Family feuds about wills provide fascinating insight into the emotions unleashed by the death of a loved, or not-so-loved, one – and the sniff of a pot of money. Whether it’s a symptom of a sense of entitlement or a more litigious society, more Australians are taking the fight to court. Now we know why: a recent report on will-making and contested estates reveals that about three quarters of claims made against wills are done so successfully.
In the most recent episode of Insight, one of Australia’s leading forums for debate and powerful first person stories, which aired on SBS, delved into this very issue – Is your will really your last word? https://www.sbs.com.au/news/
All Australian States and Territories, through their respective succession laws, attempt to balance the age old doctrine of testamentary freedom (the ability to give your property to whom you choose) with the doctrine of moral obligation (the requirement to provide for family members and dependants to whom you owe a moral obligation).
Australia is facing a growing battlefield over the distribution of deceased estates as more complex family arrangements trigger post-death conflicts and a “sense of entitlement” by family members resulting in the matter being brought before the Courts to be decided.
It is surprising how many people choose to exclude a family member, partner or dependant, for some reason or another, from receiving an inheritance under a Will. If you choose to leave a significant person out of your Will, it is important that you are aware of legislation which may, in some instances, undermine your decision.
Some of the relevant provisions are found in the Succession Act 2006 (NSW) or Succession Act 1981 (QLD). This legislation allows for “eligible people” to make a claim upon your estate should they not receive what is considered to be adequate provision under your Will.
The classes of people who may be eligible to make a claim varies from state to state but may generally include: spouses, de-facto partners, children, step-children, adopted children, grandchildren, dependants, parents and former wives or husbands.
Succession legislation was developed because it acts as a safe guard against indignant testators leaving entitled beneficiaries out of their Will.
There is a moral and ethical duty recognised at law to make adequate provision for the maintenance, education and advancement of certain eligible people. Having a falling out with a family member or fearing that they will waste their entitlement is not reason enough to disinherit someone.
The fact that an eligible person has the right to make a claim upon an estate does not mean that the court will make an award in favour of the claimant. There are genuine reasons why people may wish to disinherit an eligible person.
The Courts have the discretion to grant relief, therefore, the Court does not take an all or nothing approach, the Court can allocate an entitlement as the Court sees fit in the circumstances of each case. So there are genuine reasons why an entitled person can be left out of a Will. If you die intestate, that is without a Will, your estate will be distributed in accordance with legislation. Your Will may be distributed in proportions, or to people, that you are not happy with.
Furthermore, if no entitled persons can be found then your estate will be paid to the state (or territory) where your assets are held. Dying intestate can also be expensive, the administration costs for obtaining letters of administration and administering your estate are usually much more than if you had a Will. Also, if the legislation changes your beneficiaries will change, so the outcome is completely taken out of your hands.
With careful drafting of your Will and careful estate planning, having a Will can significantly minimise tax burdens. While there are currently no death duties in Australia, Capital Gains Tax (CGT) and income tax are important considerations which affect both your estate and beneficiaries of your Will. A way to minimise the tax burden upon your estate is to establish a trust by Will, that is, a Testamentary Discretionary Trust (TDT). A TDT will allow for income splitting and streaming to lower taxable incomes. Further, a TDT is an effective mechanism for asset protection, for example if there is a break down in family relationships between beneficiaries, or because of bankruptcy.
Wills that have been prepared without considering all relevant legal implications or DIY Wills prepared by you “are ticking time bombs”. The explosions and rifts that result can last for generations, and can be extremely expensive.
The Insight program has highlighted many key points that we here at Attwood Marshall encourage:
- Having a Will is far better than not having one at all.
- That everyone should meet with an experienced Estate Planning Lawyer to have their Will drafted no matter how simple you may think your Estate plan and wishes may seem.
- If you have a Will you need to review it regularly to ensure that it continues to meet your current circumstances.
- That the law surrounding leaving someone out of your will is complicated and the facts of each case are unique.
Attwood Marshall Lawyers have a dedicated team of Wills & Estates lawyers that specialise in estate planning and estate litigation. Contact Melissa Tucker on 07 5562 2498 or our Department Manager Donna Tolley on direct line 07 5506 8241 or freecall 1800 621 071 for a free initial consultation.