“I have not seen my child in 20 years, why should I give him anything in my will?”
Most people would think that they should be entitled to leave their estate to whomever they wish when they die, or indeed make whatever charitable bequests they choose. Whilst as a general principle that proposition is true, there are some significant exceptions that need to be acknowledged in making a will.
All States and Territories in Australia have similar legislation which allows family members, who qualify as eligible applicants, to bring a claim against your estate if they can establish that proper provision has not been made for them under the terms of your will.
The Succession Act 1981 (Qld) sets out those eligible applicants to be:
- A spouse which includes a husband or wife, de facto partner, civil partner, and dependant former husband or wife or civil partner;
- A child which includes natural children, stepchildren and adopted children;
- A dependant meaning a person who was wholly or substantially maintained or supported by the deceased at the time of his or her death and who is a parent of the deceased, or the parent of a surviving child under the age of 18 years of that deceased person, or a person under the age of 18 years.
In considering a claim by an eligible applicant, the Court will have regard to the circumstances of the applicant such as their health, financial circumstances, the degree of need which they can demonstrate, and the relationship which that applicant had with the deceased.
There is no defined formula as to how these criteria will be applied by the Court in a particular set of circumstances, however, there is an abundance of case law that has grown around the Court’s consideration of these issues.
In particular, the Court has been called upon to consider whether children who have had no meaningful relationship with a deceased prior to their death, or who may have conducted themselves in a way which alienated them from the deceased, should be entitled to any provision out of an estate if a testator decided to exclude them under their will.
Disentitlement and Reductions
Generally speaking, the greater an applicant’s need, the greater the conduct or estrangement must be to disentitle, or warrant a reduction in the provision which would normally be made for such an applicant.
Over more recent times there has been a relaxation of the application of disentitling conduct rules that may have once resulted in a complete refusal of an order for family provision. It is somewhat rare that disentitling conduct actually results in no provision for an otherwise eligible applicant. The conduct may result in a reduction in the provision made for an applicant, instead of complete disentitlement.
In estrangement cases, attention is usually given to who may have been at fault, rather than just simply the absence of a relationship. Consideration may also be given to any attempts, or lack thereof, to reconcile between the deceased and the applicant. The Court’s examination of these issues may mean that estrangement will not disentitle the applicant, but may result in a reduction of the provision made. Another practical difficulty in presenting evidence to the Court in relation to the question of who was at “fault” in bringing about the estrangement, is that the applicant is able to give their own version of events to the Court. However, evidence cannot be given by the deceased, and any witnesses may well be limited.
Recognising the potential for such claims is an important aspect of all estate planning. If you conclude that your estate may be vulnerable to a claim by an eligible applicant, these are issues which need to be fully discussed with your solicitor when preparing your will.
Moving or shifting assets
In some circumstances it may be a viable option to move assets into joint names, or consideration could be given to shifting or retaining assets in a discretionary trust to avoid such assets forming part of the estate. However, those steps may give rise to cost and tax implications in changing ownership, including capital gains tax, gifting rules for pensioners, and stamp duty.
If provision applications eventuate, they can have serious financial implications for your intended beneficiaries, both in the form of legal costs incurred by the estate, and reduced entitlements to those beneficiaries. It is therefore important that all of these issues are fully considered in the course of your estate planning and preparation of your will.
Do you have any questions?
For further help, read our articles on Wills & Estate Law: