The executors of a complex estate came to Redchip to resolve problems created by the deceased’s insufficiently drafted Will, with the goal of avoiding a litigious battle with beneficiaries.
The majority of the deceased’s assets were held in companies and trusts, so his personal estate itself had very little funds.
There were over 30 entities to consider including unit trusts, discretionary trusts, companies and corporate trustee companies. Some of these entities were controlled solely by the deceased, whilst others had the involvement of the deceased’s family members. There were also several inter-connected loans between the entities that ultimately impacted the distribution to the beneficiaries.
The Key Issues
The deceased’s Will was not appropriately drafted to manage the extent of his assets, entities and complex relationships.
There were assets of the deceased that were intermingled with the assets of various other family members, without adequate succession planning behind them. His passing therefore impacted surviving family members’ businesses and business assets.
Several entities controlled by the deceased were not mentioned in his Will at all. Under the terms of the governing documents of these entities, their control defaulted with the executor of the deceased’s estate, who then had to appoint a suitable person to take control. The challenge here was that the family members were not on good terms, so no one was allowed to be the sole controller; but, at the same time, no one was prepared to act jointly with another.
There was also an issue of the related loans between entities creating an unequal distribution to beneficiaries, which the beneficiaries predicted would be challenged.
The first step was to gain clarity over the extensive estate assets. Our estate experts collated all relevant documentation including missing trust deeds, trust deed amendments, company constitutions and the financials of each entity to understand the existing succession mechanisms in place.
Our experts devised a strategy to restructure the distribution of the assets and satisfy all beneficiaries without the estate turning litigious. This involved open and transparent round table discussions on behalf of the executors with the beneficiaries.
Ultimately, the beneficiaries were pleased with the strategy and outcomes, and a settlement deed was drawn up.
Through Redchip’s solutions, the executors of the estate were able to offer the beneficiaries and the future controllers of the deceased’s entities a solution to save over $550,000 in transfer duty costs that would have been incurred had the assets been carved up amongst the various beneficiaries in accordance with the original Will.