A case last month (Brennan v Mansfield & Ors  SASC 83) was one of the first cases of a will for a person in a same sex relationship. But what makes the decision more interesting is the discussion about what amounts to “adequate provision”.
Where a will maker does not make “adequate provision” in a will for their partner, the court can intervene and make an award out of the estate of the deceased. This applies to both same sex and different sex relationships. But what is “adequate provision?”
In this case, the surviving partner was aged 54 years and the deceased was aged 90 at the time of his death. The deceased was a wealthy man. At the time of his death he had a net estate of about $3.5 million which was made up primarily of the home in which the couple lived and a 2/3 interest in a weekend home. The other 1/3 of the weekend home was owned by the surviving partner.
The deceased made a number of bequests. There was a bequest of $100,000 to his surviving partner as well as a gift of his 2/3 interest in the weekend home. The residue of the estate (about $2.5 million) was gifted to the deceased’s old school.
The surviving partner was, in the words of the court, left in a position of “some affluence.” Aside from the gifts made under the will, the surviving partner also had a share portfolio, a BMW and a life time defined benefit pension worth 2/3 of his salary when he retired. Nevertheless, the court was satisfied that the provision made under the will was not sufficient. The court held that the surviving partner should be able “to live in a fashion which bore at least some resemblance to the lifestyle he had enjoyed.”
Accordingly the court increased the amount from $100,000 to $1 million.
This decision gives important guidance about what is “adequate provision.” In a blended or 2nd marriage family, there may be a gift of a right of residence in the home to the surviving spouse and the balance of the estate going to the children of the first marriage. What if that does not leave the spouse with enough income to maintain the home?
The Brennan case shows that it is important to turn your mind to considerations of what is “adequate”. It is highly subjective. It is different to “need”. It requires taking account of all the circumstances, even if you are not fortunate enough to be in the position of having a $3 million estate to deal with!
It is a timely reminder to those who are planning their estates to think very carefully if they plan to leave an amount which is less than what the beneficiaries might otherwise expect to receive. It is also a reminder to those who may have been left out of a will to think again before make a claim. You may not have a “need” but has “adequate provision” been made for you?
Stephen Bourke is a director in the boutique firm, Certus Law, specialising in superannuation, trusts and estate planning. He also consults to other practitioners through the consulting practice, SuperSplitting. Level 5, 28 University Avenue T: 6268 9090www.certuslaw.com.au