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  • A family law property settlement can be used to pursue a de facto claim for family provision that might otherwise not be available to stepchildren.
  • A biological child of the first spouse to die in a blended family may be motivated to pursue a family provision claim if they are not provided for on the death of the surviving spouse.

Two unrelated cases by the name of Stanford v Stanford illustrate the intersection of family, succession, and arguably, elder law. The cases are Stanford v Stanford [2012] HCA 52 (‘Stanford 2012’) and Stanford v Stanford [2021] NSWSC 1469 (‘Stanford 2021’). The facts of the cases are similar in that they both involved elderly blended families, with the spouses being in their late 80s and mid 70s respectively. In each case, the surviving spouse would have been forced to move out of their matrimonial home had the claim been successful.

Stanford 2012

Stanford 2012 involved an application for the division of matrimonial property under s 79 of the Family Law Act 1975 (Cth) (‘FLA’). It was used as a collateral strategy to pre-empt the lack of eligibility on the part of an elderly spouse’s biological children to make a family provision claim (‘FPC’) against their stepfather. The intention was to effect an inter vivos transfer of half the stepfather’s assets to their mother. This appears to have been driven by the mother’s offspring lest she predecease her second husband.

Stanford 2021

In Stanford 2021, the couple had made a contract for mutual wills leaving all their property to each other and, on the death of the survivor, to all their respective children in equal shares. The husband predeceased the wife, and his biological son promptly brought a FPC against his estate. As the bulk of the assets were held jointly with his second wife, designation of part of this as notional estate would be necessary to fund the order sought.

Similarities between the two Stanford cases

Both cases originated in the context of an elderly blended family where the second marriage was of long duration (37 and 24 years respectively). Each spouse had children from previous relationships, but they had no children together. In each case, the husband had paid out his former wife in a property settlement to retain the matrimonial home, and the second wife moved in after.

Both actions involved a dispute between stepchildren and their stepparent over the estate assets of the deceased spouse. No doubt, the biological children of the surviving spouse also looked on with keen interest.

In both cases, the biological children were never dependent upon or cohabited with, the surviving stepparent. Without those factors, stepchildren were not eligible to make a FPC claim in NSW (Succession Act 2006 (NSW), s 57) (‘Succession Act).

In Western Australia, where Stanford [2012] originated, a ‘stepchild’ falls within the category of persons eligible to make a claim, however only if they were dependent upon the deceased at the time of death (Family Provision Act 1972 (WA), s 7(1) (ea) and (2A)).

In both cases, the surviving spouse was faced with the very real prospect of losing their home in old age if the claim against them, the stepfather in Stanford 2012 and the stepmother in Stanford 2021, were successful.

Differences between the two Stanford cases

In Stanford 2012, the spouses had kept their assets in separate ownership, and the matrimonial home was in the husband’s sole name from the outset. However, in Stanford 2021 joint tenancy prevailed, and ownership passed to the survivor.

In Stanford 2012, each spouse gave their own assets to their adult children, but subject to a life estate in the home in favour of the wife. In Stanford 2021, the parties’ testamentary wishes were subject to a contract for mutual wills under which neither spouse was permitted to vary or revoke their will without the prior consent of the other.

Strategies in pursuing the claims

In Stanford 2012, the legal weapon of choice was the FLA, as a Trojan Horse for a pre-emptive ‘inter vivos FPC’. Stanford 2021 involved a straightforward FPC but it could be legally characterised as a pre-emptive attack on the contract for mutual wills lest it be breached or a FPC be made against the stepmother’s estate by her biological children on her death. Who knows what might change between the deaths of each spouse?

2012 vs 2021: similar outcomes as they could not demonstrate ‘future financial need’

The applicant in each case was unsuccessful, largely because the element of ‘future financial need’ could not be demonstrated. However, the principles in the cases remain relevant where the ‘future financial need’ component under the FLA or a FPC claim can be made out.

Family and succession law

In Sterling & Sterling & Protective Commissioner [2000] FamCA 1150 (at [26]), Kay J observed that:

‘The real protagonists in this type of litigation may often not be the parties to the marriage but heirs and successors. An issue clearly arises as [to] whether it is appropriate for the Family Law Act to be utilised as the means by which the competing claims of the next generation should be aired.’

The High Court has held that any collateral effects of a property order under the FLA upon beneficiaries under the spouses’ wills are irrelevant to a division of property under section 79 (Fisher v Fisher [1986] HCA 61). That remains so even if a spouse dies during the proceedings (Stanford 2012 at [30]).

Although it was not discussed in the Stanford cases, it is worth noting that a binding financial agreement or property order under the FLA is not immune to a FPC, even if it is expressed to be, unless it is the subject of a release under s 95 of the Succession Act. The finalisation of financial relations between spouses during their lifetime does not extend to death and the FPC legislation makes this clear (Smith v Smith [1986] HCA 36).

Both actions involved a dispute between stepchildren and their stepparent over the estate assets of the deceased spouse. No doubt, the biological children of the surviving spouse also looked on with keen interest.

Need to satisfy requirement for ‘financial need’

There is a plethora of curial considerations when adjusting property interests under the FLA, or a FPC under the Succession Act. One limitation to consider is the available assets that fall within the matrimonial divisible property and the deceased’s estate. In NSW, one must also consider the notional estate. The other main limit, though more nebulous, is the balancing of the future financial needs of the applicant spouse or eligible person on the one hand, and the other spouse or the aggregation of all beneficiaries, as applicable, under the will or on intestacy, and other persons eligible to make a FPC who actively participate in the proceedings.

If, for whatever reason, there is no such current or likely future need at the time of the proceedings, the prospects of a successful claim are slight, and this was the case in both Stanford cases.

In Stanford 2012, the mother moved into full-time residential aged care and was required to pay a bond of $300,000. Before this was paid, she became mentally incapable and moved into a high care part of the facility where only a daily fee was payable. The husband deposited $40,000 into a bank account for her sole use. Given the predictability of her need for income, the High Court found that all her present and likely future financial needs were amply catered for by the arrangements put in place by her husband (Stanford 2012, the plurality at [45] and [49], and Heydon J at [62]).

In Stanford 2021, the applicant biological son was ‘adult, able bodied and in good health; he is single with no dependants; he has stable employment which is not at risk’ (Stanford 2021 per Hallen J at (at [168 (2)]).

Domestic disturbance from a forced sale

In both cases, a strong factor against making the property adjustment sought was that the elderly surviving spouse would have had to move out of the matrimonial home. In a different context, the High Court has previously expressed sympathy for the plight of residents of a retirement village in a dispute concerning representations about future increases in recurrent charges. The operator had a ‘put up, shut up or move away’ approach, suggesting disgruntled residents should have moved out.

‘The inquiry would, no doubt, have to give due weight to the then age of the appellants, their state of health and other matters affecting whether it was reasonable to expect them to confront the turmoil, cost and burdens associated with selling their residence, buying or renting another, and shifting to it’ (Murphy v Overton Investments Pty Ltd [2004] HCA 3, the Court at [70]).

Contract for mutual wills

In Stanford 2021, Justice Hallen placed some weight on the fact that the husband and wife had made wills to the same effect and had entered a contract not to vary or revoke the wills 15 years prior to the husband’s death. His Honour observed there was no evidence of a ‘real risk’ that she would change her will now or in the future.

‘Of course, her estate may be depleted, in the ordinary course of meeting her own needs for the rest of her life or, if circumstances changed, she might do so. But each of these matters must have been apparent to the deceased at the time he made his Will and when they entered the agreement.’ (Stanford 2021 at [168 (8)]).

This observation acknowledges that a contract to make mutual wills is only as good as the available assets to which it applies on the death of the survivor. Spouses, biological children and stepchildren can take comfort from the extent to which the express terms of the agreement identify the subject assets, and the precise restrictions on dealing with them. This must be balanced against the financial straitjacket that will imposed upon the survivor. The older and more predictable the financial needs of a couple are, the more appropriate this may be and vice versa.

Dixon J held that, in the case of breach:

‘It is only by the special doctrines of equity that such a floating obligation, suspended, so to speak, during the lifetime of the survivor can descend upon the assets at his death and crystallize into a trust’. (Birmingham v Renfrew [1937] HCA 52)

In modern times, stepchildren may take a less sanguine approach, as both Stanford cases illustrate.

Financial elder abuse?

It might seem like a stretch to characterise both Stanford cases as the perpetration of financial elder abuse, as there were legitimate legal claims that were pursued and defended. But from the point of view of the surviving second spouse and his or her biological children, the orders sought in each case would have forced the elderly spouse to sell their matrimonial home. Substantial legal costs were incurred in defending the claims, although successfully in these two cases. Any recovery of costs would, in the normal course, come out of the estate in the case of an FPC. Finally, the psychological impact of being pursued by stepchildren would be difficult to forget.

Richard McCullagh is a legal practitioner and educator, author of Australian Elder Law (Thomson Reuters 2018).