Why not? Because there is no law in NSW that requires a beneficiary to provide any kind of stat dec, for any reason, in order to receive a distribution from an estate that they are entitled to. If an executor/estate attorney is concerned about distributing assets to a bankrupt it is a 5-10 min process and nominal $15 fee to do a search of the National public bankruptcy database to check if a beneficiary is a bankrupt. They don’t even need permission from the beneficiary to do it.
NSW Executor / Estate Attorney Demanding Beneficiaries Sign Statutory Declarations in order to Receive their Distributions from Estate
- Thread starter NinjaFlyer
- Start date
Tim,
How can any person/court rely upon a stat dec that includes statements regarding uncertain future events? (with respect to potential future bankruptcy or insolvency).
A stat dec is not a contract. Correct?
$1,000 to $2,000 for the stat decs is not only a wide range it’s also a bit rich.
Despite that, you’re only concentrating on one aspect of the stat dec. You’ve already noted there are other issues at play. Possibly the biggest one, and the one which you can’t do a search to ‘get around’, is the indemnity issue. Although a very small chance, mistakes don’t get made on public registers. I’ve seen people who are bankrupt yet not appear on the NPII due to processing errors and delays on more than one occasion in the past.
And, in terms of the PPSR, there is a capacity to register an ‘all present and after acquired property’ interest which can include cash and possibly would cover the share in the estate. Sure, you can get a search of that too - at least doubling the search fees component, taking you into the $1-2k territory when everything is factored, and still not covering the indemnity aspect.
Docupedia,
Appreciate your comments.
The public database searches remain IMHO the most reliable from a liability point of view. Easy to do at minimal cost. Lawyers like most independent professional advisors surely carry E&O and PL insurance? No? Mine is with Lloyd’s of London and costs $3500/yr for all risks. Spread across all clients that’s less than 0.5% of client billing’s.
But it’s simpler than this. Is an attorney not going to run NPII/PPSR checks and just rely upon a Stat Dec from the object of the inquiry as the basis to proceed and protect their liability? That sounds poorly advised. The beneficiary signs the Stat Dec, lies, and attorney has no independent check from the public database? What is said attorney going to use as their defence? “I relied upon a Stat Dec”..? To which I prosecuting him would say he was negligent regardless for not checking the public records. The defence you suggest (the Stat Dec) wouldn’t stand in U.S. courts that’s for sure. But moving on...
With less than 1:300 beneficiaries in Australia bankrupts (Vic Law Society says it’s about 1:320) and odds of an NPII/PPSR posting error maybe 1-2% at most (feel free to opine on this) that means the prospective probability of a misdirected payment is not more than 0.01%. So I agree it’s great revenue business for attorneys going the Stat Dec route if they can bill every estate $1000-$2000 for the privilege...! As for me, I’m not playing this game.
A Stat Dec and embedded liability waiver doesn’t protect the Executor/estate attorney in any meaningful way. A trustee in bankruptcy could proceed regardless against the estate for wrongful distribution and win that case it then falls upon the Executor/estate attorney to go after the beneficiary to recover their losses. Good luck with recovering assets from the bankrupt.
In sum, I get why executors/estate attorneys want to go the Stat Dec route. It’s perceived to be a simple way to get liability relief (Executors who buy this line need their head read IMHO) and from attorney perspective provides far greater billing opportunity than a simple 5 min search costing $15 with risk of error sub-0.01%.
Seems fundamentally I’m correct there is no statute requiring a beneficiary to sign a Stat Dec of this nature in order to receive their rightful distribution. I’m not a bankrupt (fact) so every day I wait adds to my potential future claim against the estate for wrongful denial of distribution.
I’d love to see the case law on that. I have no statutory obligation to do anything as a beneficiary of an estate. Please point to the relevant statute if one exists. The reverse is on the other hand well litigated.
Here's my two cents as to the likely outcome if you continue to hold out. Either of the following (more likely the first than the second):
1. You refuse to provide the stat dec, and the executor makes the distribution anyway contrary to their lawyer's advice. This triggers the lawyer to give a detailed advice to the executor about the possible ramifications should the subject matter in the stat dec actually happen. This advice will be necessary, lest the lawyer be failing in their duties. It will likely also trigger an enhanced due diligence dig into your circumstances to find out why you're refusing to give the declaration. All of this will end up costing the estate more in fees.
2. You refuse to provide the stat dec, and actually gum up the whole process. The executor gets spooked, possibly by the advice from 1, and sets about recusing themselves from executor status because they don't want to be left liable if something goes wrong with the estate. Sure, it's a small chance, but where there's no reward for the executor why take the chance? Especially if what is generally seen as a reasonable ask is being refused. This all costs the estate more in time and money, and puts it in a position where someone needs to take control (possibly through a letters of administration type scenario if there are no alternate executors).
As a bonus scenario: You bring an action against the executor for failing to be 'executorly' in decent time. The sticking point comes out in court as being your refusal to provide a requested statutory declaration. The Court determines that such a request is prudent/usual/not unreasonable. Not only has your action tied up the estate for a significant amount of time, the cost of defending it has come out of the estate. And you potentially have a costs application made against you for having to defend the action in the first place.
But, hey, what do I know? 6/5s of nothing, but I've been around enough to know that if you want to go outside the standardised processes it's going to cost someone extra.
1. You refuse to provide the stat dec, and the executor makes the distribution anyway contrary to their lawyer's advice. This triggers the lawyer to give a detailed advice to the executor about the possible ramifications should the subject matter in the stat dec actually happen. This advice will be necessary, lest the lawyer be failing in their duties. It will likely also trigger an enhanced due diligence dig into your circumstances to find out why you're refusing to give the declaration. All of this will end up costing the estate more in fees.
2. You refuse to provide the stat dec, and actually gum up the whole process. The executor gets spooked, possibly by the advice from 1, and sets about recusing themselves from executor status because they don't want to be left liable if something goes wrong with the estate. Sure, it's a small chance, but where there's no reward for the executor why take the chance? Especially if what is generally seen as a reasonable ask is being refused. This all costs the estate more in time and money, and puts it in a position where someone needs to take control (possibly through a letters of administration type scenario if there are no alternate executors).
As a bonus scenario: You bring an action against the executor for failing to be 'executorly' in decent time. The sticking point comes out in court as being your refusal to provide a requested statutory declaration. The Court determines that such a request is prudent/usual/not unreasonable. Not only has your action tied up the estate for a significant amount of time, the cost of defending it has come out of the estate. And you potentially have a costs application made against you for having to defend the action in the first place.
But, hey, what do I know? 6/5s of nothing, but I've been around enough to know that if you want to go outside the standardised processes it's going to cost someone extra.
@NinjaFlyer .... I get the principal of the thing & why you object to it, but some principals just aren't worth the fight or the inconvenience .... You can obtain or even download a stat dec for free. Include in it a true declaration of whatever is required, go to a police station to get it witnessed & signed (all police can act as a JP I believe) .... Costs you zero, everybody is happy & the estate gets distributed..
I guess you came here looking for advice/opinion? ..... There are a lot of things that are worth the time & effort of a protest, this doesn't seem like one of them IMO ...
I guess you came here looking for advice/opinion? ..... There are a lot of things that are worth the time & effort of a protest, this doesn't seem like one of them IMO ...
So long as the request is reasonable, it ultimately comes down to what the executor is comfortable with. If they want a stat dec, they want a stat dec. They get to make the decision - not you - because they’re the one in the hot seat.
If you want to call the shots, take on the role.
If you want to call the shots, take on the role.