"Crisp orders" - more than just a life interest

Thursday, 06 Sep 2018

The term "Crisp order" refers to the principal established by the 1979 Supreme Court of New South Wales decision, Crisp v Burns Philp Trustee Company Ltd.  The principle relates to family provision cases, where a person who satisfies the definition of "eligible person" makes a claim against the estate on the grounds that they were not sufficiently provided for in the deceased's Will.

Under the principle, the claimant receives a life interest in a property (such as the deceased's former home, which they may have shared with the claimant), and the subsequent right for that property to be sold and the proceeds of sale used to provide for alternate accommodation for the claimant in the future (such as nursing home accommodation).  Then once the claimant no longer requires the interest (such as when the claimant passes away themselves), the balance of the interest is distributed to the beneficiaries in accordance with the Will (or in accordance with whatever other orders may have been made by the Court at the time of the Crisp order).

A Crisp order was considered by the Supreme Court of New South Wales in the case of Prior v Kerrison [2017] NSWSC 1295 (14 August 2017).

Background facts

The deceased, Brian Moss, died in 2015.  In his 2011 Will, the deceased granted his de facto partner of 30 years, Margaret, a life interest in a house at Broken Hill until such time as she married or entered into a de facto relationship, and left her a cash gift of $15,000 with the rest and residue being gifted to his children from a previous relationship.  To explain the reasoning behind making those gifts in his Will, the deceased also completed a “statutory declaration” explaining the history of their relationship, the assets that each brought to the relationship, and concluded by stating:

“Margaret and I have previously agreed that everything she has goes to her kids and everything I have goes to mine.”

Margaret commenced the court proceedings to seek a "family provision order" under section 59 of the Succession Act 2006 (NSW).  Under that section, an "eligible person" must establish that inadequate provision for the "proper maintenance, education or advancement in life" has been made for them in the deceased's Will.  In deciding to make such an order, the Court must consider a list of factors contained in section 60 of that Act, including the nature of their relationship, the financial resources of the claimant, the financial resources of the deceased's Estate, and any evidence of the testamentary intentions of the deceased (for example, the statutory declaration prepared by the deceased at the time of making the Will).

A second claim on the estate was made by the deceased’s former spouse, Lynette, who was married to him for 16 years until 1985, and is the mother of the deceased’s children.  This claim was settled out of Court with the executor agreeing to pay the former spouse an amount of $80,000.

Agreement reached between the parties

The parties accepted that Margaret fell within the definition of “eligible person” and that adequate provision was not made for her in the deceased’s Will “because she could not use the property as security for a bond should she need do so, at some time in the future, to take up residence in a nursing home.”

It was suggested by the children that the Court make a “Crisp order” (Crisp v Burns Philp Trustee Company Ltd, NSW Supreme Court, Holland J, 18 December 1979) by which the claimant receives a life interest in real property and the right to the property for the purposes of securing, for the claimant’s benefit, more appropriate accommodation (such as a retirement village or nursing home accommodation).  Margaret sought a more extensive provision than a life estate, noting that she had an acrimonious relationship with the deceased’s children.

The Court held ...

Whilst the relationship was a long one, the Court noted the fact that the relationship was one of a separation of financial interests and “unlike the more common arrangements typical of married couples, no doubt a reflection of the fact that when they started their relationship they had both been married before, and Marg had their own children.”  In relation to the suggestion of a Crisp order, the Court noted that Margaret could potentially be a tenant at the property for a long period of time, during which the children would have the obligation of maintenance, and also, the sale of the property would not provide sufficient funds for the purposes of alternative accommodation.

Rather than making a Crisp order, the Court ordered that the property pass to Margaret, and that the estate otherwise lend her an amount of $120,000 (secured over the property) for the purposes of maintaining the property and covering expenses such as rates and insurance.  The cash gift was also increased from $15,000 to $40,000.  The parties agreed for the litigation costs to be paid from the Estate.

If you have a question about estate planning, or wish to discuss your options under the family provision legislation, contact the team at Shire Legal.

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