be dead.

We did set it up so certain named assets go to one family and certain named assets go to another family.
We did lay out steps to be taken, so not sure why it would be a problem.

I have heard "stories" about how bad they are but have not actually seen any evidence of it.
And never having used a solicitor or public trustee to handle my affairs when I die, I cannot honestly compare the two.

But who will process all this once you are dead? This is the problem. Applying for probate is a bit complicated. Its even more complicated when there is no will.

And acting as an executor for someone's will is not easy. It takes a lot of time and is stressful - especially when beneficiaries are eager to get their hands on the estate. The executor generally doesn't get paid - unless they are a professional. But they can apply to the Supreme Court to get payment - another complciation. Executors can also be liable for mistakes and debts incurred - eg. if they do not properly advertise or mistakenly distribute money they can be personally liable to a beneficiary who missed out.

The best way is to gift everything before you die - and then die with a tax debt.

 

[fernfurn]

are you serious? can you do this? is there gift taxes involved? what happens with the tax debt? do they go after the heirs for it?

 

[Terryw]

are you serious? can you do this? is there gift taxes involved? what happens with the tax debt? do they go after the heirs for it?

Are you serious?

There is no tax on gifts in Australia. If I were to give you $10,000 would it be taxed?

If someone dies and there is a shortfall with more debts then assets then the creditors simply miss out. The dead person cannot pay.

Third parties cannot be held liable for the debts of another unless they have given some sort of guarantee. So heirs cannot be liable - anyway how could they be heirs if there is nothing to give them.

Even your life insurance cannot be used to pay debts of the estate.

 

[DEC]

^^ all very good if you know what date you are going to die on and there will still be stamp duties and various other fees

 

[Terryw]

^^ all very good if you know what date you are going to die on and there will still be stamp duties and various other fees

Date is not that necessary - we all know we are going to die sometime. So if you plan your estate in advance you can largely do it. eg. not acquiring property in your own name.

There will only be stamp duty if you are gifting dutiable property such as land. Other property such as shares, units in unit trusts, businesses etc would generally not be held in personal names anyway.

It you have real property in personal names then there is always the withdrawal of equity option - subject to servicing.

Imagine you have purchase a $100k property in 1985 (October) and it is worth $2mil in 2020. GG would be roughly $1,900,000 or $950,000 after 50% discount. Tax payable on this may be around $400,000. Imagine if you could borrow 90% of $2mil = $1,800,000. You spend the cash and die just as you are handing over your last $1 timing it perfectly.

Estate sellings the property - your ownly asset and realises $200,000. But you owe the ATO $400,000 plus income tax which you hadn't paid for the past 4 years.

Made up figures with lots of exagerations, but that is the general picture.

Of course not many know the exact year they will die, but some have a general idea - however getting a loan at this stage may not be easy.

BTW, if anyone has a terminal or even serious illness the ATO will often forgive tax debts.

 

[spridget]

Hi,
My father left his will in the hands of the PT Tasmania. Bad move. Their fees plus fees to the agent they engaged cost us nearly 10% of the sale of the family home. Once they take hold you have no say and no rights in how the property is handled. Getting any information from them was a nightmare. As you are not actually entitled to any say in the sale, giving you information is considered pointless.

 

[wylie]

Our PPOR was bought via Public Trustee auction. It was owned by a lady in her 70s who had a relative (cousin?) of a similar age living with her. She went into hospital for a reasonably simple procedure and died unexpectedly.

She left an estate worth a few million to the Salvation Army with the Public Trustee managing it. The relative was distraught and was give something like two weeks to get out of the house.

Our neighbours stepped in and negotiated with the Public Trustee to allow her more time to find alternative accommodation. They said it was not an easy negotiation. She also claimed that a new will had been made, leaving the house to her and had apparently been witnessed by another neighbour. That will was never found, so the original will was carried out and that relative had to find other accommodation very quickly, whilst grieving and wondering what happened to the will.

This story makes me wonder why there is not some central repository for wills, similar to storing title deeds. This must happen a lot. New will is tucked away at home somewhere whilst the old one is found and followed.

This is the story told to us by the neighbours involved.

 

[DEC]

Hi,
My father left his will in the hands of the PT Tasmania. Bad move. Their fees plus fees to the agent they engaged cost us nearly 10% of the sale of the family home. Once they take hold you have no say and no rights in how the property is handled. Getting any information from them was a nightmare. As you are not actually entitled to any say in the sale, giving you information is considered pointless.

Would it have been any different if a solicitor was handling it?

Published fees for PT Tasmania

To administer an estate
When your estate is administered a fee is charged on assets held in your sole name that are either realised or transferred to a beneficiary:
On the first $100,000 or part 4.4%
On the next $200,000 or part 3.3%
On the next $200,000 or part 2.2%
On amounts above $500,000 1.1%
It's important to know that the fee will be reduced:
if you own assets (say, your house, or land) as a joint tenant then no fee is charged at all
if you have solely-owned assets which are classed as 'matrimonial assets' and which are transferred to your surviving spouse or defacto partner - for example the family home, motor vehicle, household effects and furniture - then the fee charged on these assets is only 2.2%.

http://www.publictrustee.tas.gov.au/article.php?Doo=ContentView&id=650

 

[pennyk]

Would it have been any different if a solicitor was handling it?

I found that the PT had a very "fixed" way of dealing with things. My situation was different as my mum was still alive. But they couldnt accept the fact that we wanted to hold onto her assets, which were producing enough income to cover her nursing home costs. They wanted to sell the assets..... because it was easier for them to "supervise".....even though keeping the assets together was likely to result in them having a much higher value, and we knew it was definitely NOT what our mother wanted. She would have been horrified.
Honestly, it took around 4 or 5 months, and mountains of paperwork, to get approval to rent out her home. (and we were guardians, so their only role was to ensure that we werent being negligent in our duties).
Dealing with a solicitor since mum died has been much easier....... We can discuss things, get advice from the solicitor and then make a decision on how to proceed very quickly and with a minimum of fuss. There is a relationship there, rather than a bureaucracy.

I think having any government department involved in your financial life is a bad idea!!

 

[Terryw]

This story makes me wonder why there is not some central repository for wills, similar to storing title deeds. This must happen a lot. New will is tucked away at home somewhere whilst the old one is found and followed.
.

There is. Wills can be deposited with the Supreme Court registry in NSW. There is a fee involved though and this usually turn people off

 

[Terryw]

There is. Wills can be deposited with the Supreme Court registry in NSW. There is a fee involved though and this usually turn people off

The fee in NSW is $110.

 

[wylie]

There is. Wills can be deposited with the Supreme Court registry in NSW. There is a fee involved though and this usually turn people off

I didn't know that. Thanks.

I believe wills should be made by solicitors and they should be made to lodge them. The cost could be built into the cost.

Of course, that would mean that home-made wills would no longer be accepted, but my experience of home-made wills (my FIL) was a disaster. He knew more than any solicitor , left a dog's breakfast, split the family, all because he thought he knew everything. He didn't even know that he couldn't leave his half of the marital home (held as joint tenants) to two of his children .

What a bl00dy mess that created, and left scars that, twelve years later, still are not healed.

 

[Terryw]

I didn't know that. Thanks.

I believe wills should be made by solicitors and they should be made to lodge them. The cost could be built into the cost.

Hi Wylie

Sometimes solicitor drawn wills are not much better.

I am looking at a will now drawn by a solicitor. The testator wants to leave a large part of his assets to charity. But the charities named in the will no not exist! There are no entities registered in the names listed in the will. No ABNs in the will - solicitor didn't check, just wrote in the names given by the client. approx $3million involved in this gift too.

Same solicitor has put a clause in the will which says "I direct that my superannuation form part of my estate". But provided no advise that this is not binding on the trustee of the SMSF. No advice that he needs a binding death benefit nomination. No tax advice. So if this guy were to die tomorrow one of his children would control his $2mil in his SMSF.

 

[wylie]

That is a worry, isn't it. You go to a "professional" only to find you've paid good money for a dud product.

Is that common Terry? I do know that the will my parents made to deal with our particular family circumstances replaced a very similar will, but in that earlier one (different solicitor) the asset forming the base of a testamentary trust was to be divided between all grandchildren at the death of the person it looked after.

Turns out, that it would have gone to his only son. The second solicitor pooh-poohed that mistake, but he made a fairly fundamental error of his own. It is too late to fix his error now. Luckily it is not such a biggie, but it does make me wonder why he was so smug about finding the error made by the other solicitor

 

[Terryw]

Yes these things are common.

I had another friend who died last year. I counted 8 things wrong with his will which was drawn up by a solicitor just months before he died. I know this solicitor and she had told me of the many hundreds of wills she has drawn up over the years so she has experience.

Firstly he had an executor who was 70 and he didn't want to act in this role. This left the back up executor who was almost 80 and she just couldn't do the job due to lack of ability.

He left assets on trust to his 13 year old son until he was 25. The executor of the estate would also be the trustee - the 80 year old would be trustee for another 12 years! No consideration about the tax aspects.

He left shares in his Pty Ltd company to his parents who were on the pension and then the company went into liquidation before his death anyway.

There were many other mistakes too - maybe not so much mistakes but not carefully thought out the way things would pan out.

His estate ended up with debts more than assets so it didn't really matter in the end, but it could have been a disaster.

 

[DEC]

I found that the PT had a very "fixed" way of dealing with things. My situation was different as my mum was still alive. But they couldnt accept the fact that we wanted to hold onto her assets, which were producing enough income to cover her nursing home costs.

That should have been stipulated in the will or wishes shouldn't it?
Who had the power to make the decision, you or them?
If power of attorney was given to them, I am surprised you got any say.

 

[Terryw]

That should have been stipulated in the will or wishes shouldn't it?

Not if she was still alive!

 

[Terryw]

ie, wills only apply upon death of the testator.

While a testator is still alive they would need to appoint an attorney to look after their financial affairs and a guardian to look after their other non financial affairs.

 

[DEC]

ie, wills only apply upon death of the testator.

Yes, but isnt there the facility to have what you want to happen "in case of" put in writing for the person who has power of attorny to follow?

While a testator is still alive they would need to appoint an attorney to look after their financial affairs

That was my point, it seems that PT was the appointed one and not PennyK, if I read the post correctly.

Terry, you seem to have some legal knowledge are you a solicitor?
If so, how is average joe supposed to know if his/her existing will has been written correctly given some of the examples given above ?

 

[Terryw]

You could draft an enduring power of attorney broadly or have restrictions. Most people probably don't properly consider the possibilities of what could happen to them.


BTW, in NSW at least, most power of attorny would cease to operate on incapacity, only an enduring POA would continue.