How the court assesses Family Provision or Testator’s Family Maintenance Claims

The Testator’s Family Maintenance or Family Provision Legislation introduces a threshold jurisdictional question as to whether or not the deceased’s Will, or the statutory intestacy provisions,[1] has made “adequate provision for the proper maintenance, support, education or advancement in life”[2] of the claimant.  The above question is one of fact and relevant to the claimant’s station in life as at the date of the deceased’s death[3] The court measures the terms “proper” and “adequate” against the claimant’s station in life and the nature of the relationship that they had with deceased[4]. The court does not consider the terms “proper” and “adequate” as fixed concepts but rather as flexible or relative. The court uses “a multi-faceted evaluative judgement,[5] which weighs up the competing needs of the parties[6]. The court has regard to the current and future needs of the claimant. The court looks through the lens of a “just and wise testator and not one who is fond or foolish,”[7] and one who is placed in a position of knowing all of the facts. A non-exhaustive list of examples of factors considered by Australian Courts have been codified in s60(2) of the Succession Act 2006 (NSW). According to s60(2) of the Act the court ought to consider:

(a) any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship,

(b) the nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person’s estate,

(c) the nature and extent of the deceased person’s estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered,

(d) the financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person’s estate,

(e) if the applicant is cohabiting with another person–the financial circumstances of the other person,

(f) any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person’s estate that is in existence when the application is being considered or that may reasonably be anticipated,

(g) the age of the applicant when the application is being considered,

(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person’s family, whether made before or after the deceased person’s death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,

(i) any provision made for the applicant by the deceased person, either during the deceased person’s lifetime or made from the deceased person’s estate,

(j) any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person,

(k) whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person’s death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so,

(l) whether any other person is liable to support the applicant,

(m) the character and conduct of the applicant before and after the date of the death of the deceased person,

(n) the conduct of any other person before and after the date of the death of the deceased person,

(o) any relevant Aboriginal or Torres Strait Islander customary law,

(p) any other matter the Court considers relevant, including matters in existence at the time of the deceased person’s death or at the time the application is being considered.

[1] See ss6(1) and 7 FPA.

[2] See s6(1) FPA, Coats v National Trustees Executors & Agency Co Ltd (1956) 95 CLR 491; Singer v Berghouse (No 2)(1994) 181 CLR 201 and Bondlemonte v Blackensee [1989] WAR 305.

[3] Blore v Lang (1960) 104 CLR 124.

[4] Vigolo v Bostin (2005) 221 CLR 191.

[5] Basten JA, in Foley v Ellis [2008] NSWCA 288, at [3]; Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19 and Deveraux –Warnes v Hall [2007] WASCA 235.

[6] Re Allen, Allen Manchester [1922] NZLR 218.

[7] Bosch v Perpetual Trustee Co Ltd [1938] AC 463.

Capricious conditions in a Will that may be struck out by the Court.

There are a large number of examples of capricious and unreasonable distributions that have come before the courts over time. There are far too many to list within this blog. It would be reasonable to conclude that there are many cases that do not receive the benefit of a judicial publication. A small number of examples are set out below. These examples are designed to highlight the deficiencies of unfettered testamentary freedom.

Infringing on religious freedoms

In the case of Re Kearney [1957] VR 56, the testator stated in his will that his executor must only make distributions to grandchildren who “at the time of such distribution be Roman Catholics and not have married protestants.” This clause was held by the court to be valid. In Re Cuming; Nicholls v Public Trustee (South Australia) [1945] HCA 32, the High Court upheld a similar gift to a granddaughter “provided she shall have renounced the Roman Catholic religion within three calendar months of my decease” [sic] In Clayton v Ramsden [1943] 1 All ER 16, the testator wrote that his daughter would forfeit her interest under his will if she married “a person who is not of Jewish parentage and of the Jewish faith.” This clause was held to be void for uncertainty. In Re Winzar (1953) 55 WALR 35, the testator wrote “Should any relative participating in this my Will marry anyone of any other religion but that of my husband’s & mine (Protestant) I direct they shall at once be disinherited and, should they follow any other religion but mine (Protestant) I direct they, he or she shall at once be disinherited.” In Hickin v Carroll & Ors (No 2) [2014] NSWSC 1059, the deceased disapproved of his ex-wife and children’s baptism as Jehovah’s Witnesses and sought to force them to convert to Roman Catholicism by an express condition precedent in the Will. Attending the funeral was also a condition precedent.

Encouraging divorce and preventing re-marriage

In Ramsay v Trustees Executors and Agency Co Ltd [1949] ALR 105, the testator made the following gift:

 “Subject thereto to pay the income of my estate to my son George Binnie Ramsay for such period and so long as he shall remain married to his present wife Irene Ramsay and on the termination of such period in trust for my said son absolutely.”

The effect of the gift was that the only way the son could vest the capital was for his wife to die or for him to divorce her. In the Re Thomson [1966] SASR 278, the testator made a gift subject to a proviso not to re-establish marital relations, by saying:

“Should Mrs M J Eliott [sic] remarry or resume martial [sic] relations with her discarded husband, Mr Arthur Elliott, within ten years of my demises [sic], then the entire property be sold and the proceeds devotes [sic] to the welfare of needy, and lonely Old Aged Pensioners, residing within thirty miles of Bradbury, S.A.”[1]

Requests to abandon parental responsibility

In Re Ellis; Perpetual Trustee v Ellis (1929) 29 SR (NSW) 470, the deceased gifted “the rest and residue of my estate conditional upon my husband leaving my child to be brought up by my sister Mrs Marie Nears and her husband or the survivor of them.” The will set out extensive stipulation on how the daughter would be temporarily permitted to live with him in Australia before being forced to return home to England and sought to effect an abandonment of the father’s parental rights.[2]

Conditions that a person be known by a certain family name.

In Littras v Littras [1995] 2 VR 283, the Testator made a gift to his children on the condition that the beneficiaries be lawfully described by the surname “Littras.”

Restraint on residency or nationality

In Kotsar v Shattock [1981] VR 13, the testator gifted the whole of his residuary estate on trust for his daughter “if and when she shall attain the age of twenty-one years provided that upon the attainment of such age she shall then be resident in one of the countries of the British Commonwealth of Nations”[3], and in the event of the failure of the above trust to pay and transfer the residue to certain charitable institutions.  The daughter resided in Estonia which was one of the Soviet Socialist Republics as at the date of the deceased’s death. The Court held the clause to be valid and her interest was forfeited.

[1] Other examples include Re Caborne [1943] Ch 224, Re Johnson’s Will Trusts [1967] 1 All ER 553; Ellaway v Lawson [2006] QSC 170.

[2] See also Re Sandbrook [1912] 2 Ch 471.

[3] At [14].

The changing family landscape and modern family provision law

Family provision law

Over time, developments to the testator’s family maintenance (“TFM”) legislation expanded the categories or classes of eligible claimants.[1] In 1936, both New Zealand and Tasmania considered changes to the law to permit claims by ex-nuptial or illegitimate children. Both jurisdictions legislated the issue in 1969.[2] The remaining states and territories legislated the same issue shortly thereafter.[3] Section 4 of the FPA expressly defines “child” as to include “illegitimate child.”

By the end of the 1960s all states and territories recognised the rights of adoptive children.[4] Adoptive children are expressly provided for in Queensland and Tasmanian family provision legislation.[5]

On 1 January 1973 s60A of the Administration Act 1903 (WA) came into effect by the enactment of the Inheritance (Family and Dependant’s Provision) Act 1972 (WA). Family provision claims could now be made against intestate estates and the arbitrary rules that govern intestate distribution.[6] On 21 November 1984 the Administration Act was amended to remove any distinction between children of “whole or half-blood” for the purposes of intestate succession.[7]

In 1984, New South Wales was the first state in Australia to legislate for de-facto couples by operation of the De facto Relationships Act 1984 (NSW).[8] The other states shortly followed suit.[9] The rights of partners in same sex relationships went through a period of significant refinement during the 1990s and early 2000s. They have continued to be treated as more or less equivalent to heterosexual couples.[10]

The various Australian state governments were forced to define issues surrounding the status of children for the purposes of inheritance. For example children “en ventre sa mère,” (in the womb of the mother), posthumously conceived children and children conceived by medically assisted reproductive technologies were considered by parliament. Western Australia enacted the Artificial Conception Act 1985 (WA), which came into force on 1 July 1995. On 21 September 2002, the act was amended to cater for same sex couples by the Acts Amendment (Lesbian and Gay Law Reform) Act 2002 (WA).

On 16 January 2013, the Inheritance (Family and Dependants Provision) Amendment Act 2011 (WA) came into force, which amended the FPA to grant step-children and dependent grandchildren standing to apply of an order of increased provision in certain circumstances.

On 19 August 2013, New Zealand legalised same-sex marriage by the Marriage (Gender Clarification) Amendment Act 2013 (NZ). The need for Australia to follow New Zealand’s reforms was hotly debated in the lead up to the 2016 Australian Federal Election. No legislative reform has occurred since the election.

In NSW a ‘dependent member of the deceased’s household’ or a person who had “a close personal relationship” may make a claim.[11] This is to cater for those persons who do not fall within the arbitrary categories of applicants but who were dependent on the deceased by way of non-recognised relationships. For example, cousins who grew up like siblings. Alternatively, aunties and uncles who act as parents to their nieces and nephews.

In 1997, the Victorian parliament abandoned defined classes of eligible applicant altogether by granting an applicant standing if they were “a person for whom the deceased had a responsibility to make provision.”[12] The intention behind the Victorian legislation is to ensure justice of the kind contemplated by Gleeson CJ in Barns v Barns which is not determinative on the status of their relationship.

“…Widening the class is simply bringing the law into greater (although never perfect) accord with social reality, which is messy in so far as people’s relationships do not always coincide with the legal stamps put on them.”[13]

Victoria has since re-introduced defined categories of applicants in an attempt to reduce the number of illegitimate claimants.[14]

[1] “In 1969 to 1970 Law Reform Commission WA; In 1965, the President of the Law Society of Western Australia approached the Attorney General with a proposal that the Act be amended to extend the classes of claimants to include the mother or father of the deceased and the children of a deceased child of the deceased.” As cited in www.lrc.justice.wa.gov.au/_files/P02.pdf.

[2] See the Administration Act 1903 (WA).

[3] Status of Children Act 1996 (NSW), sections 5 and 6; Status of Children Act 1978 (QLD), s 6; Status of Children Act 1974 (VIC), sections 3 and 4; Status of Children Act 1974 (TAS), sections 3 and 4; Status of Children Act 1978 (NT), s 4; Parentage Act 2004 (ACT), sections 38, 39 and the Wills Act 1968 (ACT), s 31A; Wills Act 1970 (WA), s 31, under the part “Illegitimacy”; Family Relationships Act 1975 (SA), s 6.

[4] See Adoption Act 1993 (ACT), Adoption Act 2000 (NSW), Adoption of Children Act 1994 (NT), Adoption Act 2009 (QLD) Adoption Act 1988 (SA); Adoption Act 1984 (Vic) Adoption Act 1994 (WA).

[5] Succession Act 1981 (QLD) s 40 and Testator’s Family Maintenance Act 1912 (TAS).

[6] S60A Administration Act 1903 (WA).

[7] See s12B Administration Act 1903 (WA).

[8] Millbank Jenny; The changing meaning of “de facto” relationships; 2006 1CFL1 Lawbook Co.

[9] Ibid see s13A Interpretation Act 1984 (WA).

[10] Ibid.

[11] Succession Act 2006 (NSW) ss 57(d)–(f); and s3(3) and 3(4).

[12] Administration and Probate Act 1958 (Vic) s 91(1) introduced in 1997 by s 55 of the Wills Act 1997 (Vic), this was later amended by Justice Legislation Amendment (Succession and Surrogacy) Act 2014 (Vic) s 5.

[13] Croucher Rosalind, Law reform as personalities, politics and pragmatics, the Family Provision Act 1982 (NSW): A case study, legal history 2007 Vol 11 at p16 citing commissioner Gressier’s memorandum to the Attorney General of NSW dated 28 November 1978.

[14] Justice Legislation Amendment (Succession and Surrogacy) Act 2014 (Vic) proclaimed on 29 October 2014.

The Layman as an Estate Planner: The curse of the home-made Will

It is the author’s experience that most clients do not understand the nature of their own asset structures. Commonly, they do not understand the separation of legal and beneficial ownership, trust relationships, superannuation and the rights assigned to those relationships. It is also the author’s experience that many lawyers do not understand these relationships or understand them on a superficial level. The lack of understanding is evident when asking the client if they understand the distinction between tenancies in common and joint tenancies. This lack of understanding is commonplace with elderly clients. Particularly where one spouse has little insight into the extent of the matrimonial assets. In the authors experience most members of the community are apathetic when it comes to estate planning. Many have no estate plan or have created their own estate plan (which in many cases is worse than no estate plan at all). This observation is not merely true for people living in lower social and economic circumstances; it can be seen in a variety of affluent families.

It is common for people who draft their own wills to unintentionally leave dependants disappointed. In Re Maria Elizabeth Rudd; ex parte Prince [2015] WASC 107, an ex-parte decision of Registrar C Boyle, it was said The fact is that unqualified people who intermeddle in the preparation of documents that have legal operation cause great harm.’ There are extensive reported decisions on the failure of gifts, equitable ademption, unintended double portioning and construction. There are many examples where laypersons have not considered the taxation consequences of a specific devise or the priority rules regarding the payment of estate debts. Beneficiaries may receive substantially more or less than the intended provision as a result of this lack of understanding. A common mistake made by clients is their failure to identify exempt and non-exempt assets for capital gains tax purposes under division 104 and sub division 118-B of the Income Tax Assessment Act 1997 (Cth).

 

The effect of joint tenancies on family provision claims

Many Australians are co-owners of interests in land. Many do not appreciate the nature or effect of the co-ownership and the consequences this has on their death. Below are examples of the effect joint tenancies can have in ousting the Testator’s family maintenance (“TFM”) legislation.

De-identified case example:

“A is an unsophisticated client. A has three adult children B, C and D from a first relationship. A meets his second wife E. They decide to buy a house together. The house is registered as joint tenants by the conveyancer. A uses all of the assets he acquired during his first marriage to put towards the home including a substantial gift from A’s mother. A’s will makes provision for all of his children and his wife E in proportion to their needs and their financial contributions. A does not realise that the house will pass to E by survivorship. A does not have any substantial assets besides the house. A dies.”

S7(ae) of the Family Provision Act 1972 (WA)(“FPA”), in conjunction with r3 of the Family Provision Regulations 2013 (WA)(“FPR”), allows step-children to make a claim against the estates of their step-parents only if their step-parent received at least $517,000.00 from the stepchild’s parents’ estate. Firstly, the prescribed limit does not include assets which were received inter-vivos or by operation of the law of survivorship. This is a major deficiency with the legislation because most couples create joint tenancy interests (both deliberately and inadvertently). Secondly, a dependant will need to wait for their step parent to die before any claim can be made. This means that there is no immediate relief to their dependency. There may be no assets of the surviving step-parent remaining on their subsequent death. In the case of Pope and Ors v Christie; Re the Estate of Glendon Frederick Dobrich (1994) SCNSW BC9801327, a case involving a step child and step parent, Young J said at paragraph [18]:

“There is also the factor that if one paid some regard to the Australian life tables, that a widow of forty-nine may very well live for another thirty-five years. This has two aspects to it. The first is that any hard cold cash that may flow to the plaintiff through this constructive trust is something that may not happen until 2033, yet she is at the moment in one of her most expensive periods of her life, having four children in early teenage or sub-teenage years.”