VIC Possible fraudulent establishment of testamentary trust

[TrustMess]

Hi everyone,

I'm trying to make sure my mother (and also therefore myself and my brother) aren't getting screwed out of our share of the inheritance from our grandfather, who passed away last year.

A testamentary trust was recently established after my grandfather's death. My aunt (mum's only sister) says she's the sole trustee of the resulting single testamentary trust. However I recently got some legal advice about it and was told by the solicitor that from his reading of the will it seems that the estate should have been split equally between 2 separate trusts, one with my aunt as trustee and one with my mother as trustee. If my solicitor is correct, my aunt's solicitor could potentially be guilty of assisting my aunt to commit fraud. My grandfather's will says:

"...where a primary beneficiary has been nominated and determined in respect of a trust, the primary beneficiary or the person nominated by the primary beneficiary shall be the trustee of the trust."

"...My executor shall divide the balance of my estate not already dealt with under the preceding clauses of this will ("the remaining balance") into one or more equal parts, sections or portions, and shall hold on trust in accordance with Part C of this will, and dispose of such parts, sections or portions as outlined in this clause."

"...Each of my children [name], [name] who survive me by 30 days shall be the primary beneficiary of a trust for one such equal part."

I just wanted to run this by you guys as well to get some second opinions and check my solicitor's interpretation is correct, and hear any tips or advice anyone may have for me. One problem I have is that my mum just tends to go with the flow and will probably be extremely reluctant to do anything about this. She won't want to annoy my aunt. Mum is quite willing to forget about her rights and just trust that the aunt will handle the finances for her.

I might be able to invoke power of attorney to deal with things myself as mum is in the early-mid stages of a neurological illness but not sure what options I have if she won't do anything. Any advice would be greatly appreciated, thanks!

 

[Lance]

Hi,
Its hard to be certain without the whole will to determine context but I would be listening to your lawyer, it sounds like they know what they are talking about. There may be some ambiguity with the "this is to precede other clauses" type statements and that my mean the other solicitor might not be helping your Aunt commit fraud, it could just be an interpretation error. The final point is if your mum formally nominates you to deal with her portion as the nominated by primary beneficiary person you can contest their interpretation.

 

[TrustMess]

Thank you for the response, Lance. Yes, that's true - it could just be a misinterpretation, but isn't it their job to interpret the will correctly? It's been through probate. Hopefully my lawyer can assist with this. I suppose if mum won't authorise me to act for her I'll just have to wait until she dies before I can do anything about it. My aunt isn't likely to hand over mum's share voluntarily. She wants to manage it all. Mum will be in a nursing home eventually (probably within 10 years).

 

[TrustMess]

Update: I've found out from the trust lawyer (who I've since learned has a history of trust fraud!) that the reason mum's sister continues to hold and manage all the assets is because mum has just agreed to let her do so for the time being. Mum just feels it's easier as her sister knows all the ins & outs as a result of managing their father's finances for so long. Mum is very passive about this.

I'm not sure what I can do about this as mum says she doesn't want to "rock the boat" with her sister and seems to be essentially giving up her right to her share of the inheritance. Mum has never been confident about / good at managing money and is getting quite dithery with her Parkinsons Disease. Her sister keeps bamboozling her with scaremongering about tax & future pension eligibility and I think she is too overwhelmed to just take her share. She doesn't want to put the sister off-side. The sister has said she's going to try to grow the portfolio with a view to giving mum a passive income from the earnings in ? years' time. So far mum's sister is paying her a small weekly allowance from the trust income (about $100 per week).

The trust lawyer assures me that my brother and I will inherit mum's share when she dies but we don't trust mum's sister and the lack of transparency about how the money is being managed really worries us. We only know what she tells us. What are our options? As I see it, our options may be roughly:

1. Try to invoke POA to take control of mum's finances on the grounds that she's incompetent to manage her own affairs and hold / manage the assets for her (difficult - I can't see us being able to get her declared "incompetent" and not even sure how one is meant to go about this). I guess we should contact her GP / neurologist?
2. Try to remove our aunt as the trustee of mum's share of the estate with court action / searches on her financial activities to see if there's been any impropriety - I've read that trustees can be removed if there's sufficient distrust of a trustee
3. Just sit tight, do nothing and wait until mum dies & hope that we see some inheritance
4. Talk to my lawyer again about the situation and get their opinion (I will be doing this to shed light on the above)

It's not nice and I know mum doesn't want acrimony between herself and her sister but I feel like she's putting us in a really difficult position here where we could potentially lose everything to mum's sister. Mum hasn't formally agreed or signed anything in writing consenting to letting the sister manage her share of the estate so I don't know who the assets will "belong" to when mum dies. Thanks for any advice you may be able to give. Cheers.