In this article we talk about dealing with an unfair Will. We are not considering the validity of a Will or being left out of a Will entirely – rather that the distributions made to one or more beneficiaries might be considered to be unreasonable in the circumstances.

There are many reasons why a Will might actually be, or be perceived as unfair, including:

• The Will of the deceased person (testator) may be old and was not updated to take account of changing personal or financial circumstances. For example, the testator may have divorced and not revised his or her Will to take into consideration a new relationship or family members.

• A child may have provided significant care during a parent’s final years whilst other siblings carried on with their lives without interruption. The ‘carer’ likely incurred personal and financial expense or missed opportunities due to these commitments, however the Will may not take this into account. In the circumstances, it might seem reasonable that the child be compensated for the gratuitous services.

• A falling out often causes people to act rashly resulting in a hurried decision to cut somebody out of a Will. Even after conciliation, the testator may not turn his or her mind to reinstate that person as a beneficiary.

• The testator may have been unduly influenced or simply had a favourite child to whom he or she chose to benefit at the expense of others. Alternatively, a widow may be left wanting with a greater share of assets being left to the testator’s children or others.

Whatever the reason, an unfair Will raises questions that can no longer be answered, and creates uncertainty between the beneficiaries. If you relate to any of these situations, you may find comfort in knowing that there are ways to deal with an unfair Will.

What can you do about an unfair Will?

The concept of ‘testamentary freedom’ means that people should be free to determine how their assets are dealt with after they die.

Traditionally, Courts have been hesitant to interfere with this principle. However, society’s views and the concept of ‘family’ have changed immensely over the years.  Consequently, a Court has discretion to change the Will of a testator to alter the distribution of his or her estate where a moral obligation to provide for an eligible person exists and the Will fails to provide for the person. This is known as a Family Provision claim.

How is a Family Provision claim made?

Three main steps are involved in making and determining a Family Provision claim.

1. You must be an eligible person.
2. It must be shown that at the time of the deceased’s death, he or she had a duty to provide for your proper maintenance and support and the distribution proposed under the Will fails to do that.

3. If the above two elements are satisfied, the Court will determine an appropriate adjustment in the circumstances taking into consideration the size of the estate and the interests of other beneficiaries or claimants.

The definition of an eligible person and the timeframes within which to make a Family Provision claim, differ between State and Territory jurisdictions.

Usually, a spouse, former spouse, de facto partner or child of the deceased will be an eligible person. Step-children, grandchildren, parents, siblings and persons in a ‘close personal relationship’ or who lived in the same household as the deceased, may in some circumstances and jurisdictions, also be eligible.

Your lawyer will assist in determining your eligibility to make a Family Provision claim and advise you on the time limitations applicable for your area.

Proving a Will is unfair

Once eligibility criteria are satisfied, a range of factors are considered in determining whether the Will is unreasonable and if so, what adjustment should be made.

The Court assesses the degree to which the deceased had a moral obligation to provide for the claimant in light of the proposed distribution of the estate. The claimant’s financial situation is taken into account as are the competing financial needs of other beneficiaries.

The Court looks at the Will and any evidence regarding the deceased’s obligations and intentions with respect to the claimant. The person’s character and conduct are relevant as is the nature and length of the relationship with the deceased. The claimant’s age and whether he or she has a physical or mental disability are also factors.

Financial and non-financial contributions made by the claimant to the property of the deceased person, or to the welfare of the deceased person or his or her family, are also important considerations.

Mediation is usually compulsory before a Family Provision claim proceeds to hearing. Settlement out of Court is often preferable, particularly when it appears obvious that a claim is justified and the estate assets can meet that claim. The executor’s role is to preserve the assets of the estate and an out-of-Court settlement is likely to assist in protecting assets from being depleted by legal costs incurred by going to Court.

Are there other ways to remedy an unfair Will?

Subject to certain conditions, a Deed of Family Arrangement can be used to document an agreement reached between the beneficiaries to distribute the estate assets contrary to the provisions of a Will.

All beneficiaries must be over 18 years and have full legal capacity. The parties (beneficiaries, executors and third parties, if relevant) should seek independent legal advice.

Where the parties are agreeable, or at least open to negotiation, a Deed of Family Arrangement can be a practical and cost-effective way of mitigating a Family Provision claim by remedying an unfair distribution under a Will.

Good legal advice is essential as such arrangements may have stamp duty and taxation consequences which must be addressed prior to formalising the agreement. The deed will also need to protect the executor from future claims or liability arising under the Will.

Conclusion

If you are a relative or somebody who shared a close relationship with a deceased person and feel that the Will is unfair, then you may be able to make a Family Provision claim. Your lawyer will discuss the eligibility criteria and assist in making the claim or negotiating a settlement with the estate.

It is important to try to avoid Will disputes arising after your death. This can be achieved by ensuring that your Will is up to date and takes account of changing circumstances in your life. Your lawyer can advise on structuring your Will to limit the possibility of a future Family Provision claim.

If you or someone you know wants more information or needs help or advice, please contact us on 07 3281 6644 or email mail@powerlegal.com.au.

Most of us appreciate the importance of making a Will and having an estate plan that sets out how we would like to provide for our loved ones when we die.

If, like many Australians, you belong to a blended family, there are additional considerations when planning your estate. Most typical will be ensuring that the competing interests of children from past and present relationships are addressed, whilst ensuring a current partner is provided for.

Following are our top estate planning considerations for members of a blended family.

Make a family tree and identify potential issues

Because of the complexity of some blended families, the importance of making a family tree cannot be over-emphasised. The tree should identify immediate family members, former spouses, children from past and present relationships (biological, adopted and step-children), as well as anybody else who is, or has been, financially dependent on the Will-maker.

Making a family tree helps to:

• consider the testamentary wishes of each partner and identify those they wish to benefit from their estate;
• acknowledge the potential for disputes and family provision claims and, as far as practicable, safeguard against these;
• identify those that may have a moral claim on the Will-maker’s estate.

Look at your major assets

Real estate and superannuation interests are often our most significant assets. Understanding some legal concepts regarding these assets can greatly assist with planning your estate.

Real estate

If you hold real estate as a joint tenant, the principle of survivorship applies. This means that your share of the property will immediately vest in the surviving joint tenant when you die no matter what your Will states.

If this is not your intention, you and your partner may consider severing a joint tenancy and instead holding the property as tenants in common. In this case, either of you may leave your share of the property to whomever you wish by a direction in your Will.

Your lawyer can advise and assist in severing jointly held real estate.

Superannuation

A common misconception about superannuation is that it automatically forms part of your estate. This is not the case. A superannuation fund is only permitted to directly pay a death benefit to a ‘dependant’ of the fund member or otherwise, to the estate.

A ‘dependant’ includes a spouse (including a de facto partner of same or opposite sex), a person with whom the fund member had an interdependency relationship, a child of any age or a person who is financially dependent on the member. A child includes a biological child, adopted child, step child and ex-nuptial child.

Fund members can choose who receives their death benefits by completing a Binding Death Benefit Nomination. This circumvents the trustee’s discretion and directs it to pay benefits to the dependant nominated by the member.

In a blended family, it may be appropriate for fund members to direct the trustee to pay all or some of their death benefits to their child or children to guarantee that they receive an inheritance immediately after they die. In this case members will need to consider whether there will be sufficient funds for the surviving partner as well as the tax implications. Advice should be considered from a lawyer or financial professional.

Consider different types of Wills

An example of a simple Will for a married couple is one that provides for the estate to go to the surviving partner in the first instance and then upon his or her death, to their children. This may not be ideal for blended families as the children of the deceased partner will need to wait until the step-parent dies before inheriting under the Will. There is also a risk that the surviving partner may subsequently change his or her Will to the effect that the children of the partner who dies first miss out altogether.

Different types of Wills can be used to avoid these issues and your lawyer can advise on the most appropriate for your situation. The following are some examples.

Testamentary trust

A testamentary trust is a trust contained in a Will that is created upon the testator’s death. In the case of a blended family, a separate trust can be created for each child which effectively separates assets allowing each beneficiary to receive and deal with their respective share via an appointed trustee (which may or may not be the beneficiary).

Testamentary trusts can also provide for asset protection and have taxation advantages. They are however complex and require ongoing management. Consequently, the benefits should outweigh the costs of creating and administering the trust.

Mutual Wills Agreement

A Will may leave assets to each partner and, on the surviving partner’s death divide the combined assets between all children (from former and present relationships). This may technically be ideal however there is nothing to prevent a surviving partner altering his or her Will after the first partner dies, effectively leaving out a child or children of the first-deceased partner. A Mutual Wills Agreement can help to prevent this.

Essentially, the partners agree on the beneficiaries (for example children from both partners’ past and present relationships) and how their assets should ultimately be distributed. This is reflected in reciprocal Wills and a binding agreement to the effect that neither party will alter his or her Will after the other’s death.

The surviving partner has an obligation to hold the assets on trust for the beneficiaries named in the Will and is bound by that agreement. Those benefiting under the Will should be aware of the agreement so enforcement action can be taken if necessary.

Conclusion

Effective estate planning takes time and careful consideration. Every family is different and there is no one perfect solution. Talking to an estate planning lawyer helps to identify the potential issues that may arise and to devise strategies to address these issues to ensure that your intended beneficiaries are protected when you die.

If you or someone you know wants more information or needs help or advice, please contact us on 07 3281 6644 or email mail@powerlegal.com.au.

Making a Will is important, particularly if you are part of a blended family. A blended family is a family in which one or both partners have a child or children from a previous relationship. Careful estate planning now should ensure that all of your intended beneficiaries are provided for when you die and that the potential for conflict within the family unit is minimised.

There is no one-fit solution when it comes to estate planning for the blended family. The dynamics and needs within families evolve and personal assets may fluctuate from year to year. However, by identifying the potential issues that might arise within each family unit, and considering some options to address these, an effective estate plan can be accomplished.

The important thing is to discuss your circumstances and objectives with your legal advisor so that your wishes can be properly set out in your Will and other estate planning documents. These documents should be reviewed regularly to take account of changing circumstances.

Competing interests – the common issue

The most typical issues faced by a Will-maker within a blended family are the competing interests of past and present partners, biological children and step-children. The Will-maker is likely to want to look after the current partner and also children from previous relationships. There may also be children of the present relationship and children from the partner’s prior relationship to consider.

Traditionally, a Will for a married couple provides for the estate to go to the surviving partner in the first instance and then upon their death, to the children. This is likely to be inappropriate for blended families – not only must the children of the deceased wait until the step-parent dies before inheriting, but there is a risk that the surviving partner may change their Will so that the deceased’s own children miss out. A further risk is that the assets may over time diminish, leaving little for the deceased’s children.

In some instances, if adequate provision is not made from a deceased estate, an eligible beneficiary may be able to make a family provision claim causing distress, delay and uncertainty during an already stressful time.

The following may provide some helpful suggestions when considering these complex issues.

Immediate gifts and interests in real estate

When making your Will, you may choose to provide an immediate gift to your children upon your death rather than your children waiting to inherit after the death of your partner. A life insurance policy nominating the children as beneficiaries might be appropriate in this instance.

If the estate is significant, the Will could provide for an immediate gift of real estate, money or other valuable asset to the children. This will safeguard against the possibility of your children missing out on an inheritance should your partner later change their Will or your estate assets diminish.

If you and your partner hold real estate as joint tenants, you might consider changing this to a tenancy in common. A joint tenancy means that the share of property held by a deceased tenant automatically goes to the surviving tenant. This cannot be altered by Will. However, if the property is held as tenants in common, your share may be left to your children subject to leaving your partner a life interest in that share of the property.

A life interest will provide your partner a continued right to reside in and use the property until he/she dies at which stage your share will revert to your children. Note however, that life interests can be complex due to circumstances such as health and aging of the surviving partner who may need to downsize or move to an aged care facility. These issues should be carefully considered and discussed with your legal advisor.

Testamentary trust

A testamentary trust is a trust contained in a Will that comes into effect upon the testator’s death. A testamentary trust provides flexibility and control in asset distribution amongst beneficiaries and assists in protecting your assets from third parties and creditors. Assets can be preserved so that they can pass through future generations and the trust can provide for different scenarios.

Testamentary trusts are generally tax effective and may be worthwhile considering in your estate planning if the value of your likely assets warrants the establishment and administrative costs.

Choosing your executor

Your executor is your personal legal representative when you die. He or she has the role of ensuring that the wishes set out in your Will are followed. Your executor will deal with your estate lawyers, accountants, financial advisors and real estate agents. He or she will maintain estate accounts, pay bills and generally oversee the administration of your estate.

Generally, a person’s spouse or child will be nominated for this role. However, because of the dynamics involved in blended families it may be preferable to appoint one or more neutral friends or professionals so that the role may be carried out with impartiality.

Conclusion

These are some important points worth remember when considering estate planning for the blended family:

• Talk to your partner about your estate planning objectives.
• List all assets including those held separately and jointly.
• Consider everybody from the family including spouses, previous spouses, biological and step-children, and identify those whom you wish to benefit – preparing a family tree may be helpful.
• Contemplate if your choice of beneficiaries might leave open the potential for a family provision claim. You may need to discuss this with your legal advisor.
• Choose impartial executors.
• Discuss your objectives with your lawyer so the relevant documents can be prepared.
• Ensure that you have binding death benefit nominations in place for your superannuation and life insurance policies.
• Review your Will and plans regularly, and immediately if your personal, health or financial circumstances significantly change.

If you or someone you know wants more information or needs help or advice, please contact us on 07 3281 6644 or email mail@powerlegal.com.au

Do you know when to update your Will?

Most people are aware that a valid Will determines how their assets are dealt with after they are gone. Wills generally provide for the appointment of a trusted executor/s and gifts to chosen beneficiaries. They may also appoint guardians for minor children and give direction for specific funeral and burial arrangements.

When to review your Will

Many people make a Will, arrange for it to be safely stored and then forget about it. However, in many situations reviewing your Will is just as important as preparing it, particularly when events occur and your Will no longer reflects your wishes.

Your Will should be reviewed when your personal or financial circumstances change.

The following events might prompt you to review your Will.

Marriage

Generally, the Succession Act 1981 (Qld) revokes a Will upon the marriage of the testator but not provisions of gifts to the testator’s spouse at the time of the testator’s death nor the appointment of that person as executor, trustee or guardian. Similar provisions apply upon the registration of a relationship.

A Will made in contemplation of marriage is not revoked when the marriage takes effect.

If you have married since preparing your Will you should have it reviewed to determine whether it still reflects your wishes. Even if the Will was made in contemplation of marriage to your present spouse, if some time has passed since preparing it, certain other terms of the Will may no longer be desired.

Be aware also that older Wills may fall under previous provisions of legislation and have different effects. As a general rule, Wills older than three years should be reviewed.

Separation

The divorce of a testator revokes a Will to the extent of gifts to the testator’s former spouse, the appointment of the former spouse as executor, trustee or guardian and the grant to the former spouse of a power of appointment. The divorce however does not affect the appointment of a former spouse as trustee of property held for the children of the testator and spouse.

Changes in marital status or relationships should always prompt you to review your Will.

As a divorce will result in some provisions remaining valid and some not, your Will should always be reviewed to take into account your new circumstances.

Note also that many partners are separated for some time before finalising a divorce so your Will should be reviewed once you determine that you and your spouse have separated indefinitely.

Birth of a child

Obviously the birth of a child will warrant revision of your Will to ensure that child is adequately provided for. Your Will can be drafted to distribute assets equally amongst your children, even those born after your Will is made.

Death or ill health of an executor

You may have appointed an executor/trustee of your estate who is no longer alive, aging, mentally or physically unwell, or who has moved away. In these circumstances you might consider appointing a new executor. Your Will can provide for a substitute executor if your appointed executor is unable or unwilling to act. There is no limit to the number of executors you may appoint. Your executors should be capable of administering your estate in accordance with your wishes, which is often carried out under the guidance of a solicitor.

Death of a beneficiary

A gift to a beneficiary who dies before, or within 30 days of the testator, may fail unless a contrary intention is stated in the Will.

If the beneficiary was a child of the deceased then the Succession Act 1981 (Qld) provides that the deceased child’s children will instead take the gift. If the testator has no children and a substitute beneficiary is not nominated the gift falls to the residuary estate. This can have unintended effects.

A Will that nominates a beneficiary who has passed on should be reviewed to ensure that it still has the desired effect.

Disposal of a specific gift

A specific gift is clearly identified and separate to other property of the estate; such as a prestige motor vehicle. If you sell or dispose of such an asset after you make your Will then the gift fails.

The result is that the intended recipient of the gift may receive nothing at all or a much lesser share of the estate than what you intended. This may have a significant effect, particularly if the asset is of substantial value.

Acquisition of interests in a company or partnership

Property owned by a company cannot generally be disposed of by Will however the shares in a company may be gifted. If you acquire an interest in a partnership you should consider what happens to that interest when you die. Most partnership agreements set out what happens when one partner dies and how that partner’s share of the partnership is distributed. New business interests should always prompt reviewing your Will.

Increased wealth, potential challenges to a Will, vulnerable beneficiaries

Your Will may incorporate a testamentary trust to provide for minors, protect beneficiaries under legal incapacity, safeguard beneficiaries’ assets from creditors or family provision claims and provide certain income tax advantages.

If you would like these protective measures incorporated in your estate planning and the value of your assets warrant the administrative and accounting costs of a testamentary trust then it is worthwhile discussing this option with your solicitor.

Summary

Life is unpredictable and change inevitable. For better or worse life changes are likely to impact upon your estate planning. For good measure, you could diarise to review your Will each time your tax return is prepared. Remember that your superannuation, binding death benefit nominations, appointments of power of attorney and enduring guardians also form part of effective life and estate planning. These should also be regularly reviewed.

If you or someone you know wants more information or needs help or advice, please contact us on 07 3281 6644 or email mail@powerlegal.com.au.

Once upon a time you were happily living together with your de facto partner. Roses were bought, dinners were cooked, finances were shared and Wills were signed leaving all your assets to the other partner in the event of what you then thought of as the far away time of your tragic passing. Thoughts of either of you dying were such a melancholy distraction from the happiness of your lives together, that you put your Wills away in a bottom drawer and never looked at them again.

Unfortunately, however, there wasn’t a fairytale happily ever after ending to this story. You and your partner decided to take your lives in different directions. Joint bank accounts were closed, furniture and other assets were divided; but all the while, your Wills stayed in the bottom drawer, unread and forgotten. Until one of you died.

What happens now?

Your ex-de facto wants his or her share; your other family members think “They were never married. Why should she/ he be entitled to anything?”. It looks like this might get messy.

Are your other family members right?

Many people think that, because they weren’t married, their ex-de facto has no future financial claim on them or their estate. Some people might also think that if they and their ex-partner have divided up their assets, neither one could have a further financial claim on the other. Unfortunately, those assumptions aren’t always correct.

The laws relating to division of assets after a couple separates are completely distinct from those dealing with Wills and inheritances. A Will is not affected by a family law property settlement, which, of itself, cannot prevent someone receiving a gift left to them in their ex-partner’s Will.

So, can your ex-de facto inherit?

According to a recent Western Australian case, the answer might depend on exactly how you referred to your ex-de facto in your Will.

In Blyth v Wilken the Court considered a situation where, in his Will, the deceased left his assets to his now ex-de facto partner, with the parties having separated some three years before the deceased’s death. Eleven years before his death, and at a time when the couple were living together, the deceased made a Will leaving the bulk of his estate to “my de facto wife Kathrine”. The Will had not been changed after the parties separated.

The Court found that by using the words “my de facto wife Kathrine”, the deceased didn’t merely intend to benefit Kathrine; he intended to benefit Kathrine because she was his de facto wife. Accordingly, the Court found that, notwithstanding what the Will said, the deceased would not have wanted Kathrine to benefit from his estate as she was no longer his de facto wife at the time of his death. The gift to Kathrine, therefore, failed and other family members benefitted from the deceased’s estate.

Would different words have made a difference?

The decision in this case depended on the use of the words “my de facto wife Kathrine” in the deceased’s Will. If the Will had merely referred to Kathrine by name, without also describing her as “my de facto wife”, the outcome could well have been very different. That is, despite separating from the deceased almost three years before he died, Kathrine could have received the bulk of her former de facto partner’s estate.

A word of caution

The case of Blyth v Wilken is only one decision of a single Master (not a Judge). The decision is not binding on the West Australian Supreme Court, nor other Courts, which could come to a different decision on similar facts.

Just because your Will refers to “my de facto partner such and such” that is not necessarily a guarantee that that person will not be able to benefit from your estate in the event that you die after ending your relationship with him or her.

Conclusion

In most Australian States and Territories (NSW, Victoria, South Australia, Western Australia and the Northern Territory), separating from your de facto partner will not change your Will.

Any gift in your Will to your ex-de facto could still be valid, despite the fact that you have separated and divided up your assets. It is possible that, based on the decision in Blyth v Wilken, the Court could overturn a gift in your Will to your former de facto, depending on how that gift was worded.

In the ACT, Tasmania and Queensland, termination of a registered de facto relationship will revoke any gift in your Will to your ex-de facto partner. However, this only applies to registered relationships and registered terminations of them; and in the ACT it only applies to registered same sex relationships.

Regardless of where in Australia you live, the safest course of action is to review, and if necessary change, the terms of your Will as soon as possible after the ending of any relationship, even a friendship.

If, for example, your Will leaves your jewellery to “my friend so and so”, would you still want “so and so” to receive that jewellery if you’ve de-friended each other by the time of your death?

Blyth v Wilken suggests that the jewellery may not end up in your former friend’s hands, but would you want to leave that to chance and to the question of whether a Court would follow the Blyth v Wilken decision?

If you or someone you know wants more information or needs help or advice, please contact us on 07 3281 6644 or email mail@powerlegal.com.au.