TESTAMENTARY STATEMENTS: WRITTEN REASONS FOR REDUCING PROVISION OR FOR LEAVING SOMEONE OUT OF A WILL

When will makers leave someone (such as an estranged child) out of a will they often write what is called a TESTAMENTARY STATEMENT to explain their decision. The hope is that, if the will is challenged, then this statement will be sufficiently explanatory so a court ill not interfere with the provisions they have made.

Willmakers need to be aware: if the matter does go to court, then evidence can be called to either support or undermine the assertions in their statement. It is vital therefore to be very clear-eyed and accurate about what goes into it.

In Kouroutis v Kouroutis [2023] NSWSC the court decided that the deceased’s written reasons for downgrading benefits to his daughter were incorrect:  he had stated that his daughter had not attended her mother’s funeral and that she had not visited him in a nursing home for 12 months. Evidence was provided in court that both of these statements were wrong. His testamentary statement therefore had little weight and the daughter’s provision was more than doubled.

RECOMMENDATIONS

·       If you want to provide written reasons do them in a separate statement not in the body of the will.

·       The statement should include reasons for the exclusion of a person as well as the inclusion of others.

• Try to be objective: don’t lay all the blame on the other person if you too are somewhat at fault.

•  Outline what you have done to try to rectify the estrangement.

•  Update the statement to reflect changes in the nature of the relationships and any other matters dealt with in the statement.

Flanagan Legal Newcastle can provide advice if you are considering using such statements to bolster your decision regarding your testamentary decisions (who you will leave in or out of a will and why you may do so).

CAN A CARER CHALLENGE A WILL

When people get older they often need assistance in day-to-day living. They may have no children to help them, or their children may be unavailable. Sometimes relatives, friends, or neighbours step in to assist. Older people need to be aware that even though an unpaid carer has no automatic right to challenge a will, if they can establish eligibility they may be able to do so.

Carers may be able to do that by providing evidence that they were living with the deceased at the time of his or her death in a close personal relationship, and that they were providing them with domestic support and personal care for no (usually financial) reward.

The carer would also need to demonstrate that there are “factors warranting an application’: Such factors might create a moral obligation that the deceased would provide for them in their will.

Skarica v Tosca 2014 provides an example. The unpaid carer/previous “boyfriend” was eligible because he had a close personal relationship with the deceased and he also provided her with domestic support and care.

He was also able to establish that there were “factors warranting”: he was someone who, in her contemplation, may have had a reasonable expectation of inheritance from her estate and she did explain in her will why it was that she had made no testamentary provision for him. Also, the applicant provided the deceased with domestic support and care after the date upon which the deceased made her will and left him out of it.

 BE AWARE

Under some circumstances carers could be eligible to challenge a will: it might be wise to ensure that anyone who cares for you is paid adequately and that there is evidence of this.

Willmakers do have the freedom to decide who will inherit their property but they need to know that if they provide insufficiently for eligible people, then courts have the discretion to interfere with their wishes.

CAN A STEPCHILD CHALLENGE A WILL?

A stepchild has no automatic right to challenge a step-parent’s will.

To establish eligibility they need to show that they lived in the same household as the deceased, and that the deceased cared for them during this time.

Then they need to demonstrate that there are “factors warranting an application’: for instance, did the deceased tell them they would inherit property from them one day; did the stepchild provide significant help by looking after them when they were old, or by conserving or improving the deceased’s property? Such factors might create a moral obligation that the deceased would provide for them in their will. 

THIRKELL V COX 2010 provides an example.

A step-child applied for provision from her step-mother’s will. She was eligible to apply because (I) she and her father had lived with the stepmother and (ii) the stepmother had cared for her when she was a child. The factors warranting an application were that the step-daughter had been recognised in the deceased’s will and also that the stepdaughter had provided devoted care to the deceased in her last years. The court ruled that the stepchild’s application was successful and that she would therefore receive modest provision.

Willmakers do have the freedom to decide who will inherit their property but they need to be aware that if they provide insufficiently for eligible people, then courts have the discretion to interfere with their wishes. Willmakers who are considering leaving stepchildren who were dependent on them out of their wills, or instead just providing them with a “nominal” sum, should take advice from a solicitor. They may need to make compromises to avoid a legal challenge.

CAN A GRANDCHILD CHALLENGE A WILL?

Being a grandchild is a start but they also have to establish that they were “at any particular time, wholly or partly dependent on the deceased grandparent’. Once previous dependency is established the grandchild has to also establish that there are factors warranting an application.

 FEDE v DELL’ARTE 2009 NSWSC is an example.

 The granddaughter had been dependent on her grandfather. Following the separation of her parents in 1988, she and her mother had moved into the grandparents’ property and the majority of the family income came from the grandfather.

So the grandchild was eligible but she had to do more: she had to establish that, having regard to all the circumstances of the case (whether past or present), there were factors which warranted the making of the application. In other words, given the past circumstances, would most people believe that the grandfather should have left her something/something more in his will?

In this case:

•        Her grandfather did recognise her in the will and did give her some minor provision (taking into account his very large estate)

•        he had written a previous will in which he had given her half of his estate

•        he also thought it necessary to explain in the will the reasons why he was making the limited provision for her

The court decided she was eligible and that there were factors warranting her application, it increased the provision made for her in the will.

Willmakers do have the freedom to decide who will inherit their property but they need to be aware that if they provide insufficiently for eligible people, then courts have the discretion to interfere with their wishes. Willmakers who are considering leaving grandchildren who were dependent on them out of their wills, or instead just providing them with a “nominal” sum, should take advice from a solicitor. They may need to make compromises to avoid a legal challenge.

A ADULT CHILD IS ALWAYS ELIGIBLE TO APPLY FOR MORE PROVISION

Sometimes parents decide that they are very unhappy with their adult child’s behaviour and will therefore leave them entirely out of their will, or instead, throw them a nominal sum. However, as Hallen J in Page v Hull-Moody stated: “ (although) the relationship between a parent and child changes when the child attains adulthood…a child does not cease to be a natural recipient of parental… support”: in other words, parents are often seen to have an moral obligation to make “sufficient" provision for their adult children in their wills.

 Failure to make such provision may lead to a challenge, and such challenges often disrupt family relationships more and are very expensive and eat up much of the estate. Average legal costs for challenges are currently around the $80,000-100,000 mark for each party.

In Crawford v Munden [2020] NSWSC a mother left her son entirely out of her will. The court found that to have left him nothing was not to have recognise his moral claim on her estate, even when his major responsibility for the estrangement was taken into account. The court found that provision in the sum of $150,000 (out of a possible around $450,000 left after legal costs) ought to be made for him.

 In Smith v Smith [2016] NSWSC the father left two of his (estranged) children nominal sums of $30,000 each and another child the residue of a not inconsiderable estate. The court found that although the father did not have a legal obligation to provide for his adult children, nor did he have any obligation to treat his three children equally he should have provided them with a modest rather than a nominal sum (around $90-100,000 each).

 Willmakers do have the freedom to decide who will inherit their property but they need to be aware that if they provide insufficiently for eligible people, then courts have the discretion to interfere with their wishes. Willmakers who are considering leaving children out of their wills, or instead just providing them with a nominal sum, should take advice from a solicitor. They may need to make compromises to avoid a legal challenge.

A CURRENT SPOUSE IS ALWAYS ELIGIBLE TO MAKE A CLAIM FOR BETTER PROVISION

Writing a will can be very complicated when you are part of a blended family. You usually wish to provide for your current spouse and also for children of previous relationships.

Sometimes will makers want to leave a substantial part of their bounty to their children but they do need to be aware that it is always wise to ensure that the current spouse has sufficient provision. If this is not the case, a spouse is undeniably eligible to proceed to the courts for more.

Among the most common and certainly the most bitter family provision cases are those between a widow and the adult children of the deceased from a previous relationship. STEINMETZ v SHANNON [2019] NSWCA provides a case in point. The deceased had a substantial estate of $6.8 million and he left his widow of 28 years with an annual stipend of $52,000 and the rest went to the children. The NSWCA found that the widow had made very significant contributions to the relationship for many years and also that she had legitimate expectations of living in a similar style to which she had been living for 28 years. The court awarded her $1.75M.

Willmakers do have freedom to decide who will inherit their property but they need to be aware that if they provide insufficiently for eligible people, then courts have the discretion to interfere with their wishes.

WHO CAN MAKE A CLAIM ON YOUR WILL: INTRODUCTION

When having a will drafted it is essential that you consider very carefully who might be a natural object of your beneficence. If these people are omitted, or if they consider they that have not been treated fairly, they might be able to make a claim on your will.

A person cannot make a family provision claim unless the Court first deems them to be eligible:

 The following are
"eligible persons" who may apply to the Court for a family provision order in respect of the estate of a deceased person:

(a) a person who was the spouse of the deceased person at the time of the deceased person's death,

(b) a person with whom the deceased person was living in a de facto relationship at the time of the deceased person's death,

(c) a child of the deceased person,

(d) a former spouse of the deceased person,

(e) a person:(i) who was, at any particular time, wholly or partly dependent on the deceased person, and(ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member,

(f) a person with whom the deceased person was living in a close personal relationship at the time of the deceased person's death.

Eligibility for people in groups (a) (b) and (c) is very straightforward, the people fitting into groups (d) (e) and (f) will also have to establish factors warranting an application (in other words, it will be harder for them to establish their eligibility.

 Flanagan Legal Newcastle can assist you in determining just who you should consider as a beneficiary in your will, and also who might also be eligible to make a claim if they are dissatisfied with the provision or lack of provision you have made for them.

HOW BAD DOES AN ADULT CHILD’S BEHAVIOUR HAVE TO BE BEFORE THE CAN BE EFFECTIVELY DISINHERITED?

Some parents have become so distraught with their adult child’s behaviour that they make the very hard decision to leave that child nothing in their will. This does not always prove effective. Sometimes, if the child makes a family provision claim, the court will grant them provision despite their “disentitling” behaviour.

Crawford v Munden; In the Estate of Angel [2020] NSWSC provides an example of such an outcome. The court recognised that the son was responsible for a 16-year period of estrangement. The mother had made many attempts at reconciliation: she had moved twice to where her son lived, she had attempted to see her grandchildren, but was completely rebuffed by her son. He totally wiped her out of his life. A reasonable person reading the case details might well have concluded that his behaviour was cruel and heartless and that he deserved to be disinherited. Nonetheless the court gave him substantial provision from his mother’s estate.

In Grant v Grant; Grant v Grant (No. 2) [2020] NSWSC the daughter:

·       bullied, harassed and threatened her parents for money over several decades

·       her parents and especially her mother were frightened of her and at one stage even left the country to get away from her

·       she misused the power of attorney she had for her father, sold his house to her daughter for a nominal sum and left him without sufficient funds to pay his nursing home fees

·       she moved him from nursing home to nursing home so her siblings could not contact him

·       her mother disinherited her, she applied for family provision and was unsuccessful.

This case indicates that really bad behaviour: behaviour that is actively hostile, aggressive and potentially criminal will probably be sufficient to effectively disinherit an adult child.

IF YOU DONT MAKE A WILL YOU COULD LEAVE A MESS BEHIND YOU

Many people procrastinate when it comes to making a will. This could prove traumatic for those you may wish to protect when you are no longer around.

If you die without a will the NSW Trustee and Guardian (NSWTG) may have to take over the administration of your estate if a relative cannot be found to take it on.

Even though the NSWTG is a government agency, it is not subsidised by the government. It is self-funding and therefore it is entitled to charge commissions and fees on the work they do. The fees charged to administer your estate could prove to be substantial.

The NSWTG would have to start from scratch. It has to make enquiries and advertise to locate who is rightfully entitled to a share of your estate. There are statutory regulations regarding the order of who will inherit and what proportion of the estate they will receive. If there are overseas relatives the NSWTG genealogy department would have to get involved. They may have to search birth, marriage, death and divorce events in every state and country the deceased and each relative lived. This research takes time and can span many years. If NSWTG are unable to prove that relatives are entitled then they have to apply to the Supreme Court for an order to distribute the estate This cost is also absorbed by the estate. In the meantime family members may be in great financial need.

MacDonald v Public Trustee [2010] provides a salutary (and admittedly, non-representative) example.

Theresa Stapleton died without a will in 1968. The Public Trustee took over the administration in that year. For forty years her relatives were in communication with the Public Trustee trying to get their entitlements. When the matter went to court the assets of the estate were no longer held by the Trustee and could not be located.

This “grim picture” of administration could have been avoided if Theresa Stapleton had made a will in the first place.

SCOTT MORRISON IS WRONG

SCOTT MORRISON IS WRONG: YOU DO NEED THE GOVERNMENT IN YOUR LIFE (especially if you are a Retirement Village resident) 

Without the intervention of the NSW government retirement village residents would still be:

• paying recurrent (general services) fees well after they have permanently left their residence: now there is a legislated 42-day cap ;

• having to stay in the village well past the time they should have left for aged care accommodation because, if their unit wasn’t sold, they couldn’t cover the costs of moving or pay the nursing home daily fees: the Aged Care Rule has now been legislated which means they can now access part of their estimated exit entitlement money to pay those costs;

• be stuck with a contract which might be unsuitable for their needs, especially when they need to leave the village: now the regulations prescribe that contracts must be in standard form and even though there may be other terms added these cannot be inconsistent with the standard terms or with retirement village laws or any other law.

As a retirement village resident you are better protected because of government intervention and supervision.

 You are also better protected if you ask a solicitor to explain all the ins and outs of the contract well before you move in. Flanagan Legal Newcastle  provides such a service.

WHO WILL LOOK AFTER MY PET IF I DIE?

It is not unusual for a solicitor to be asked by a will maker how they might provide for a very loved pet. You can use your Will to formalise future arrangements for your pet.

These are several options which can be incorporated into your will which will give you some reassurance that you have made appropriate arrangements.

Option 1

Giving a Legacy to Friend or Family to Care for your Pet

You ask a trusted friend or family member if they will care for your pet. You would explain that you will leave a legacy in your will which would provide for the associated costs.

Your will would then incorporate a simple clause which leaves the pet and a sufficient legacy to the carer you nominate.  You need to understand that such a clause is non-binding (it can’t be enforced) so you need to find someone you trust to carry out your wishes.

Option 2

Testamentary Trust in your Will

An alternative is to set up a trust in your will. The trustee would manage the trust assets and pay over the income or capital from the trust to the carer who provides the day-to-day care.  As with previous option, a trust imposes only a non-binding direction, however at least in this option the executor could monitor the pet’s welfare before s/he handed over more funds. Be aware that a trust could prove onerous for the trustee as their duties would continue for the life of the pet.

With Options 1 and 2:

 It is recommended that you leave written details about your pet and veterinary documents with the Will so that anyone caring for the pet will have sufficient information to provide good care.

Careful consideration should also be given to ensure there are sufficient assets or funds to last the pet’s lifetime.

Care costs will include food or special dietary needs, veterinary expenses (pets get more expensive as they get older), grooming, toys, etc. A substantial fund is usually required. You could consult a vet, or an animal charity regarding what might be a sufficient amount.

Option 3

Legacy Programmes

The NSW Animal Welfare League and the RSPCA operate legacy programmes. These legacy programmes provide for the re-homing of the pet or home the pet in a facility run by the charity especially for pets of those people who have died.

This option is very popular, particularly for people who do not know anyone prepared to look after their pet when they die.

These charities urge people to give as large a legacy as possible to allow them to properly care for pets.

Option 4

Euthanasia

Some people prefer their pet be euthanised on their death as they do not wish the animal to suffer the grief of separation, of re-homing with someone who may not love and care for the pet, or of possibly end up in an animal shelter. You need to discuss this option with your executor who would be the person required to organise the procedure.

Wills require considered decisions. Consult and discuss options with your solicitor but the end, you have to decide.

SHOULD YOU MAKE A CLAIM ON YOUR EX-HUSBAND’S WILL?

SHOULD YOU MAKE A CLAIM ON YOUR EX-HUSBAND’S WILL?

Your former spouse has died. You are not flush financially. He was. Should you make a claim on his will?

Such a move will not be straightforward. As an ex-spouse you are eligible to apply but, for the court to consider your claim, you must establish that you were a “natural object of his testamentary recognition” (as his children and current spouse would be). In very simple words: did he “owe you something” or did he have a moral obligation to provide for you in his will?

To establish this obligation you need evidence that there are other circumstances (besides you being poor and  formerly married or in a de facto relationship) which mean that he did “owe you something”.

For example:

·     there was not a final property settlement at the time of separation (sometimes because the exiting spouse does not want to exacerbate a very fraught situation).

·     where the deceased died before property matters were resolved by the family court

·     where an ex-spouse had promised to make substantial provision to the former spouse in his will.

Even if you are able to establish a moral obligation then the court still considers other matters such as are there other eligible people whose needs are greater than yours and to whom the deceased was closer and had a more mutually supportive relationship.

In summary: In most cases a previous final property settlement is likely to terminate any obligation of the former spouse to provide for you in his will. Do not go down this track lightly, you need expert legal advice regarding your prospects and you need to understand that taking this on is exhausting both psychologically and possibly financially and also that it may disrupt your relationship with other family members.

GET ADVICE EARLY ABOUT WHAT COSTS YOU MIGHT BE FACING WHEN YOU MAKE A FAMILY PROVISION CLAIM

GOING TO COURT TO CHALLENGE A WILL SHOULD ONLY BE COMMENCED AFTER CAREFUL EVALUATIONS OF THE COSTS CONSEQUENCES

GOING TO COURT IS EXPENSIVE

The average amount of costs is about 20% of the value of the estate and the proportion is greater when the estate is small (under $500,000). As an example: an estate worth approximately $3 million had costs close to $300,000 (10%); whereas an estate worth approximately $800,000 had costs close to $240,00 which is approximately 30% of the estate. 

An estate’s value is often significantly reduced by legal costs leaving less to share among beneficiaries and courts are increasingly taking action when an estate is could be consumed in costs.

 EVEN IF YOU WIN, YOU WILL PROBABLY STILL HAVE TO PAY SOME COSTS YOURSELF

If you win you would normally get costs calculated on an “ordinary’ basis: this means the estate pays around 60-70% of the solicitor/client costs and you have to pay the gap from your provision from the estate or from your own personal resources.

IF YOU LOSE IT IS UNLIKELY THAT YOUR COSTS WILL COME OUT OF THE ESTATE

It is now much more common than it previously was for an unsuccessful applicant to be ordered to pay not only their own costs but also those of the other party.

Grant v Grant (No. 3) [2021] NSWSC  provides an example: the court considered that the defendants should have known (and should have been properly advised) that they had no chance of success. They not only had to pay their own costs but also 100% of the costs of the other party.

NO WIN/NO FEE (CONDITIONAL COSTS) AGREEMENTS

Check the agreement. You may have to pay disbursements (that is the fees for all services required in connection with a legal matter {such as court fees} apart from solicitor's fees), and out-of-pocket expenses. You may have to pay these regardless of the outcome of the case. This extra amount can be up to 25 per cent of the costs.

In Olsen v Olsen [2019] NSWSC the court stated: “There have been many decisions in recent years dismissing claims by adult sons and daughters. Many of these cases … are conducted on a speculative basis pursuant to a conditional costs agreement. Such cases sometimes unnecessarily fuel the expectations of claimants, ultimately causing more hardship and heartache. Too often they waste the resources of the court and the money of the litigants.”

BE EXTRA CAUTIOUS IF THE ESTATE IS SMALL 

The diminutive size and nature of such estates often means that little will be left in the estate after costs have been deducted. Too often applicants are faced with this harsh reality. In these cases courts can make costs orders limiting the costs that are to be borne by the estate so that there is something left for beneficiaries. In an unsuccessful claim the court can order that the applicant pay their own costs and those of the other party.

In Wengdal v Rawnsley [2019] NSWSC the court said:
“The …(applicant)… was well aware that… the value of the estate was small. She persisted with her claim, which at the hearing was one for about one half of the value of the estate (before the deduction of costs). This was not a reasonable position to adopt when she must have known the value of the estate and the competing financial circumstances of the Defendant. For these reasons, I concluded that…she… should pay… (her own and)… the Defendant’s costs, calculated on the ordinary basis.”

GET ADVICE EARLY ABOUT WHAT COSTS YOU MIGHT BE FACING WHEN YOU MAKE A FAMILY PROVISION CLAIM

ARE YOU IN A DE FACTO RELATIONSHIP

People in subsequent relationships are often keen to protect the property they have amassed for the benefit of their children when they die. Many believe they will best do this by not living full time under the same roof with a new partner. By managing the relationship in this way they think that the other person will not be legally seen as a de facto and so s/he will not have a claim on their property or super down the track.

This may not work.

Recent cases indicate that there may be a finding of a de facto relationship even though a couple may co-habitate only for a few days each week. It is not seen to be essential that there be unbroken common residence. In fact, one partner can spend some nights each week elsewhere and still be deemed to be a de facto. Some element of common residence is essential, however, and this will ordinarily include elements of interaction and sharing while engaging in activities associated with occupying the same place.

Ultimately, a court will consider the nature of any particular union, and whether there was a merger of two individual lives into life as a couple. It is  the merger of two lives which is the core of a de facto relationship.

What does this look like?

It focuses to a large extent on a mutual commitment to a shared life and a couple’s interactions at the level of everyday living such as:

*  living and sleeping together under the same roof on an ongoing basis 

• elements of interaction and sharing whilst engaging in activities associated with occupying the same place

• presentation to friends and family as a couple

• joint holidays, with and without children

• frequent contact by telephone, text messages and emails when apart

• sharing domestic jobs around the house

• intermixing finances

• a sexual relationship

• being invited to, and attending, functions together.

The court looks at all the circumstances and not all of the above might be evident.

 Weston v Public Trustee provides an example of what the court the deemed was a borderline case, but a de facto nonetheless. The circumstances were that the plaintiff had stayed with his partner every weekend and then, after he retired, he would go back to his own home for a few days. He would always let her know whether he was going back to her place or staying at his. When he was still at work if he left from her place she would send him off with food to heat up for the following night. 

If you are, indeed, in a de facto relationship then you may need advice regarding potential options for protecting your estate for your children: Flanagan Legal Newcastle at flanaganlegal.net.au can provide you with such advice.

SHOULD I RE-MARRY/SHACK UP WITH MY NEW PARAMOUR?

This is a very knotty problem for an older person who has “stuff” and who has a new wo/man in their lives and is considering taking the relationship further. They want their property to eventually go to their children from a previous relationship, and not to the new partner (or eventually to the new partner’s children). 

People who have decided to go ahead and get married or “shack-up” , to set up a blended family, try to deal with the inheritance problem by using “strategies” such as granting the partner a life tenancy, making a binding family agreement, creating mutual wills or testamentary trusts, and giving gifts to their children before death. These are more or less successful. A recent case: Schneider v Kemeny; Kemeny v Schneider [2021] NSWSC may have added to the potential armoury. 

In Kemeny v Schneider a second husband of 14 years made an unsuccessful application for better provision than that provided by his deceased wife. Judge Rees stated that, in her opinion, any entitlement must be justified by reference to the circumstances of the particular case.

The facts/circumstances were:

• At the time of their marriage the couple had agreed to leave each’s assets to their respective children and they actually re-executed wills on their marriage to that effect.

• Financial arrangements between the couple during their married life were strictly defined. Ms Kemeny insisted that the plaintiff pay ‘rent’ of $500 a week plus half of household expenses. Although the plaintiff suggested that they have a joint account for housekeeping, Ms Kemeny refused

• Ms Kemeny was very insistent on maintaining separate finances and financial records.

• They maintained separate bank accounts.

• After his wife’s death Mr Schneider’s own resources were judged sufficient for his proper maintenance in his retirement.

• Later in the marriage Ms Kemeny obtained legal advice as to how best to prepare her will given she was ‘on notice’ that her husband might challenge his provision. Having received that advice, Ms Kemeny adjusted the provision made in favour of him consistent with that advice (she left him her car, artworks and her superannuation (totalling some $103,000) together with a right to occupy her apartment for six months after her death, rent free). She left the rest of her estate to her two children in equal shares.

• Judge Rees stated that where it can be seen that a capable willmaker has duly considered the claims on his/her estate, then respect should be given to that judgment.

In short: Judge Rees stated that surviving spouses do not have primacy over all other applicants regardless of circumstances, they must be entitled to primacy on the facts. The court will examine the facts in conjunction with considerations such as the length and quality of the relationship; the surviving spouse’s contribution to the relationship, health, earning capacity, age and prospects; the size of the estate and competing claims. 

In this case “the provision may not have been generous but it was entirely commensurate with the tenor of their relationship and their dealings with each other since its inception”. 

THE WIDOW “WINS”

Eligible people (such as spouses, de facto and children) can apply to the NSWSC when they believe that a deceased partner or parent has not made adequate or proper provision for them in a will. 

Among the most common and certainly the most bitter family provision cases are those between a widow and the adult children of the deceased from a previous relationship. 

As a rule of thumb, widows win these cases – and even where they lose, they win on appeal. 

Steinmetz v Shannon [2019] NSWCA is a case in point. The spouse made an application after her partner of 28 years, who left an estate of $6.8 million, left her with an annuity of $52,000. The NSWSC noted that she made sustained and substantial contributions to the relationship: she ran the house, did the housework, she cared for him when he suffered with ill-health in the last 15 years of their relationship. Even though she did have assets of her own (such as a house and some superannuation) the court  found that she had legitimate expectations of living in a similar style to which she had been living for 28 years and that she had not been given proper provision. It court awarded her $1,750,000.

A will maker in a blended family faces complex decisions as s/he tries to both provide in a proper manner for their partner and children from a previous relationships and  avoid expensive family provision applications down the track.There are several options such will makers can consider in these situations. Flanagan Legal Newcastle at flanaganlegal.net.au can assist by providing a will maker with appropriate options.

THINKING ABOUT A GRANNY FLAT?

A granny flat solution seems so appropriate: you are getting older; your house is too big and getting harder for you to manage; you have an adult child and grandchildren with whom you have an excellent relationship and who could provide you with support and company in your later years. It sounds idyllic. 

Before you rush into such a care and accommodation arrangement be aware: such arrangements have been described as “a tangled web” of intricately connected legal, financial and pension issues and not necessarily the answer to your situation.

Thelma Langford v Deva and Diane Reddy and Ors [2012] NSWSC provides a case in point. The court found that Thelma Langford decided to transfer the title of her property into her daughter and son-in-law’s names on the basis that they would build a granny flat for her entirely at their expense in which she would live and that they would care for her for the rest of her days. And this worked out for a while but unfortunately problems arose (not unusual with such arrangements), and Mrs Langford went to court in an attempt to recover the title to her property.

The judge in this case did not damn granny flat agreements as such but he was very critical of the solicitor who acted for Thelma Langford and, inappropriately, for her daughter as well. He stated that the solicitor should have sent her to be advised by her own, independent solicitor; moreover he stated that the advice the solicitor gave her was limited and not sufficiently comprehensive. Most of all he did not advise her how to set up a granny flat arrangement which would minimise the impact of unexpected adverse changes in circumstances (seen so often in these granny flat agreements). 

In summary: if you are contemplating a granny flat agreement you should instruct a solicitor who is aware of the legal, financial and social security implications of such an agreement. 

The solicitor should advise you on:

• the effect the particular granny flat arrangement you are contemplating would have on your pension entitlements (think asset deprivation and possible consequent reductions in your pension)

• the security of your tenure of your property (should you have sole ownership, co-ownership or no ownership)

• the potential necessity for you to have a written detailed contract/deed which outlines all party’s responsibilities in the arrangement

• the effect on your testamentary intentions of entering such an arrangement (you may end up unintentionally disinheriting your other children).

Granny flats are sometimes the solution but it is wise to consult a solicitor who deals in such matters before you take the plunge!

BLENDED FAMILY SOLUTIONS:MUTUAL WILLS

When a willmaker wishes to cater for the needs of the current partner and also those of the children of current and former relationships, another possible solution is to enter into a contract to make mutual wills.

This method involves both spouses executing wills which provide benefits for the children of each spouses’ previous relationships. The spouses then enter into a contract in which they agree not to revoke their will without the permission of the other spouse.

An example: “I leave everything to my wife but if she has already died then 50% of my estate will be divided between my children and 50% is to be divided between my wife’s children”. Correspondingly, the wife will might say in her will “I leave everything to my husband but if he has already died then 50% of my estate will be divided between my children and 50% is to be divided between my husband’s children”.

A mutual will agreement allows both parties to the relationship the ability to create wills with terms that are known to the other partner. This agreement gives rise to obligations on the part of the surviving partner, with the surviving partner becoming the trustee of the estate for the beneficiaries named in the wills. Remarriage automatically terminates the existing will but does not change the obligations under the agreement.

Mutual wills can give rise to problems: for example, If the survivor wishes to defeat the mutual wills contract, he or she may be able to do so by squandering the assets the subject of the agreement (although additional provisions can be included in the contract requiring the surviving spouse to not unduly dissipate their assets so as to reduce the size of their estate available for distribution on their death). 

If clients want to make mutual wills despite the potential problems, then their solicitor needs to draft a valid and enforceable agreement.

Flanagan Legal Newcastle can provide the appropriate advice (lynn@flanaganlegal.net.au )

DYING WITHOUT A WILL

DYING WITHOUT A WILL

 When someone dies without a will (dies intestate) they often leave a mess behind them which others have to clean up. Confusion reigns about what will happen, who will get what, and how it will be dealt with. Relatives may be put under a lot of unnecessary stress. Solicitors will almost certainly have to be engaged. 

SOME POSSIBLE OUTCOMES:

• Your estate may not go to those you would have named had you made a will. Marshall v Public Trustee [2006] illustrates this. The deceased died intestate (without a will) and as a result the NSW statutory rules applied as to who would inherit. (See https://www.eqt.com.au/~/media/equitytrustees/files/legal-profession/inheritanceguides/inheritance-guide-nsw.pdf for more details). According to the rules, the deceased’ siblings with whom he had had no contact for 50 years were the beneficiaries instead of his step-sons who he had treated as his sons and for whom he had taken responsibility over many years. They received nothing under the rules.

• Marshall v Public Trustee also illustrates how expensive and wasteful of the estate it is when plaintiffs go to court to challenge the outcome of the application of the statutory rules. Costs to bring the action were nearly $80,000 from a fairly small estate of $347, 515.00 which was therefore whittled down to $271,594.The court over-ruled the statutory rules and the stepsons inherited the (reduced) estate after all. Some foresight could have avoided this.

• There could be other unintended consequences. If you are part of a blended family then a current spouse may need special consideration in your estate planning. You may have considered, for instance, giving them a portable life estate so that they have a home for the rest of their life. If you don't act on that, and there are children from a previous relationship, then the current spouse may not be as secure as you intended.

The list of possible adverse outcomes is endless. Flanagan Legal Newcastle at www.flanaganlegal.net.au can assist you to make a will now and avoid leaving a mess behind you.

WHO WILL TAKE CARE OF MY CHILDREN IF SOMETHING HAPPENS TO ME?

Parenthood brings so many questions. 

Most are related to the welfare of these little people for whom we take total responsibility. 

One major question  parents must address is: who will take care of them if something happens to me?  For sole parents, and for parents of disabled children, this concern is particularly critical.

If you want to ensure your children are taken care of as well as possible if the unthinkable does happen, then you need to make a will, and you need to include a Guardianship Clause which gives the appointed guardian legal control of the children. This means the guardian will have the day-to-day control of the children, and they will be able to make decisions about the children's upbringing (including where they live and go to school), education, health and welfare.

Lynn Flanagan of Flanagan Legal Newcastle at www.flanagnlegal.net.au can guide you through the process.

QUESTIONS TO BE ADDRESSED

why should I write a will which includes a guardianship clause? 

Writing a will which includes a guardianship clause will save your child or children even more trauma in the event of your death. If you have made your wishes clear, a guardianship clause in your will will be legally binding and your children would automatically go to the guardian who you previously decided will look after them best. This may save  disputes between relatives and friends and help avoid applications to the Supreme Court for guardianship. If it does go to court your wishes as expressed in the Guardianship Clause will carry weight, as courts will assume that you are the best judge of who will care for your children.

who should I choose as guardian?

This is a very personal decision. There are so many factors you have to weigh up and obviously it will be gruelling to go through this process, however, it is a question that needs to be addressed by all parents.

Relatives are usually the obvious and most practical choice, but sometimes a very close family friend  who has a bond with your child might be the most suitable. When choosing someone, remember that they’ll be raising your children, not just providing for them. Do they share your values and beliefs? Do they have the ability and means to care for your children (sometimes in addition to their own)? Perhaps one person will express a clear desire to play this role, or a person you were considering may not be willing to take on the responsibility. The initial conversations you have may reveal feelings and attitudes that will help you make your final decision.

A MEMORANDUM OF WISHES can provide guidance to the guardian as they raise your child. 

Having made a guardianship decision, it is advisable to inform your relatives and friends who you have chosen and why you made your choice: this would give them a chance to absorb your decision and to learn to live with it.

what provisions should be in the will to support the guardian financially?

We all know that raising children is expensive. If someone is willing to take on the role of guardian it is important to ensure that provisions in the will ensure they do not suffer financial burden or loss. The will needs to include a clause that gives an executor the power to advance income and capital from the child’s share of the estate to the guardian for the maintenance, support, education and benefit of that child. The MEMORANDUM OF WISHES may also provide a guide for the executor. Sometimes, in the case of a disabled child, it will be necessary to set up a Special Disability Testamentary Trust.

As it is likely that the executor and the guardian will be acting for many years, careful consideration needs to also be given to the choice of executor/s and whether the guardian might also be appointed as a co-executor (because of a possible conflict of interest, generally a guardian is not appointed as sole executor).

Having answered these questions you can know you have done everything  you can to smooth out your child’s life in the event something does happen to you.