Challenging a will can be risky business

B2B Editor1 July 2014

Challenging a will can be risky business

The judgement in the recent New South Wales Supreme Court decision Friend v Brien stated the following:

It is difficult for parties to assess the likely outcome of a claim for a family provision order. The criteria to be applied are so general and the judgement to be made so evaluative that the same facts can appeal to different judges in markedly different ways.

As Palmer J said in Carey v Robson (No. 2) [2009] NSWSC 1199 concerning the claim of an unsuccessful plaintiff that:

“I do not regard Marion’s claim is borderline. However, I readily acknowledge that other minds may come to a different conclusion. Marion may have succeeded in her application before another judge. That’s the nature of this kind of litigation.””

We are often asked “Can my will be challenged?” The simple answer to the question is yes. The more important question, however, is whether or not any challenge will be successful. Two recent cases give an indication of just how difficult mounting a challenge can be at times and how the size of the estate appears to impact greatly on the outcome.

The first, Wilcox v Wilcox, involved a claim by two grandsons against their grandfather’s will. The grandfather’s estate was worth around $5.5 million and was left mostly to his only daughter who was the mother of his two grandsons. The deceased owned and operated a farming business with his daughter and her partner. The deceased had paid for his grandson’s education at boarding school as well as providing them with accommodation and other benefits. The grandchildren were not involved in running the family business and did not appear to have a very close relationship with their grandfather.

The court found that the grandsons were not impressive witnesses and that a substantial basis of one of the grandson’s claims seemed to be “a highly developed and unhealthy sense of entitlement” and that generosity by a grandparent in favour of a grandchild did not automatically convert into an obligation to provide for the grandchild in their will.

One of the grandson’s settled his claim before the final hearing and despite his views, his Honour made in order of $387,000 in favour of the other grandson. The judgement suggests the costs of both parties were borne by the estate.

The second case, from which the above quote is taken, involved a claim by an adult daughter against her father’s will. Her father’s estate comprised a half interest in a farm and a farming partnership worth around $1.3 million, which were left to his son who had worked in the family business since he left school aged 15, and other assets worth around $70,000 which were left to his widow.

His widow also benefited from joint assets of around $400,000. The gift to his son was charged with a legacy of $157,500 payable to the deceased’s daughter.

After finishing school, the daughter trained as a school teacher and at the time of the hearing was retired. She and her husband had modest assets and would have owned their home debt free after the daughter received her legacy in the will. The judgement indicates that the deceased and his daughter had a good father daughter relationship.

His Honour rejected the daughter’s claim. On the issue of costs, which amounted to $150,000, his Honour made an order that the daughter pay the estate’s costs. So, after allowing for the costs order, the daughter will actually receive very little from her father’s estate and the family relationships may be irreparably broken.

Both cases show how difficult assessing the likely success of any family provision challenge can be, particularly when business assets are involved. In our view and experience, proper business succession and estate planning and communication can go a long way to avoiding challenges being made. Although, challenges cannot always be avoided and good early advice is crucial to getting the best possible outcome.

DDCS Lawyers can provide you with specialised advice in relation to all aspects of business succession and estate planning. To make an appointment please contact a member of our estate planning team.

Brendan Cockerill is a Senior Associate of the firm.

18 Kendall Lane, New Acton, Canberra

phone (02) 6212 7600 [email protected], www.ddcslawyers.com.au