Attwood Marshall Lawyers Estate Litigation Senior Associate, April Kennedy recently joined Robyn Hyland on Radio 4CRB to talk about how the courts deal with family provision claims and what an executor of an estate can expect when taking on the role to defend a claim when someone contests a Will.
What is a Family Provision Application?
When a person dies leaving a Will, they leave instructions to distribute their assets to certain beneficiaries, which usually includes their children, spouse, other relatives, or even a charity. If someone is eligible to contest a Will is left out of the Will, or receives less than they anticipated, and believe they are entitled to provision (or more provision) from the estate, they can apply to the Court by making a Family Provision Application. This is an application to the Court to change the terms of the Will so that the person making the application is given more money or assets from the estate on the grounds they have not been adequately provided for in the Will.
This also applies when someone dies without leaving behind a Will. When someone dies intestate (without a valid Will), the law follows a set formula determining who should receive the estate. If certain people believe they are entitled to more of the estate than what is set out by legislation, they can make a Family Provision Application for the Court to seek a greater share.
How common is it for people to contest a Will?
It is very common to see disputes over Wills when the deceased leaves behind a homemade Will, online Will, or do-it-yourself Will kit that was purchased from the local post office. The same goes for a Will that is prepared by a lawyer who is not experienced in estate planning.
If a Will is prepared properly by an experienced estate planning lawyer, then it is less common to see the Will contested. However, given the complexities and relationships within families, each family will have its own set of dynamics and issues that could arise in a Will being contested after a family member passes away, no matter how well the Will is drafted, or the advice provided.
Contesting a Will is sometimes a controversial topic. It can be viewed by people as a person being “greedy” or “entitled”. However, the issues surrounding these types of matters can be much more complicated than simply saying someone is being greedy or entitled. There are usually a lifetime of emotional issues and family history involved in most contested estate matters where it is difficult to know exactly where the truth lies. One thing is for certain, the deceased is no longer with us to tell the Court what their reasons were to shape their Will the way they did. In many cases, the reasons of the deceased, while relevant to understand why they did the Will, are not the final determinate of a claim against the estate. There are certain basic matters the Court takes into account when dealing with a provision claim against the estate which are set out below.
Estate litigation has become an extremely demanding area of law, and that applies to most states and territories in Australia, with New South Wales leading the way as the family provision claim hot spot. A study by University of New South Wales showed that NSW was responsible for 60 per cent of all Will disputes in the country.
When it comes to which categories of people generally bring these types of claims, we know that adult children are the most common claimants.
Family Provision Claims and going to Court
According to the NSW Supreme Court’s Provisional Statistics, in the 2021 calendar year, 872 Family Provision Applications were filed, with 845 being resolved by negotiation or at mediation.
That means more than 9 in 10 claims were resolved without having to go to trial.
A few years ago, around 80-85 per cent of claims were resolved by negotiation/mediation. Today, it seems to be an upward trend, with over 90 per cent of claims resolving early.
The high success rate in these types of claims can be attributed to the fact that very early on, when a person obtains advice from an experienced estate dispute lawyer, they can get an upfront case assessment which helps determine the likelihood the application will be successful, mitigating the risk of people pursuing these types of claims if they clearly do not have merit.
When people get expert advice early on from a lawyer who is experienced in estate litigation, they are able to understand the different settlement options available, which can help set the tone for negotiating effectively and resolving the dispute at a much earlier stage.
We all know that litigation is inherently risky. As lawyers, we say this time and time again. As just outlined, very few Family Provision Claims proceed to trial. Of the few that did make it all the way to trial in 2021, approximately one-third of those claims were dismissed or were unsuccessful. For this reason, there is a strong incentive for all parties involved to settle early and avoid drawn out, costly litigation. It also avoids the ongoing emotional stress and helps the family to ‘move on’ with their lives and, if possible, mend some fences with relationships.
The executor’s role in defending a claim in a deceased estate
It is the executor’s duty to uphold the terms of the Will and preserve the assets of the estate.
It can be an extremely stressful task. Even if no one contests a Will, the executor’s role is already an onerous one. They are responsible for organising the funeral and burial or cremation of the deceased, locating the Will and beneficiaries, applying for the Grant of Probate, collecting, and protecting the assets of the estate, providing the court with an inventory of those assets, paying all the estate debts and costs in administering the estate, attending to taxation affairs and distributing to the beneficiaries (just to name a few tasks).
Then if the Will is contested, they take on the task of ‘defending’ the claim and maintaining the wishes of the deceased in the Will.
When a Will is contested, the executor must not distribute the estate. It is their duty to assist the court where necessary in making relevant documentation available, and they must provide all the necessary information about the deceased’s assets and liabilities.
It is important to note that the executor should not defend a claim at all costs, nor should they capitulate early on. They must be able to determine if a claim has merit and if the applicant will be successful in seeking further provision. They have a duty to act reasonably and resolve any claims so that the estate assets are preserved for the benefit of the beneficiaries.
If a claim is made against an estate, the executor should seek advice from a suitably qualified lawyer to determine the likely success of the claim and best way to proceed to resolve the matter at the earliest opportunity.
What happens if the executor defending the claim is also a beneficiary?
When the executor is also named a beneficiary of the estate, this can complicate the executor’s position. Ultimately, the executor has a fiduciary duty to the beneficiaries of the estate. Their fiduciary duties may clash with their own interest in the estate.
The executor must remain neutral and consider the interests of the estate as a whole. They must be objective when assessing the merits of a claim by another party and negotiate and compromise appropriately.
An executor cannot use their position to unreasonably incur legal costs in an effort to defend their interest in an estate. If this occurs, the executor may be held personally liable for any legal costs incurred.
What an executor can expect from the family provision claim’s process
When someone contests a Will, the general steps that take place are:
- Notice of the claim – The person making their claim gives notice of the intention to do so.
- Hold off distribution – Upon receiving that notification, the executor should cease or delay distributing the estate until the claim has been finalised.
- Negotiation – both parties can come to an agreement between themselves, then a formal agreement can be drawn up to protect all parties and finalise the matter. If negotiations fail, then court proceedings will begin.
- Court proceedings – The applicant will file proceedings in court together with their supporting evidence. The Executor must assist the Court by responding to the claim and filing evidence about the assets and liabilities, details of the beneficiaries and status of the administration of the estate.
- Attend a mediation or settlement conference. Parties must follow compulsory alternative dispute resolution (ADR), which involves an impartial person assisting in the dispute to solve the issues between both parties and help them reach an outcome that is fair and suitable for everyone involved. This is a flexible solution which allows both parties to retain control over the main issues and reach their own mutual agreement with a decision-maker stepping in to make the decision for them.
- Trial / Hearing – If the claim cannot be resolved at mediation or settlement conference, the matter will proceed to trial where all parties are required to attend Court and the matter is to be decided by a Judge.
This is just a general rundown of the process; however, each case may have different steps depending on its own complexities.
How does the court view family provision applications?
These types of claims are often fraught with conflict and tension and can bring families to breaking point during a time they are already grieving the loss of a loved one. A court will view every application on its own facts and merit; there are no two cases that are the same.
For the small proportion of claims that proceed to trial, a court will always look at all the evidence put forward to make a decision about whether the person making the claim has successfully made their case and whether they should be awarded provision or further provision from the estate.
It is important to remember that the purpose of a family provision claim is not to seek ‘compensation’ for a bad childhood. This is a common misconception. You must have genuine financial need in order to mount this type of claim.
Also, when it comes to a parent leaving their estate to their children, another misconception is that the assets should be divided equally between the children. There is no law that says that a parent must do this because it’s ‘fair’. Sometimes, dividing assets equally may not be fair when one child is independent, and wealthy, and another child desperately needs more than the others. Of course, family history and dynamic plays a part here.
The court also assesses the actual needs of the person making the claim – that is the foundation underpinning family provision law. The court will distinguish ‘needs’ from ‘wants’. Some claimants tend to list all the things they ‘want’. They might want a bigger house, a better car, or a savings fund, but the court might not necessarily view these things as genuine ‘needs’.
How to reduce the likelihood of your Will being contested
The best protection you can provide your estate is to have your Will and estate plan prepared by an experienced estate planning lawyer. There is no substitute to getting good advice when it comes to estate planning. A simple online Will or homemade Will just won’t cut it and is only going to increase the likelihood that someone will contest your Will!
As part of the estate planning process, a lawyer will talk through the different strategies you can use to plan for the distribution of your estate, ensuring that you are taking into consideration any people you have a duty to provide for.
You will also be able to discuss who is the most suitable choice for your executor. This is a big decision as the executor plays such a significant role if the Will does get contested.
It is also important to remember to keep your Will up to date. We see it all too often when people forget to update their Wills and their family circumstances have changed significantly before they die. Those who are left behind then fight it out arguing that the Will does not reflect the testators’ intentions at the time of their death. Ensuring a Will is up to date is essential.
Attwood Marshall Lawyers – supporting you through the challenges that you can face when involved in an estate dispute
If a Will is contested, whether you are a beneficiary who wants advice about the dispute, or an executor defending the estate, make sure you get trusted advice from someone who practices in this very complex area of law. Not all generalist lawyers are up to the task to handle estate litigation matters. Drafting a Will, and defending a Will are two very different tasks. Make sure you put yourself in the best position to defend a contested Will by getting advice from someone who knows what they are doing, because it can get very messy and be very costly!
Attwood Marshall Lawyers have one of the largest and most experienced estate litigation teams, with senior lawyers who practice exclusively in this area. Our team have the state-specific knowledge to assist with estate litigation cases in Queensland, New South Wales, and Victoria.
Will disputes and Succession Law can be highly complex issues to navigate. When someone makes a family provision application, emotions are generally running high, and many family issues are bought to the surface. It is important to find the right lawyer who can guide you through this process, help you carry the burden, and reduce conflict as much as possible so that you can achieve your desired result and move on with your life.
To find out more about how we can help with an estate litigation matter, please contact Estate Litigation Department Manager Amanda Heather on free call 1800 621 071, direct line 07 5506 8245 or email aheather@attwoodmarshall.com.au
Read more:
How to defend a claim against an estate when you are appointed Executor in a Will
Want to write someone out of your Will? Beware: the “black sheep” of the family may still be entitled to claim on your estate!
Advice for beneficiaries in a Will when there is a dispute
