Why it is of vital importance for a lawyer who is preparing a Will for a person with a trust, partnership or company to see the last available financial accounts for each entity.

Let me tell you the story of Farmer Green.  An elderly widower, Farmer Green had three adult children.  He had two farms worth about two million dollars each and off farm real estate also worth about two million dollars.  He had two sons who were farming and a daughter who lived in Perth.  One farm was held in a family trust and the other was owned by a company.  The real estate was owned by himself.

He wished to leave a farm to each son and the real estate to his daughter.  His Will sought to achieve this by leaving control of the trust that owned the first farm to Son A and the shares in the Company that owned the second farm to Son B, the rest and residue of the estate, comprising mostly metropolitan real estate, was left to his daughter. 

However, after the farmer dies, a problem arises.  The lawyer drafting the will did not see the financial accounts for the Company which showed that the farmer, on paper, owed the Company (his company), one million dollars.

Under common law principles the debt due to the Company had to be paid from the rest and residue of the estate, that is, from the daughter’s share.  This meant, the daughter lost $1 million from her share of the estate, and the second son gained $1 million dollars.

So it is of vital importance for a Lawyer who is preparing a will involving a testator with Trusts, Companies or Partnerships to see the last available financial accounts for each of those entities. For that reason we request this information in the standard Estate Planning Instructions sheet which we give to Clients, Accountants and Financial Planners when instructing us on Wills and estate planning matters.