It has many of the elements that capture the community’s interest – the tragic death of a man, his beloved widow at odds with his wealthy, loyal family, and a costly legal dispute which has played out in public over the past few years as the parties argue about his legacy.
At its heart, the recent decision of the Supreme Court in relation to the legacy of Marc Cardaci (Cardaci v Filippo Primo Cardaci as executor of the estate of Marco Antonio Cardaci [No 5]  WASC 331) is about the power of the Court to remove a trustee. It has also been necessary for the Court to examine the wishes of the deceased.
The Court has the power to remove a trustee. The Court considers factors including the interests of the beneficiaries, security of the trust property, and sound exercise of the power of the trustee. The Court will only exercise this power where there is a clear need.
When Marc Cardaci died, his substantial wealth including recent inheritance was mostly held in trusts established by him. Those trusts and his deceased estate were controlled by his brother. While his Will left his estate primarily to his widow, who brought the claim, it was the brother who ultimately had the power to distribute income or capital to her from those trusts.
The plaintiff argued, successfully, that her brother-in-law, as the controlling mind of the relevant trustee companies, should be removed due to his conduct. His conduct included allegedly telling the widow that he would never distribute any income or capital to her from the trusts. The Court found that he did indeed say these things. It also held that he made some decisions that were not in the best interests of the beneficiaries.
The evidence suggested that the deceased’s brother formed the view that his late brother’s widow, his sister-in-law, wanted to “move on” after the death, and that the estate money should instead be put toward a foundation which he had contemplated during his lifetime.
The Court appointed the widow to be trustee instead of the brother and removed the brother as trustee. It found that she was the prime and natural candidate for provision from each of the trusts, and this was consistent with the deceased’s wishes as expressed in his lifetime.
The Court declined to appoint a receiver of the exercise of the Powers of the Guardian of one of the trusts, which would have removed these powers from the brother. Instead, the Court found the powers of the Guardian are not capable of being the subject of receivership.
The Court also made orders around Marc’s Will and Estate, including to remove the brother as executor and install the widow, and to provide for all property to be given to her absolutely. The Court noted that while Marc had access to great wealth for his personal use, he left a relatively modest estate as he held few assets personally.
It remains to be seen whether there will be an appeal filed in this matter.
WHAT CAN WE LEARN?
This case sheds light on the role of the trustee. It is not uncommon for family wealth to be managed using trusts and companies, particularly where the family is involved together in a successful commercial enterprise. Diligent estate planning takes into account how income and assets held in trusts are to be distributed after death, but it is also essential that a trustee responsible for the trust assets and income understand their role and the proper exercise of their powers if disputes like this are to be avoided. Any person in a trustee role like this requires legal and other professional advice to ensure a proper understanding of the role and the pitfalls to avoid.
Our team is highly skilled and experienced in advising on all aspects of Dispute Resolution Law. Contact us today if you need advice or representation in this area.