How to deal with an 'unfair' Will
In this article we consider dealing with an unfair will where one or more parties consider the distributions made to one or more beneficiaries (or someone being left out of a will entirely) 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 (or became void). For example, the testator may have divorced (or a de facto relationship ended) 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’ may have incurred personal and financial expense or missed opportunities due to such commitments, however the will may not take this into account. In the circumstances, it might seem reasonable that the child be compensated for such gratuitous services.
- a falling out sometimes causes people to act rashly, resulting in a hurried decision to cut somebody out of a will. Even after reconciliation, the testator may not turn his or her mind to reinstating 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 by the testator and creates uncertainty between the beneficiaries. If you experience 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 in common law countries, Courts have been hesitant to interfere with this principle (whereas in some European countries and Islamic societies there may be fixed rules as to inheritance by spouses and children).
However, society’s views and the concept of ‘family’ have changed immensely over the years. Consequently, a Court has a statutory 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 such 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 qualify as 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 in the relevant jurisdiction.
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 may be 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 generally 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 express provisions of a will.
All beneficiaries must be over 18 years and have full legal capacity to be able to be bound by any such arrangement. 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 modifying an ‘unfair’ distribution under a will.
Good legal advice is essential as such arrangements may have significant 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 as a result of not complying with the provisions of the will.
The entitlement of the deceased to superannuation benefits may not form part of their estate e.g. if the testator left a binding superannuation death benefit nomination – (and this may also be the case as regards the assets of trusts which the deceased controlled) and case needs to be taken to clarify what, if any assets actually form part of the estate governed by the will proposed to be challenged.
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 (and other associated documents) are 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, or what steps need to be taken, and what the time limits are for making a claim.
If you or someone you know wants more information or needs help or advice, please contact us on (07) 5443 4866 or email email@example.com.