Life estates and will disputes

Overview

Wills and Estates can be a particularly complex area of law, especially where multiple family provision claims are being made.  In the case of Ng v Lau; In the Estate of Ken Kui Yuen Lau [2020] NSWSC 713, a number of issues were raised including two family provision claims, and whether a second Will created in 2016 accurately reflected the deceased’s testamentary intentions.

Background Facts

The deceased, Ken Kui Yuen Lau (Mr Lau), died in 2018.  The plaintiff was Mr Lau’s wife from his second marriage, and the defendant was Mr Lau’s only child, Gary, from his first marriage.  In this case there were two main issues that arose, the first being that Mr Lau had two Wills, one from 2001 and another from 2016.  The second issue considered was in regards to family provision claims pursuant to s 59 of the Succession Act 2006 (NSW), brought before the court by both Mrs Lau and Gary, each dependent on which Will was determined to be valid by the court.

Under Section 59, 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, a statutory declaration, if any, prepared by the deceased at the time of making the Will).

In this case, the estate was made up of a number of assets including shares, rental income, money held in a bank account and two properties, referred to as the ‘Peakhurst property’ and the ‘Bexley property’.  The main difference between the Wills was that in the 2001 Will, Mrs Lau was entitled to receive full ownership of the Bexley property, whereas in the 2016 Will, Mrs Lau was only entitled to a life interest in the Bexley property and upon her death, the Bexley property would be gifted to Gary.

Issue One – Probate

The first issue considered by the court was whether the 2001 or 2016 Will reflected the true testamentary intentions of Mr Lau, and whether the circumstances surrounding the creation of the 2016 Will were suspicious in nature.

Mrs Lau’s Submissions

Mrs Lau wanted the 2016 Will (granting her a lift interest) passed over and the 2001 Will (granting her full ownership) to be relied on, on the basis that Mr Lau had never informed his wife about the existence of the second Will, and that various suspicious circumstances gave rise to an apprehension that Mr Lau did not know of or approve the contents of the 2016 Will.

It was claimed that Mr Lau acted in a secretive manner, as he had not spoken to either his wife or son about the creation of the 2016 Will.  Mr Lau also used a different lawyer to draft the 2016 Will than he had used for the creation of the 2001 Will, and had waited until his wife was overseas before meeting with the lawyer.

Further, Mrs Lau submitted that there was no reason as to why Mr Lau would have undertaken to execute a new Will.

Mrs Lau also questioned Mr Lau’s understanding as to what was meant by the term ‘life estate’ in regards to the Bexley property he left to her in the 2016 Will and whether he understood the implications of it.

Gary’s Submissions

Gary submitted that Mr Lau’s instructions regarding his intentions for the 2016 Will were clearly expressed, simple to understand and the instruction to include the life estate to Mrs Lau originated from Mr Lau himself, not by the lawyer he was speaking with.

It was also contended that in 2017, Mr Lau had demonstrated an awareness of his 2016 Will by showing the Will file to Gary, and allowing him to take a photograph of it. In light of this, it was submitted that the 2016 Will was rational on its face, was considered, and did not exclude either of the two beneficiaries for whom Mr Lau was expected to provide for.

It was further put forward that while the 2016 Will was different from the 2001 Will, the change was not significant or inexplicable.

Court’s Decision

The Court was satisfied that Mr Lau did know and approve of the contents of the 2016 Will and that it did reflect his testamentary instructions.  The conclusions made by the Court were primarily based on the clear and uncontradicted evidence of Mr Anagnostellis, the lawyer who prepared and witnessed the 2016 Will.  In his file note, the lawyer noted that Mr Lau had discussed his reasons for changing the Will, stating that as his wife held interest in another property, the life interest would be more beneficial to both parties.

The Court did not accept Mrs Lau’s claim that Mr Lau’s actions in creating the 2016 Will were suspicious, noting that a failure of a person to discuss their testamentary affairs with their spouse is not necessarily a cause for suspicion, especially where the contents of the Will are likely to create an argument.

Although suffering from physical ailments due to his cancer, there was no evidence to suggest that Mr Lau did not have testamentary capacity.  Additionally, Mr Lau had been in contact with a lawyer in 2005 in regards to changing his Will to create a life estate for his wife further proving the contents of the 2016 Will to be Mr Lau’s true testamentary intentions.

Issue Two – Family Provision Claims

As the 2016 Will was confirmed to be the last Will of Mr Lau, Mrs Lau sought additional provisions from the estate.  A brief summary of the contents of the 2016 Will are as follows:

• Mrs Lau and Gary were appointed jointly to be executors and trustees;
• The Peakhurst property was to be given to Gary;
• Mrs Lau was given a life interest in the Bexley property, with the remainder interest to be passed to Gary; and
• Residue of his estate was to be given to Mrs Lau and Gary in equal shares.

 Mrs Lau’s Entitlement

Mrs Lau submitted that her present financial circumstances and needs warranted further provision out of the estate.  Mrs Lau had relied on a superannuation fund pension and rental income from a property she owned in her own name.  After Mr Lau’s death, Mrs Lau commenced receiving her late husband’s ComSuper pension (receiving additional payments per fortnight).  While Mrs Lau was in good health, it was put forward that within a few years it was likely that she would need to move to a more suitable accommodation due to her age (74).

While these facts were not contested by Gary, he raised two issues:

• Whether there were alternative housing options available to Mrs Lau, and whether the expenses put forward by Mrs Lau were actually less that what was disclosed in her evidence, therefore increasing her net financial position and reducing her need for additional provision out of the estate; and
• Mrs Lau had put forward a figure of $800,000.00 as a price point for new accommodation, however this was rebutted by the defendant as there were other houses in the same area selling for approximately $330,000.00 to $570,000.00.

The Court accepted that there were other accommodation options available to her, and that $800,000.00 was at the higher end of the amount required.  The Court also accepted that her current expenses were less than disclosed in her evidence, and it was found that Mrs Lau maintained a level of financial independence unconnected with any gifts devised pursuant to the 2016 Will.

Gary’s Entitlement

As the 2016 Will was accepted by the Court, Gary’s claim for family provision consequently fell away.  However the Court still considered his financial position in relation to Mrs Lau’s claim.  The significant level of financial assistance given to Gary by Mr Lau during his life was emphasised in order to prove his financial situation as sufficient.

The Court’s Decision

The Court found that the 2016 Will did not make adequate provisions for Mrs Lau’s proper maintenance and advancement in life insofar as it gave her only a life estate in the Bexley property.  This is because it failed to address the reality that Mrs Lau would need to move from the Bexley property within a few years to more suitable accommodation due to her age.  The life estate did not give her that flexibility of choice as to her accommodation.

The additional provisions to be made for Mrs Lau were:

• A crisp order – giving Mary what might be termed a “portable” life interest in the Bexley property, ensuring her ability to move to other accommodation as her circumstances required and as she thought fit. To assure her independence in this regard, the Court’s orders were subject to a condition – volunteered by Gary – that Gary renounce probate of the 2016 Will so that Mrs Lau can continue as the sole executor.
• Mrs Lau was further entitled to an additional provision of $45,000.00 from the Estate. That amount was intended to cover the necessary costs of improvements to the Bexley property and other minor expenditure.

The Court did not accept that any further provision was required for rates, insurance or any subsequent maintenance for the Bexley property.

Lessons to be learnt from this case

• It is essential to consider the future of the beneficiaries when writing a Will. This is of particular importance when a spouse’s situation may change, as highlighted in this case.
• It is also important to ensure that the client understands the difference between ownership and life estate, and considers which would be most beneficial to the person the property is being left to.
• To save costly court proceedings, where possible, it is a good idea to inform beneficiaries of any changes to the Will – this will also prevent claims of suspicious circumstances.
• This case also reinforces the importance of lawyers keeping contemporaneous file notes, as this formed much of the evidence in this case for the 2016 Will being valid and proving Mr Lau’s intentions of creating a life estate.