The West Australian
Contested wills are among the most rapidly growing form of litigation in Western Australia. Booming property values over the past ten years, along with enforced superannuation contributions, means that many older people are leaving behind life-changing amounts of money. And the rise of divorce, de facto relationships and blended families makes for many more potential claimants than in the past.
In my experience, as soon as the value of an estate exceeds $500,000, the likelihood of someone challenging a Will becomes very much higher, although I also see challenges to estates that are more modest. And with the average family home in Perth worth over $500,000, many estates present high value targets.
The law provides that, so long as you are mentally competent, you may leave your assets to whoever you chose. But this seemingly unfettered discretion is tempered by what the Courts have described as a “moral responsibility” to make provision for certain family members.
The Family Provision Act, formerly known as the Inheritance Act, opens your will to challenge if you do not make “adequate provision” for the “proper maintenance, support, education or advancement in life” of certain family members. These family members include spouses - current, former and de-facto - children, step-children, grandchildren and parents, to name the main groups.
The Supreme Court can, and often does, over-ride the wishes expressed in a will that fails to make adequate provision for these family members. By allowing a successful challenge, the court can effectively rewrite your will after your death.
How do you avoid such a challenge?
Obviously every individual is different, and specific legal advice on your own situation should be taken. The greatest complexity is that adequate and proper provision is different not just for every family, but for different members of the same family and at different times in their lives: what is adequate and proper for the a young child of a multi-millionaire is different to that for an adult child with their own means with a more modest upbringing. But by way of a few general guidelines:
· Make sure you leave adequate and proper provision for family members who could prove that they are even partially dependent on you materially. For example, even though you may have a very difficult relationship with a step-son, if he lives rent-free in your granny flat and you don’t make provision for him in your Will, he may have a good case for making a successful challenge after you die.
· Be a ‘wise and just testator’ as opposed to a ‘fond and foolish’ one. Leaving $50,000 for the continued care of your beloved cat while making no provision for your defacto’s irksome daughter, who still lives at home, is an example of a Will that is open to challenge.
· Explain your decisions in your Will or in another document clearly. Such explanations can strengthen it against challenge.
· Update your Will every three years. Life moves on, relationships change, and what was once a sound plan of action may be overtaken by events.
· Be as open as possible with your children and beneficiaries about your plans for your estate and how much wealth you have.
This last point – conversations about inheritance – is worth emphasising. Many parents avoid it, not wishing their kids to feel entitled, uncertain about their own intentions, feeling uncomfortable talking about their own death, or for various other reasons. Children, similarly, may feel awkward, not wanting to appear greedy, believing ‘it’s Mum and Dad’s money after all,’ and so on. A recent study by UBS Bank Investor Watch in USA revealed that only 54% of people had discussed estate plans with their children, and only 34% told their heirs how much money they had.
From a legal perspective, the fewer unresolved issues there are, the less likely a legal challenge. Discussion not only clears the air, but by identifying potential problems down the line, a parent can make a plan that’s legally more robust. All of which enables the smooth transfer of assets in accordance with your wishes.
As always, sound legal advice at the outset is the best possible step you can take. A properly drafted Will can prevent disputes, whereas a poorly drafted or inadequately thought out Will is fertile ground for protracted, expensive and acrimonious litigation. Legal advice, and open conversations with your family, are the key.