We spend a lot of time advising people about how they can protect and pass on wealth to the next generation. We spend a lot of time advising people how to exercise their right to choose “who gets what”.
But there is a limit to this right of choice.
Ultimately a person’s wealth is not theirs to deal with as they like upon their death. The law recognises that people have a responsibility to others, and in particular their family and other people who have been involved in their wealth – even if only to enjoy it.
In all States in Australia the law provides you with a right to challenge a Will if you believe that you have not been adequately provided for. Furthermore, provided that your challenge is not unreasonable or unfounded, the cost of making a claim (including some of your legal costs), even if not successful, may be paid for out of the deceased’s Estate.
The law is not completely prescriptive in this area – it does not provide a specific entitlement. The extent of your entitlement, if any, will depend on a number of factors. These include:
- Whether the Will is grossly unfair;
- The financial needs of you and other family members;
- The extent you were financially dependant upon the deceased;
- The deceased’s mental capacity to understand what they were doing at the time of making the Will; and
- Any undue influence exerted by another person prior to the signing of the Will, and therefore whether the Will reflected the deceased’s true wishes.
New South Wales law as an example…
By way of example, the Succession Act 2006 (NSW) allows an “eligible person” to contest a Will. For this purpose, you will be an “eligible person” if you are:
- The wife or husband of the deceased at the time of their death, (this includes de-facto partners);
- A child of the deceased, or a child of a domestic relationship with the deceased;
- A former wife or husband of the deceased;
- A person who was both (a) at any particular time, wholly or partly dependent upon the deceased person, and (b) a grandchild of the deceased person or at any time a member of a household of which the deceased person was a member.
If you are an eligible person you must then show to the Court that there is some reason for the Court to award you a financial benefit. You must show to the Court that given your relationship to the deceased, there is a moral obligation on them to provide for your maintenance, education and advancement in life.
If you are an eligible person and there is a moral obligation on the deceased to provide for your maintenance, education and advancement in life, the Court will review your financial situation, and if need is established, alter the last Will of the deceased.
How is a moral obligation identified?
If you are a spouse or de-facto of the deceased, upon proving the relationship, moral obligation is assumed. This assumption also applies to children, adopted children or children of a de-facto relationship the deceased was in at the time of death. However this assumption can be rebutted if you were estranged from the deceased and there is no need justifying an award.
If you can demonstrate that there was some level of contact between you and the deceased, however occasional, this may give rise to a moral obligation on the deceased to provide for your maintenance, education and advancement in life.
In the recent New South Wales case of Nicholls v Hall & Ors NSWCA 356, “bare paternity” was held to be sufficient to warrant an award under the now repealed Family Provisions Act. What this means is that if you have been estranged from your family for various reasons, or the deceased did not even know of your existence, this does not prohibit you from making a claim under the Family Provisions Act. Existence or non-existence of a relationship with the deceased is not the deciding factor.
You must prove to the Court, that given the size of the estate, the competing claims on the estate and your financial and medical situation, the Court should determine that provision be made for you from the estate.
What factors are taken into account to determine need?
The Court must identify if your maintenance, education and advancement in life has been adequately provided for under the deceased’s Will. The Court will take into consideration your current finances, such as housing accommodation, motor vehicle, household appliances, education needs, medical expenses and prospective future medical expenses. In essence, the Court will look into your whole situation and identify your needs based on your current financial situation.
Each case is determined on its own facts.
Can a step child make a claim for family provision?
Step children do not have an automatic right to make a claim for provision from the estate of a deceased parent. They are not automatically an eligible person. Step children must establish that they are an eligible person on the basis of having formed part of the household of, and financial dependency on the deceased.
Can a grandchild make a family provision claim?
Grandchildren do not have an automatic right to make a claim for provision from the estate of a deceased. They are not automatically an eligible person. Grandchildren must establish that they are an eligible person on the basis of financial dependency on the deceased. This extends to both financial and emotional dependency. As a general rule, an award will only be made when the role of the grandparent is more akin to a parental role.
What is needed to establish dependency?
Generally the Court will look at your financial dependency on the deceased. This includes such things as paying for education to regular purchase of clothing, or some other form of monetary assistance. The Courts have also accepted that emotional dependence may be taken into consideration.
A broken promise
If a deceased person, prior to their death, made you a promise that you would receive something in their Will in return for something you have done during their lifetime (e.g. a service such as care in their old age, or working on a family farm for less than market value wages), then the deceased may have an obligation to you at law. This obligation arises under what is referred to as a “constructive trust”. Where you have suffered detriment as a result of meeting your side of the bargain, such as time and labour, the Courts will enforce the promise against the deceased’s Estate.
My step mother and father had similar Wills, she has now changed her Will to exclude me
There may be situations where a parent and a step parent make what are referred to as “mutual Wills”. What this means is that their Wills are made on similar terms, and in consideration of their mutual promises not to change their Will without the other person’s consent. The Courts have recognised that this is a contractual agreement between the deceased and the step parent, giving the intended beneficiaries an interest in the surviving parent’s Estate even after the later change in their Will.