A Deed of Family Arrangement is required when beneficiaries wish to engage an executor in altering the terms of a Will when it comes to asset distribution.
This article breaks down what the lawful possibilities are and how you can protect yourself as an executor or beneficiary.
Can An Executor Change The Terms of A Will?
No. The executor of a Will has a duty to act in the best interests of the estate and the beneficiaries named in it.
That being said, there may be certain circumstances when the terms may be impossible to complete as expressed in the Will, such as:
- A beneficiary in the Will has also passed;
- The estate’s debt needs to be settled and as such beneficiaries may receive less than what was detailed in the terms;
- A specific asset, gift or item has been lost or destroyed.
However, it is possible to alter the Will with the express permission and agreement of the beneficiaries involved when it comes to the way assets are distributed.
A typical scenario is when one sibling wishes to purchase the share/s of a house that was gifted to all the siblings in exchange for an agreed upon sum — assuming that there are insufficient funds in the estate to allow one sibling to receive the house and the other the equivalent value in cash.
Read More About The Probate Process In QLD:
Probate: A Definitive Guide To Navigating Probate in Queensland
What is A Deed of Family Arrangement?
In order to facilitate an arrangement like the scenario above, an agreement between the executor and beneficiaries can be formalized by way of a Deed of Family Arrangement (DOFA).
A DOFA is a legal document that should be properly drafted by a solicitor for the parties involved to sign once they have seeked legal advice to understand the ramifications of them signing the DOFA.
It’s important to note that all parties must be aged 18 and over and have full legal capacity in order for the DOFA to be lawful.
Once signed, the DOFA is used to give the executor legal protection in case any of the beneficiaries decide to change their mind.
What Should Be Included in A DOFA?
- The parties to the agreement, namely, the executor and the beneficiaries;
- The property being purchased by the one sibling;
- The agreed upon purchasing price that the one sibling will pay the other and when it will be settled;
- Who is responsible for the payment of legal and other transfer fees, duties and taxes.
Seek Legal Advice Before Entering Into A Deed of Family Arrangement
It is of the utmost importance that each party understands what they are committing themselves to, and seeking legal advice can help ensure that whichever side of the arrangement you’re on that you’re covered.