When a person decides to create a Will (a Testator) they are free to leave their property to whomever they choose. The Testator can also exclude specific people from being a beneficiary of their estate however, there are risks in excluding someone, especially if that person is financially dependent on the Testator. Whilst it is important to understand that every person has the right to draft his or her Will in the way they see fit, it is also important to understand that when preparing the last Will and Testament, it is important to consider all persons that the deceased ought to have provided for following his or her death.

 

 

Circumstances when a Testator may consider excluding someone from their Will

• Separation from a spouse or partner;
• No contact with their children for a number of years;
• The Testator has already gifted a substantial sum of money to their children;
• One child is in greater need than the rest of the family e.g., if they have a disability;
• There is a possibility that a beneficiary Will squander their inheritance.

Although a Testator may have valid reasons to exclude someone from their Will, their decision can be challenged or cause conflict and delay in the administration of their estate.

 

Who can bring a claim against an estate for insufficient provision?

Under Victorian laws, only an “eligible person” can apply to the court for family provision. The “eligible person” must show that the Testator did not provide adequate provision in their Will for their proper maintenance and support; and must demonstrate that the Testator had a moral duty to do so.

In broad terms, the classes of persons eligible to make a claim can be summarised as:

a)      any spouse, former spouse, de-facto spouse, partner, domestic partner (however described, or defined); and
b)      persons with whom the deceased shared a domestic or close personal relationship (however described, or defined); and
c)       past or present dependents (including, but not limited to, children and grandchildren).

 

Is the exclusion or preference of family members ever warranted?

During 2022 decisions were handed down which illustrate three common reasons for exclusion of a family member – poor relationship, estrangement, and unequal distribution.

1. Poor Relationship
It is not uncommon for the relationship between an adult child and a parent to breakdown, resulting in the parent removing their child from their last Will and Testament. In making a statement of wishes, if the Will-maker states their reasoning for exclusion being due to dislike of a child, the Court Will give little weight to such statement.

In Kleinig v Neal (No 2) [1981] 2 NSWLR 532 at 540A, Justice Holland J stated “A wise parent will recognise that perfect harmony between parent and child is in the nature of things not to be looked for….. Differences of outlook between different generations is not exceptional, it is the general rule, so some friction between parent and child or disappointment in a parent’s hopes and expectations concerning his child will be accepted by the wise parent as almost inevitable. If it occurs, the parent who is wise will not allow such disharmony to blind him to the needs of his child for maintenance, education or advancement in life.”

When a court considers conduct that removes entitlement, it must consider the circumstances, the age of the applicant and the age of the deceased at the time of the incident/incidents, the evidence available by witnesses with respect to the cause of the conflict, and whether or not there is any evidence supporting the applicant, the action of the deceased, along with the actions of the applicant.

 

2. Estrangement

In Kitteridge v Kitteridge [2022] NSWSC 193, the estrangement was the central part of the claim. The case involved a family provision claim by the adult son of the deceased (Lee) who contested a Will made in 2017 in which the deceased left almost the entire estate to the youngest son and executor, and nothing to the deceased’s two older sons. Importantly, a clause in the deceased’s Will stated that she made no provision for her older two sons as they “refused to have any contact with me for many years”.

The deceased had a history of making claims on her own parents’ estates, her wealth being almost totally derived from the outcome of those claims. The deceased left nine statements, typed and handwritten, along with seven Wills each disinheriting the plaintiff. The basis of her reasoning was the lack of contact by the plaintiff on the basis that he ‘chose’ her ex-husband (the plaintiff’s father) over her (the plaintiff’s mother) in the breakdown of their relationship.

The Court found that significant respect should be had for the clear intention of the deceased as evidenced in her Will and accompanying statements. However, those intentions should not render the Court unable to exercise its discretion and order further provision. Instead, the Court must determine whether adequate and proper provision had been made for the claimant. Relevantly, the deceased had a moral duty to provide for Lee as his mother.

Justice Robb stated that a wise and just Testator does not let family disharmony blind them to the proper needs of the natural objects of their estate and to entirely exclude a child from disposition after asking them to choose is not the actions of a wise and just Testator.

 

3. Unequal Distribution

In Lalic v Lalic [2022] NSWSC 31, the Deceased’s Will provided that her daughter and one of her sons received her principal place of residence, with the residue to be split equally between the four siblings. The reasoning was set out in the Will having regard to the emotional and material support given by the two primary beneficiaries. The effect of the Will was to entirely disinherit two out of their four children, once the costs of legal proceedings are accounted for.

The plaintiff filed a claim for provision out of the estate of his late mother. The estate principally consisted of real property left to other adult children and the applicant was left with a share of the residue of her estate. The applicant contended that he was a disability pensioner and unable to work.

The Court, in determining whether provision should be made, assessed how the applicant received a gift of land from his parents during their lifetime, how he undertook many years of unpaid work for the family business and that he had a close relationship with the deceased. The Court concluded that, considered at the time of the determination of when the application was filed, the deceased’s Will did not make adequate provision for the plaintiff’s proper maintenance and advancement in life and that further provision for the plaintiff should be made.  The Court ruled that the plaintiff is entitled to provision of a lump sum of $125,000 in lieu of the provision made for the plaintiff under the deceased’s Will dated 1 May 2008.

 

These cases show that Will makers need to be mindful of making proper provision for family members in their Will, even if their relationship with all their potential beneficiaries was not the best. They are usually best advised not to exclude family member unless there are very good reasons to do so, in which case advice should be sought from an estate planning solicitor as to whether it is prudent to draw up a Memorandum of Wishes or whether other steps should be taken to protect the potential estate.

 

Chiara Nicolaci – Solicitor– Matthies Lawyers

Should you have any queries in regard to estate planning matters, please contact Matthies Lawyers for an obligation-free consultation or call +61 3 8692 2517 today.

Disclaimer: This article contains general information only and is not intended to be a substitute for obtaining legal advice.