Law Talks Episode: The rise in family provision applications amid the ‘Great Wealth Transfer’

Robyn: Good morning and welcome to another edition of 4CRB’s Law Talks, where we unpack legal issues that affect everyday Australians.

Today we’re diving into estate litigation, specifically the rising trend of people contesting wills. And joining us today is Attwood Marshall Lawyers Estate Litigation Senior Associate, Martin Mallon.

Martin has extensive experience handling family provision claims, testamentary capacity issues, executor removal applications, just to name a few. Thanks for joining us, Martin.

Martin: Thanks for having me, Robyn.

Robyn: Well, so today we’re going to talk about the fact that there has been a significant rise in family provision applications over the past two decades. But before we discuss a particularly interesting case, why do you think estate disputes is an area growing so much?

Martin: Well, Robyn, I think there are several key reasons that may be contributing to this. Firstly, we’re currently experiencing the largest generational wealth transfer in history.

Baby boomers are passing on trillions of dollars to younger generations, which invariably leads to more disputes.

After all, there is simply more money for people to fight about.

Secondly, the family structures, which I think this could be the more driving factor, the family structures have changed significantly over the last two decades and there’s blended families, estrangement, cultural issues, religious beliefs, all create more opportunities for disagreements. And also thirdly, I think that the advancement of technology, particularly DNA, has allowed people who have not been able to identify whether a person is their biological mother or father, there are technology that is available now where you can get that determination even when that person has already passed away.

So, three major drivers, but the numbers do tell a story. In New South Wales, family provision claims filed in the Supreme Court increase from 655 in 2005 to 968 in 2023. So that’s almost 50 per cent increase. In Queensland, the success rate for contesting wills is also incredibly high. A study found that 77 per cent of contested will claims in Queensland are successful, and that’s above the national average.

Robyn: Okay. Well, those numbers paint a clear picture of modern family dynamics and the legal challenges they create after a loved one passes away.

Now, there was a fascinating news story last year that illustrates how courts view these disputes. The Australian Financial Review ran a piece titled “A child won a share of her dad’s estate, despite planning to kill him”. At first glance, it seems impossible that a child in this situation would win a claim. But the full story is quite interesting. Can you break it down for us, please, Martin?

Martin: Sure, Robyn. This case highlights how inheritance disputes aren’t always black or white. And sometimes, if you dig a little bit deeper, there is an explanation of the reasons as to why someone, for example this person, her name was Jessica, she allegedly was planning to kill her late father. In this case, the daughter Jessica had strained relationships with her parents. Her parents were highly religious, and they felt that Jessica had embarrassed their conservative Jewish family on several occasions, including an incident where she attended their Orthodox Synagogue and announced that she was transgender.

She had asked her father to fund her gender transition, but he had refused. However, despite the strange relationship, he continued to financially support her throughout her life, paying her a weekly allowance, paying her credit card and also he also bought her an apartment. But when he passed away, Jessica was excluded from her late father’s will.

As a result, Jessica filed an application seeking further provision from her late father’s estate for her proper maintenance and support, and the Supreme Court of Victoria ruled that despite the daughter’s troubled history with her father, he still had a moral duty to provide for her.

The court acknowledged the family dynamics, but didn’t see it as enough to entirely disinherit the daughter. Instead, she was awarded 3.25 million from her father’s 12.44-million-dollar estate.

In matters where there are on what’s called disentitling conduct, so conduct which is so egregious that the courts can say that you are, you’ve disentitled yourself from further provision, those cases are extremely rare and in this particular case, the estrangement or the issues within the family, it appears that they were contributed on both sides, so from Jessica but also from her late father in relation to the way that he treated or spoke to her daughter or didn’t agree with his daughter’s cultural, or lifestyle decision to become a transgender.

Robyn: Yeah, it’s a remarkable outcome and it really highlights how difficult it can be to exclude someone from a will even when the deceased had clear reasons for not doing so. Why is that?

Martin: Well, the law recognises that a person has free authority to leave their estate however they wish. However, the law, the family provision legislation exists for certain people, eligible people, and though the courts have held that a deceased person has a moral obligation to provide for those people to ensure that they receive adequate provision for their proper maintenance and support. For example, when a couple who have been together for 40 years when one of them passes away, it would be, in my view, it would not be equitable or fair if the husband leaves his estate to or everything to charity, and the wife of 40 years has nothing to assist her until when she passes away. So, it’s designed to, that the courts have held that you’ve got a moral obligation to provide for these people.

Robyn: And is it usually adult children who bring these challenges?

Martin: Yes. Well, statistics show that adult children were most common group to contest for challenge wills, they’re not the only eligible people, but children do typically seek further provision from the late parent’s estate.

Robyn: So, when someone contests a will, what factors do the courts look at?

Martin: Well Robyn, the courts look at the applicant’s financial position now and into the future. The applicant’s health and mental health, the competing claims, the size of the estate, any contributions the applicant has made to the deceased estate, the relationship between the applicant and the deceased, the financial and health circumstances of the beneficiaries and in essence, the court can consider any other matter, that is relevant.

Robyn: So, it makes sense why more people are contesting wills. But for our listeners who want to avoid these types of disputes, what can they do to protect their estate and ensure that their wishes are upheld?

Martin: Firstly, we recommend that people get advice from a lawyer who practises in estate planning who can draft your will to ensure that it complies with the legislation and also ensures that your will, your estate is left to the people you want to leave it to, and they can also provide you with advice on how to limit or reduce claims that may be filed against your estate.

You could leave clear reasons on why you elected to exclude someone. So, if you want to leave someone out, you can either within the will or a separate document, you can outline that you have thought carefully about how you want to leave your estate and that you’ve elected to exclude, for example, one of one of your children because you had a falling out and that can go into detail as to why they were excluded, and that evidence can be used in resisting a claim that may be filed for that by that person in seeking further provision from the estate.

Robyn: Sure.

Martin: Also, a lawyer who is experienced in estate planning, they can talk to you about creating what’s called a testamentary trust, and that can add an extra layer of protection and control over how the assets are distributed and who receives them.

Robyn: Yeah, great advice, Martin. But before we wrap up, I think I know the answer to this, but what’s one final takeaway you’d like to leave our listeners with?

Martin: You’ve heard me say this a few times before Robyn, but the advice is to get advice from a lawyer who practises in estate planning to draft your will. If you believe that you’ve been left out of a will, or you’ve received substantially less than other beneficiaries, I encourage you to seek advice from someone who specialises in estate litigation, who can give you advice on the best way on advancing a claim. Get advice on your prospects, your likely range of award, and to file the claim, if you are the executor, it is also important to get advice from a lawyer, because they can give you strategies on the best way in defending the claim.

Robyn: Well fantastic insights, Martin. Another fascinating discussion on the kinds of estate disputes that end up in court. Thanks for joining us today.

Martin: Thanks Robyn.

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