Wills and succession: navigating complex family relationships

Even the Royal Family is not impervious to questions surrounding succession and whether a family member is ‘entitled’ to inherit anything from the estate. Earlier this year, Andrew Mountbatten-Windsor was stripped of his titles in the fallout over his connection with Jeffrey Epstein. In February, Mountbatten-Windsor, the former Duke of York, was arrested on suspicion of ‘misconduct in public office,’ and the scandal has prompted questions over whether he should be removed from the line of succession.

Familial relationships can be tricky to navigate, whether it’s the relationship between a parent and child or between siblings. A ‘falling out’ between family members, over ‘perceived wrongdoing’ or behaviour, can often lead to family members being left out of wills.

However, as Jennifer Vuu, Special Counsel and Accredited Specialist in Wills and Estates Law at HWLE Lawyers explains, no individual has an “automatic right” to inherit from another. “That’s because we have something in Australia that’s called the right of testamentary disposition and freedom.

“… [W]e can leave assets to whoever we want, however we want, and … it’s [an] enforceable human right,” she says.

Vuu believes that a popular ‘misconception’ is the belief that “I’m a child, I should receive something”.

In recent years, there has been a shift in the different types of family structures, particularly blended families. This has impacted how assets are left to family members. Vuu says it has “caused huge complications because really, it’s this idea that no person has a right to inherit from your estate.

“That said, a testator has an obligation to consider … who should I leave my assets to? Who is dependent on me? And it’s really a legal obligation but also a moral obligation.”

She explains that when you are dealing with a blended family, you are basically dealing with two families and aside from the spouse and a person’s own children, there might also be stepchildren and former spouses to consider. “[S]o it’s causing huge issues … particularly for smaller estates. You might not have a lot of assets to give away, but you’ve got a lot of people to account for …,” she says.

Vuu explains that if everyone is not provided for, it might open the floodgates for disappointed beneficiaries to bring a claim against the estate for further provision or any provision particularly if the testator has not left them anything in their will.

If a family member is not provided for under the will, there are legal recourses available to them. As Vuu explains, in New South Wales, disappointed beneficiaries (who is an ‘eligible person’) can make a family provision claim. “… [I]f a testator hasn’t given adequate or proper provision for a person for their advancement in life or their maintenance … then that person can bring a claim against the estate.

“’[T]ypically, the categories of people that are eligible to bring a claim are spouses … it can also be anyone that was dependent on you,” she explains.

For legal practitioners, it can often be a difficult task to balance the rights or wishes of the testator to leave a potential beneficiary out of their will with the right of a child or another potential beneficiary to be provided for.

“[W]hen you have a black sheep, you typically have some form of estrangement, or … at least … some tension in the relationship.

“[E]strangement isn’t going to be something that disqualifies an eligible person such as a child … from bringing a claim but … it’s a factor that the court can consider in why the testator might have left their assets or made their will a certain way,” explains Vuu.

While it is open to the testator to leave a potential dependent out of their will, the onus falls on the legal practitioner to advise them of the consequences.

As Vuu explains, a section 100 statement can be prepared and admitted as evidence and it can set out the reasons for exclusion. She says, it is “sort of like the deceased person speaking in court on the witness stand and it can set out reasons for why they’ve excluded that child.

“But you’ve got to be really careful because it’s a really fine line between having a really effective statement and having a statement that can work against a testator.”

She gives the example of a testator who was delusional or mistaken at the time of making the section 100 statement. If the evidence is tested and it eventuates the testator was wrong then it can work against them and strengthen the claim of the eligible person.

While it is the responsibility of the legal practitioner to advise the testator on their wills and what happens to their estate after they pass away, Vuu points out that practitioners can advise their clients on how to deal with their assets during their lifetime. “[B]ut that is really something that is still vulnerable to attack. [F]irstly, you’ve also got a balance for the testator. Is that something that they want to give up? [The testator’s right] to enjoy those assets during their lifetime.

“In New South Wales, we have notional estate … when you bring a family provision claim and let’s say there’s nothing in the estate but three years prior the deceased person was just divesting themselves of assets, there is an ability for the court to look beyond what’s in the estate at the date of death …,” she explains.

If that happens, Vuu explains the court can “claw certain assets back in” to provide for the eligible person if the court finds that a provision should be made.

Given the current cost-of-living crisis in New South Wales, wills and estates solicitors like Vuu are seeing a trend of potential dependents asking for their inheritance earlier. “[W]e have seen what we call ‘inheritance impatience.’ So, people seeking now to come to an arrangement with the testator … typically their parent and say, ‘can you give me something now and I might, for example, give up my rights to take from your estate … in the future,” she explains.

Vuu cautions that is not something that everyone will be comfortable doing as it involves giving away the person’s assets and any associated legal right to it.

“What we have also seen are the claims made by, for example, grandchildren or people who have one time lived with the deceased person …,” she says.

When it comes to other classes of dependents, while grandchildren are eligible to commence a claim, Vuu points out there is a “higher threshold to establish … in terms of need and your eligibility.”

For solicitors tasked with navigating familial relationships and determining who may be an eligible person, Vuu says it is about asking the clients lots of questions, including the “difficult” ones. “[W]hat are your circumstances at the moment? Who are you living with? Who comes and visits from time to time? Let us know the lay of the land and who’s involved in your life.

“And sometimes clients will say, ‘Oh, I didn’t even think that was possible. [M]y grandchild just comes here every now and then. But it’s really our obligations as practitioners to say, well actually that person may potentially have a claim. So, it’s understanding the family framework,” she explains.

Vuu adds that practitioners should ask questions and have a thorough understanding of the testator’s assets because if the testator has no assets in their estate, that may open the gates for a claim to be made against the estate. She points out that sometimes promises or representations may be made by the testator to potential beneficiaries during their lifetime. “You can see this often in farming families where you’ve got a child who’s essentially worked on the farm for their whole life [based on] the promise that they’ll be given the farm and then the parent dies [and] they don’t get the farm.

“You can see what happens here. That again opens up the doors for a claim to be made.”

While testators are generally free to dispose of their assets as they wish, they can also stipulate a ‘no contest clause’ in their will. Vuu explains that a testator can leave a dependent a stipulated amount but if the dependent brings a claim against the estate, then they will receive nothing. “Those sorts of clauses … [are] legally binding but the fact is they can often be void because they’re contrary to public policy because what you are asking … the beneficiary [to do] is to give up a legal right in order to inherit from your estate,” she says.

Vuu says she often advises clients to avoid taking that step because the contents of the will may become public at a future date and its contents can be perceived as “inflammatory” and it can prompt a claim to be made as the potential dependent might feel mortified by it or feel that there is an “injustice.”

“[W]e recommend … that you just get that separate statement signed and prepared by the testator. Keep that language objective so it’s something the executors can keep up their sleeve. They don’t necessarily need to disclose [it], only if it’s needed to be used, for example in defence of a claim against the estate,” she says.

As cost-of-living pressures mount for families, it is imperative for testators to carefully examine their assets and consider their relationships with potential dependents to determine the best way to protect their estate after they are gone.