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Any information contained in a blog on this website is general in nature only. The content of any blog posted below reflects information which is known to us as at the date of the posting of the blog. Please be aware that the law regularly changes. Please do not rely on the general information contained in the below blogs, instead we recommend that you contact us to obtain legal advice tailored to your own specific situation.

 

Jun24

Acceptance and Disclaimer of Gifts left in a Will

Amanda Quin - Tuesday, October 22, 2019

Disclaimer of Gifts - Blog by Andrew Cannon - email aac@peacockes.com
 

Do I have to accept a gift left in a Will ?

Whilst it is uncommon and unusual for someone to want to refuse or be unwilling to accept a gift left to them in a Will, also known as a renouncement or disclaimer of gift, it is well-recognised that a beneficiary has the free will and discretion to do so. Courts of Equity, both past and present in Australia have confirmed the fundamental principle that a person cannot, under any circumstances, be forced to accept a gift left to them in a Will. This draws upon an authoritative statement set out by Justice Holroyd at 577 in the English authority of Townson v Tickell (1819) 3 B & Ald. 31 that:

“I think that an estate cannot be forced on a man. A devise, however, being prima facie for the devisee’s benefit, he is supposed to assent to it, until he does some act to show his dissent. The law presumes that when the contrary, however, is proved, it shows that he never did assent to the devise, and, consequently, that the estate was never in him”.

Today, this statement on the disclaimer of gift has been endorsed in principle as evinced by Justice Ward in Tantau v MacFarlane [2010] NSWSC 22 at 77 that:

“… there is no doubt that it is open to a beneficiary to disclaim a gift made in its favour under a Will, though it is said that generally the disclaimer must be absolute (not partial) in its operation…”

Since Townson, Equity in Australia has arguably evolved the principles regarding disclaimer of gift in a Will. This ‘evolution’ is in the form of more modern requirements set out by the Courts which provide that a disclaiming beneficiary:

  1. Cannot disclaim a gift (where left to them in a Will) before the passing away of a testator;
  2. The gift must be refused by deed or positive conduct, to avoid any inference of ambiguity (It is confirmed that a beneficiary cannot disclaim a gift in a Will left to them merely by silence or a period of inactivity. Conversely, a beneficiary wishing to disclaim a gift is arguably best served to confirm such a decision in a deed of agreement, which is signed and witnessed by all the parties);
  3. The beneficiary cannot disclaim the gift/ beneficial interest after it is accepted (however the judicial and academic commentary on this point has been somewhat ‘stretched’ and unsettled by the concept of ‘initial acceptance‘ and retraction: See Tantau at [75] – [122] );
  4. Once the gift is disclaimed, the position of the disclaiming beneficiary is final and absolute;
  5. The beneficiary disclaiming their gift cannot choose whom is to inherit what would otherwise have been their share of the beneficial interest/gift.

When may a disclaimer/renunciation of a gift left in a Will be appropriate ?

In some circumstances, a beneficiary may have very good reasons for disclaiming a gift or beneficial interest left to them in a Will.

Such circumstances may include, but are not limited to:

  • A beneficiary of a trust may wish to disclaim their beneficial interest held in a Trust structure in order to avoid an undesired capital gain from arising ( ie. Cost/benefit where the cost of the possible adverse tax consequences may outweigh the financial benefit of receiving the gift/ beneficial interest; See Federal Commissioner for Taxation v Ramsden [2005] FCAFC 39; Smeaton Grange Holdings Pty Ltd v Chief Commissioner of State Revenue [2016] NSWSC 1594;
  • A beneficiary may not wish to be restrained by a potentially onerous provision in a Will (such as a life estate) ; and
  • Personal, family and ‘moral’ reasons (particularly where accepting a gift/ beneficial interest would then create conflict and acrimony amongst family members and/or other beneficiaries).

Centrelink and testamentary gifts

Testator: When considering who you wish to benefit in your Will you should take into account whether an intended beneficiary is receiving or is likely to be receiving Centrelink and/or Veterans’ Affairs benefits.

A testator wishing to leave a gift/ beneficial interest to a current recipient of Centrelink and/ or Veterans’ Affairs benefits should carefully consider the nature and extent of the gift to provide for that person, and possible consequences of that person receiving it - for example, depending on the size of the gift and the circumstances of the beneficiary, it may reduce the beneficiary's entitlement to a pension.

See: Tantau v MacFarlane [2010] NSWSC 22, O’Sullivan Partners (Advisory) Pty Ltd v Foggo [2012] NSWCA 40, Commissioner of Taxation v Ramsden [2005] FCAFC, R v Skinner [1972] 1 NSWLR 307, De Santis v De Santis [2002] NSWSC 729, Lewis v Lohse [QCA] 199, Lawson v Lawson NSWSC (unreported) and Aljaro Pty Ltd v Weidmann [2001] NSWSC 206.”

Beneficiary: Care should be taken before disclaiming or renouncing a testamentary gift, particularly if the person who wishes to disclaim is in receipt of a Centrelink pension or payment or intends to apply for a Centrelink pension or payment within 5 years.

For a period of 5 years, a disclaimed gift may potentially be deemed  by Centrelink to still be an asset of the person who disclaimed it - despite that person never having actually received the gift.

As such, legal advice should be sought prior to disclaiming or renouncing any gift.