Family Provision Claims
Family Provisions in Big Money Estates
Many people have a mistaken understanding of how a Will works and may have the belief that they can give their estate to anyone they desire. However, this is not the case in Australia and testamentary freedom (being able to give the estate to anyone the Will maker desires) is balanced by laws that allow courts to use their discretion and ensure that the remaining family members are adequately provided for with the proceeds of the estate. The reality is that the number of contested Wills is on the rise in Australia. The most common type of challenge is a Family Provision claim.
In a Family Provision claim, the applicant must demonstrate that they have been left without ‘adequate provision’ for their ‘proper maintenance, education or advancement’. It is important to note that only spouses (which includes de-facto spouses), children (which includes step-children) or people who are wholly or substantially maintained or supported by the deceased person can apply to a court for a family provision.
“Adequate provision’ and ‘proper maintenance’ have been notions that Courts have struggled to define. However, it is evident from recent decisions that what is adequate or proper in one case may not be adequate or proper in another.
In most Family Provision claims, the Court exercises its discretion and weighs three factors which are; the size of the estate, the needs of the applicant and the interests of other parties having a legitimate claim on the estate of the deceased. The weight to be given to each of these factors varies. This is especially the case in big money estates compared to modest estate matters.
A recent Western Australian Supreme Court decision in Mead v Lemon (2015) has captured the attention of both the public and the legal community and may have an enduring impact on the resolution of big money estate disputes. In this case, the size of the estate was extremely large. The Will provided that the testator’s two children should receive the amount of $400 million each. The applicant (who was a love child) was left with a $3 million trust fund, which had a number of oppressive conditions tied to it. A big driving force behind the Judge’s decision to ultimately award the applicant $25 million (an additional $22 million) was that the other beneficiaries would not suffer any significant financial detriment. This may not of course be the case where increased provision was made from a modest estate. As a result, where there was a large estate, it was not important for the court to have regard to the interests of the other parties. Additionally, the Judge stated that it was not about fairness, but considered the position of a wise and just father, that of community expectation and the duties of a parent arising under the Act. The Judge also removed the oppressive conditions from the fund.
This can be contrasted to decisions made in modest estates, where the basic principles of making adequate provision for the” proper maintenance, education or advancement’ for the beneficiary are the same as in large estates. However, an applicant in a modest estate has a much lower likelihood of successfully contesting a Will and receiving a larger sum from the estate, even if they are of humble means.
The principles that were applied in Mead v Lemon (2015) may be of important relevance in big money estates in the future. It is important to note that the decision serves as a reminder for practitioners that are involved in large estate planning to try and minimise the scope for Family Provision claims.
Consequently, especially due to the rise in Family Provision claims in recent years, we cannot stress strongly enough the importance of seeking professional legal advice when finalizing a Will. At Carroll Fairon Solicitors, we have experienced practitioners who will be able to ensure that your Will reflects your intentions as clearly as possible. Additionally, our experienced lawyers will also be able to advise you as to whether there may be any potential Family Provision claims. When drafting your Will, we can ensure that adequate arrangements are made for each family member, minimizing the potential risk of future Family Provision claims. We can also assist clients in making Family Provision claims or responding to those claims if they are made.