Retirement village exit entitlements require careful consideration in will making and estate planning.
Consider the case of Keith Herbert who died in September 2012 with a will he had signed in January 2007, appointing his solicitor Guy Gibbons, as executor.
He was survived by his wife Margaret and his two children, Tania and Iain, from a previous relationship.
Keith occupied a property at Jimboomba when he made the will, and in it he recorded a grant to Margaret of a right to reside in that property or any other property he owned at the time of his death.
If she was unwilling or unable to reside there, it was to be sold with the proceeds being shared equally between Tania and Iain.
Additionally, Margaret was to receive half of the residue of the estate, with the other half being shared equally between Tania and Iain.
The Jimboomba property was long gone by the time Keith died. He had in fact used the sale proceeds to purchase a licence to reside in a unit in an Eight Mile Plains retirement village. That required an incoming contribution of $335,000.
He and Margaret held the licence jointly as tenants in common but their car and some shares held as joint tenants passed to Margaret solely when Keith died.
The retirement village unit deposit was though, only repayable after Margaret’s death, as an “exit entitlement”. Thus the distribution of Keith’s share had to await Margaret’s death.
There was very little else in his estate “because much had been consumed in costs”.
Margaret, who died in 2024, had five children from her previous relationship, of whom three daughters survived her. Her will of July 2023 left 25% of her estate to each of those daughters with the remaining 25% to be shared equally between the two children of her deceased son Peter.
It also recorded everyone’s understanding that Tania and Iain would take Keith’s half share of the exit entitlement under an express provision to that effect in Keith’s will, and so she made no provision for them.
In administering Keith’s estate, Mr Gibbons had to consider whether that interpretation was correct or whether Keith’s interest in the exit entitlement formed part of the residue. He sought counsel’s opinion that concluded in favour of the latter.
The net effect of both wills under that interpretation appeared to be that Margaret’s children would receive 75% of the total exit entitlement: Margaret’s 50% interest by direct gift under her will, and one half of Keith’s 50% interest, being their share in the residue of Keith’s estate.
Tania and Iain were left to share the remaining 25%, something which they came to accept.
Mr Gibbons law firm partner was the executor of Margaret’s will was a different partner at the same firm. The cordial understanding with Tania and Iain deteriorated by reason of delays in the administration.
Litigation ensued until reason prevailed with the parties resurrecting their earlier understanding.
Gibbons thought it prudent to seek a court direction to distribute Keith’s estate as per the barrister’s advice. The same application sought indemnifications in his favour and that of his law firm partner for any liabilities they had incurred in respect of both estates. He also sought an order that Tania and Iain to pay the costs of the application on the indemnity basis.
Justice Peter Davis called the application by the executor for directions related to the indemnity “misconceived”, “unnecessary” and an “unreasonable” attempt to leverage a much broader “collateral advantage”.
He dismissed the application and ordered that Gibbons, pay Tania and Iain’s legal costs on an indemnity basis. The executor was also denied indemnity from Keith’s estate for his own costs or for the costs he was to pay Tania and Iain.
Re Herbert (deceased) [2025] QSC 315 Davis J, 28 November 2025
