Law Talks Episode: Balancing the needs of beneficiaries in family provision claims

Robyn: Good morning and welcome to another edition of 4CRB’s Law Talks, where we breakdown the legal issues that affect the community. Today we’re talking about family provision claims, specifically how a court decides who gets what when beneficiaries have competing needs. And we have joining us from Attwood Marshall Lawyers, Estate Litigation Partner Lucy McPherson.

Lucy has worked exclusively in estate litigation since 2020 and works across both Queensland and New South Wales jurisdictions. Thanks for joining us today, Lucy.

Lucy: Thanks so much for having me.

Robyn: Lucy let’s start with the basics. When beneficiaries have competing needs, what factors does a court consider in deciding how an estate should be distributed?

Lucy: That’s a great question, Robyn. In Queensland, the Court considers a range of factors in determining whether or not to make a family provision order in a family provision application. These type of applications, being a family provision claim, allow an eligible person to seek further provision out of the estate if they believe that they haven’t been adequately provided for.

And the key factors that the court looks at include the financial circumstances and needs of the applicant, the relationship to the deceased person, the size of the estate and importantly for your question, any competing needs of the beneficiaries of the estate and the obligations or promises that were made by the deceased person to the applicants and the beneficiaries as well.

The court will essentially balance all of these elements, including the needs of the applicant, against the competing financial need of the beneficiaries of the estate, to determine what is appropriate in all of the circumstances.

Robyn: So, one of the biggest questions people will ask is how does the court decide what is reasonable? What if there are several beneficiaries who prove they have a need? Can you talk about a case that highlights this type of dispute and what a court considered?

Lucy: Absolutely. A good example is the case of Niebour-Pott & Anor and Pott, which is a 2020 decision out of the Supreme Court of Queensland.

This case is quite complex and involved a family provision claim by two adult children of a de facto relationship against their father’s estate, and the estate is quite large, it was worth in the vicinity of 3.8 million dollars.

So, Bryan, the father, who was a retired commercial airline pilot died in June 2008 and left behind 3.8 million dollars in assets, separate from other income earning assets, which are controlled through a family trust. So assets that are held in a family trust don’t necessarily fall into the estate of the deceased person, so those assets were separate to the $3.8 million of assets to be held in his personal name when he died.

Robyn: Okay.

Lucy: The deceased married his first wife in 1959 and had three children. And he separated from his wife and then entered into a relationship with a de facto partner, Jennifer, in 1983. He had two children with Jennifer, who were the applicants in this particular case.

That relationship ended in the 1990s, and Bryan remarried his second wife in 1998, who he remained together with until his death.

In his will, that was in effect when he died, he provided for his second wife and his three children from his first marriage. However, he left nothing to his two children of his de facto relationship in the middle, which was with Jennifer.

Now these claimants, Cameron and Naomi, they were the applicants in this case, and they sought a claim for further provision out of his estate. The deceased had some contact with the applicants, being Cameron and Naomi, until around 2000.

After this year, his contact with them ceased, but he did agree to financially support them both until they reached 18 years of age.

At the deceased’s time of death, Cameron was 17 years of age and Naomi was 24.

Cameron and Naomi suffered from autism spectrum disorder and other health related issue. So, life wasn’t, you know, particularly easy for them.

Bryan may have had his reasons for leaving Cameron and Naomi out of his will. However, that didn’t mean that he did not have a moral duty to provide for them. After all, Cameron and Naomi were unlikely to find employment, their life was likely to be difficult because of their disability and their mother’s finances were limited.

So, they ultimately brought an application before the court to seek the provision from the estate.

Robyn: So, what was the outcome of the claim in this particular case?

Lucy: The court ultimately ruled in their favour. So, in Cameron and Naomi’s favour, the court noted that the deceased failed to make adequate provision for their proper maintenance and support in his will, and both of the applicants, Cameron and Naomi were each awarded about $400,000 out of the estate.

Robyn: Lucy, how does the court determine whether someone has been adequately provided for under a will?

Lucy: That’s a really good question because it is quite a subjective element of the legal test. The term ‘adequate provision’ isn’t qualified or defined under legislation. It’s something that we have to turn to case law to consider in more detail and it is quite subjective, and really depends on the individuals’ circumstances or the individual who has brought the case, the claim before the court.

The court looks at the provision provided for the applicant in the will, and whether that provision is adequate to meet their financial, social and personal needs. So the question of adequacy of provision is really a question of whether the provision in the will is adequate to meet their needs and that, you know, takes into account a number of factors like address things like their standard of living, their ability to support themselves, whether they have any disabilities or health conditions which may affect their financial or employment circumstances, or create financial hardship, their dependence on the deceased prior to their passing and a number of other factors that the court takes into account to determine that question about adequacy of provision.

It isn’t about ensuring fairness. This question about adequacy of provision is more about meeting a person’s reasonable needs given their relationship with the deceased, and the overall circumstances as well as the overall value of the estate.

Robyn: So, Lucy, does financial need always outweigh the deceased’s wishes?

Lucy: No, not necessarily. I think that the court has an obligation to respect the deceased person’s wishes, so the cornerstone of all succession law in Australia is his idea of freedom of testation, so freedom of testation ultimately means that each of us have the freedom to dispose of our estate as we see fit.

Family provision law is a way to try and fetter that freedom. So, fettering that freedom to dispose of our estate as we see fit, and by recognising that we have a moral duty to provide for certain people in our lives.

So, the court has an obligation to consider that freedom of testation and respects that a person may have had their reasons as to how their estate was to be distributed in their will. But the court does have the power to intervene if the will maker hasn’t considered their moral duty to provide for certain people in their lives.

So, it’s not something that’s disregarded, this idea of freedom of testation, it’s something that is really the cornerstone of all of this discussion, but the court does have the power to intervene in certain circumstances.

Robyn: Yeah, and I think it’s an interesting point to make there that is, people when they make a will, they think they have the right to leave clear instructions and intentions of their will, but this just highlights that’s not necessarily the case, and it’s been a really interesting discussion, Lucy. Before we wrap up, what’s your final takeaway for listeners who might be worried about a similar situation in their own family?

Lucy: It’s really important to remember when discussing these type of disputes, that estate disputes are very complex and each case is very different. It will turn on; you know each case will turn on its own facts. So it’s difficult to be, you know general in our discussions in these type of matters.

It’s important also to remember that when somebody makes a family provision claim, the determination of the family provision claim is really going to come down to the unique facts of the matter, and the outcome will be dictated by those facts.

For anyone who feels as though as I’ve been left, you know they’ve been treated unfairly in a will or haven’t received what they believe is adequate provision for their proper maintenance, it’s really essential to seek advice early.

There are strict time limits that apply in relation to family provision claims in both New South Wales and Queensland. And if you miss those time limits, you could jeopardise your rights all together. So, it’s crucial that you seek legal advice early in relation to your entitlement and your right to bring a claim.

The best approach is always to speak to an experienced estate lawyer who will be able to help you navigate and understand your rights and also weigh up the prospects of success of any claim to be made against the estate.

Robyn: Yeah, I think there are a lot of our listeners would have would have found this a very interesting topic today. Thanks for breaking it all down for us, Lucy.

Lucy: You’re welcome. Thanks for having me.

Robyn: You’ve been listening to Law Talks here on 4CRB, which you can hear every Friday morning from 9 o’clock.