Will my Will be done - or undone?
How can we ensure that when our clients execute a Will, that their wishes are carried out?
The rationale behind the Family Protection Act 1955 (the "FPAct") and its predecessors (back to 1900) was to ensure that poor dependants of the deceased did not become a burden on the State.
Currently, the majority of claims or potential claims arise out of people being in second or subsequent relationships.
Let’s take a very common example.
1970, Rod marries Rachel. They have 2 children, Liam and Lisa, who in 2012 are 32 and 27 years of age. Rod and Rachel divorce in 1990.
Rachel re-marries Henry in 2000. Neither Liam nor Lisa is living with Rachel and Henry and both are financially independent.
Rachel dies in 2012. Rachel's Will essentially says “All to Henry”.
Who is entitled to make a claim under the Family Protection Act?
Partners. Whether married, civil union and, in some circumstances, a de facto partner. A de facto partner only has the ability to make a claim if they are also able to make a claim under the Property (Relationships) Act 1976 .
In this case, Henry is already poised to get everything.
Children are entitled to make a claim.
A child must be alive at the date of the deceased’s death (but as an interesting aside, the Court has held that if the child is in its mother’s womb at the date of her death and is born alive, then that child would be entitled to claim too).
In our example, Liam and Lisa would be entitled to bring a claim.
Grandchildren are entitled to claim. They need to be alive at the date of the deceased death, or in the womb and born alive after the deceased’s death.
Stepchildren - there are conditions on stepchildren being entitled to bring a claim. The step-child's parent must also be entitled to make a claim under the Property (Relationships) Act 1976 and the stepchild must have been maintained, or legally entitled to be maintained wholly or in part by the deceased step-parent. This means step-children can currently only bring a claim if they are being financially supported by the step-parent who has died.
In certain circumstances, parents of a deceased are able to make a claim. A parent needs to prove that they have been maintained or legally entitled to be maintained partially or wholly by their child. Alternatively, they may bring a claim if at the date of their child’s death, their child had no surviving partner or children.
What is their claim based on - that is what do they need to show in order to receive any part of Rachel’s estate?
To change the Will Rachel's children need to show that Rachel has breached the moral duty to provide for proper maintenance and support of each of them. There is no presumption that all children should be treated equally under the Act and it is very important that their individual circumstances are taken into account. For example, Liam may be struggling financially while Lisa is a wealthy surgeon.
Liam and Lisa are adults and their claim would be treated quite differently to a claim made by infant children.
On one hand Rachel has a moral obligation to provide for her children which, on the other hand, is to be weighed against Rachel’s right to dispose of her assets on her death as she sees fit.
Early on, the Courts made much song and dance about trying to uphold a testator's (the person who makes a Will) wish as much as possible and saying that a Will ought only be disturbed to the extent necessary to provide for the proper maintenance and support and that it should not be a matter of re-writing a testator’s Will.
Then the Court went ahead and essentially rewrote the Will and were quite willing to make awards for adult children.
Current thinking, since the landmark case of Williams v Aucutt in 2000, is that testamentary freedom should be paramount. Subsequent cases have tended towards a conservative approach to awards, particularly in relation to adult children making claims. In changing the terms of the Will the Court will do only the minimum necessary to fix the breach of moral duty. The Court will otherwise try and give effect to the testator's wishes. The Court
will not rewrite the Will so as to do what a Judge thinks is "fair".
In assessing competing claims the Court will look at the entire estate - that is how much pie is there to divide up?
Maintenance and Support
The Court has essentially treated maintenance as financial need, whereas support is given a broader interpretation “sustaining, providing comfort, belonging to a family and of having been an important part to the overall life of the deceased”.
Maintenance and support do not have to be either/or options. You do not have to say Liam needs financial maintenance, but he does not need support. They are composite in nature. Support requires a parent to recognise their children in their Wills to at least some extent.
On the other hand the Courts, since Williams v Aucutt, are clear that a testator will not have to provide equally for all children, and that a relatively modest legacy for a child can be adequate to recognise the relationship.
When assessing a claim on behalf of either Liam or Lisa, you need to look at their individual needs. There is no presumption that Liam and Lisa are to be treated equally between themselves.
In Williams v Aucutt there was a very large estate where the testator had left a modest amount to her daughter. Her daughter was very wealthy. While the Court went to lengths to state that it would only amend the Will to the extent required to remedy the breach of moral obligation, it still doubled what was left to the daughter.
The upshot of Williams v Aucutt is that the Courts are still not afraid to change Wills and any adult child, no matter how wealthy, can legitimately claim to be entitled to some moderate provision from the estate for the purpose of psychological familial support, unless there is some disentitling conduct or some earlier provision made during the lifetime of the testator.
The Act provides that claims need to be made under the Act within 12 months from the date of grant of probate or within 2 years of the date of grant of probate if the claim is being made by a person who is not of the full age or mental capacity.
However, under the Administration Act, the administrator may distribute the estate 6 months after the date of the grant of probate unless the administrator has received notice of a claim.
While you might have a very good claim, if the estate is all gone, there may be little point in bringing a claim.
Family Protection Act claims, while able to be brought in the Family Court, are still expensive, both in terms of time and money, and stressful for the claimants.
It also puts an enormous amount of strain on familial relationships, particularly where one sibling has been treated differently from other children or left out completely.
How can you avoid unnecessary litigation?
Legal advisors need to have a very good understanding of the extent of the estate and possible claimants and consideration needs to be given to what provision ought to be made for any potential claimants.
It is important to ensure properties are owned in a way that parties can make sure their wealth is kept within separate families if this is what they want. This may mean a new home should be owned in equal shares rather than jointly. Wills need to cater for the way properties are owned.
Where the main asset is a family home and there is a new partner and children of a previous relationship, one option is to take out a modest life assurance policy that is for the benefit of the children.
You do not have to provide equally for all of the children, but the testator should provide something. Even very wealthy children will be able to make a claim, which will eat into the assets available for the beneficiaries.
Sometimes a Section 21 Agreement and/or a Trust might also be appropriate so that there is certainty as to how property is to be distributed on death.
When making or preparing a Will and also buying property, it is important to take good legal advice if you want to ensure that your wishes in your Will are carried out.