Can you prevent a claim?

It can be hard when preparing a Will to determine whether or not the testator ought to leave a token legacy for those people whom they believe would otherwise make a claim on their estate.  This case is an example of the possible orders a court will make where it is satisfied that the main beneficiary under the Will has been (and should have been) provided for, but where the testator also had a moral obligation to other eligible persons.

Case:

Stockwell v Beaumont; O’Donnell v Beaumont [2019] NSWSC 1811

The Facts:

In this case, the Deceased had been married three times, having children only with his second wife. One of those children, Nina, brought proceedings in 2017, while his third wife, Margaret, brought separate proceedings, also in 2017.  The third, and youngest of his children, Samantha, was the defendant to both proceedings as executor for the estate.

The claims made by the Deceased’s child and wife

Margaret alleged that at the time of her separation from the Deceased she did not pursue a family law settlement as the Deceased had promised to provide a legacy in his Will for her.  She conceded at hearing that at no time did she seek legal advice.  She also alleged that other than the Deceased forgiving money owed to him by Margaret, she did not receive any other funds or settlement. Nina submitted that her financial circumstances were such that she required provision from the estate.

The main beneficiary’s position

Samantha – the recipient of the majority of the Deceased’s estate – enjoyed “a good and close relationship” with the Deceased throughout her life, while her siblings were estranged from the Deceased at the time of his death.  Based on the evidence provided at hearing, she had become the closest friend of the Deceased and regularly provided him with help, notwithstanding the fact that she was raising three small children on her own.  She ceased work in order to assist her father after he was diagnosed with esophageal cancer and exhausted personal savings to care for her father.  At the time of hearing, Samantha’s financial affairs were relatively dire.  She suffered from numerous health issues and was responsible for three small children, two of which suffered from oppositional conduct defiant disorder.

The Deceased’s last Will

The Deceased had signed a Will some time before his death, which left all of his assets to Samantha, save for some minor legacies.  The value of the Estate was $1,638,570.00 which consisted predominantly of a property and a sum of cash.  At the time of the hearing, Samantha resided in the property with her children but on 2 December 2019, shortly before the Court was to deliver judgement, Samantha (having already had the title of the property transferred to her pursuant to the Will) sold the property and relocated to Queensland causing Nina and Margaret to urgently bring the matter back before the Court.  The property was sold for $1,450,000.00.  During the course of the proceedings it also became clear that the Deceased had, prior to his death, also provided Samantha with a total of $238,966.00 over a period of time to pay for, among other things, credit card debts, repayment of several loans, repayment of motor vehicle leases and relocation expenses.

What did the Court decide?

Nina received a sum of $200,000.00 to eliminate her mortgage, while Margaret received $150,000.00 to eliminate her mortgage and provide a small contingency fund from the proceeds of sale of the deceased’s property.

It was found that for many years leading up to his death, the Deceased had been estranged from Nina and although in previous Wills he had left a substantial legacy to Nina, his moral obligation to Samantha, as his youngest child, was greater in all of the circumstances.  Similarly, Margaret did not have any significant evidence to support her claim that the Deceased had promised to provide her with a legacy in lieu of a more significant family law property settlement.  Samantha in fact furnished evidence which demonstrated that the Deceased paid his third wife a sum of $22,342.54, the description of which was ‘divorce settlement’.  The Court accepted this evidence.

Ultimately, although the Court believed that Samantha should receive the lion’s share of the estate, it was satisfied that some provision should have been made for Nina and Margaret and the Deceased had a moral obligation to do so.

Takeaways

It is important that you keep your Will up to date to ensure that you have made provision for those people whom the Court would consider you morally obliged to provide for, or otherwise address why you will not be making provision for them by making a written statement to that effect. Clients sometimes tell us that they have heard that all they need to do is provide a “token amount” to a potential claimant, to avoid a family provision claim being made. That is not correct. It is not always the case that by making a small provision for a potential claimant you will prevent them from claiming on your estate.