Should a will be untouchable, never able to be challenged? And is it predatory of relatives to challenge a loved one’s will? These are some of the questions posed in a recent article written by Caroline Overington at The Australian. Wills have always been able to be legally challenged, but Overington reports that estate planning practitioners say the difference is now, there are far more people prepared to challenge a will than ever before.
And while the aim of estate planning is to ameliorate against the risks of challenges to a will, it can’t stop challenges altogether. The fact is that wills can’t be ‘future-proofed (that is, protected from challenges). If things wind up in court, the court is the ultimate arbiter of what is fair — and it may not be exactly what was intended by the will.
This has led to the question – why even bother with estate planning? Why go to the trouble of making a will if your wishes may end up being ignored or overridden? Well, aside from the fact that estate disputes happen more often when someone dies without a will, estate planning is also still recommended because at the very least it will still help minimise the risks of challenges.
Why are there more challenges to wills nowadays?
There are a number of reasons why there are more challenges to wills these days. One of the main reasons is simply the change in family forms that has occurred, from the traditional nuclear family unit to the various forms of blended families that are now common.
In the more traditional nuclear families of the past, couples would make individual wills with the same wishes (appointing each other as executors and giving the respective estates to each other, to pass to the children on the parents’ death) and such wills are known as “mirror wills” – reflecting the same wishes of each party. But in the newer types of blended family forms, individual wills must also take into account the unique circumstances on each “side” of the family, and therefore no longer represent “mirror wills”.
The increased complexity in the family dynamic has really been a game-changer. Whereas in the past, parents would leave everything to each other and it would go to the children on the parents’ death, things are now much more complicated. When parents divorce and remarry, they may then leave their estate to their second spouse, which can cause a lot of upset amongst the children of the first spouse.
But there are also other reasons. For example, Baby Boomers have more wealth and bigger estates than later generations, whereas adult children are often under more financial strain due to the increased cost of living and the difficulty in entering the housing market. The advent of compulsory superannuation has also added super as an asset to be carved up.
Another reason estate planning practitioners give for the increase in challenges is that there seems to be a greater sense of entitlement among the younger generations, who feel they “deserve” something from their parents.
Why do parents leave adult kids out of wills?
In the case of blended families, a parent may have to balance the needs of their new partner and any new children against the needs of their adult children. They may feel strongly that they wish to ensure their current spouse isn’t left homeless upon their death, and this may mean that they do not wish to sell the family home and distribute proceeds amongst adult children. Parents may also feel they’ve already been generous enough through their child’s life. Or they may feel one child “deserves” more because that child has been more present or more helpful to the parent than other children.
When adult children challenge a parent’s will in court, the courts will look at the needs of all the parties involved. They may well agree with a parent’s will that leaves a home to a second spouse, in spite of the children’s disgruntlement. Or they may have to decide on the competing needs of different siblings. Unfortunately the law operates on a needs-basis which means that sometimes, the law favours a child who has not worked as hard or been as successful at creating their own wealth as a sibling has been, because the child who is “down and out” can argue that proper provision for them was not made in the will. This can certainly seem unfair.
The estate planning measures you should consider
Taking the time to really map out smart estate planning is important. Anything that can help avoid a will being challenged is helpful, because when wills are challenged it can be a time consuming and costly process to resolve—not just financially, but also emotionally.
A family meeting to honestly discuss all the issues is also regarded as a really good idea. But it’s human nature to want to avoid potential confrontations, so such meetings are not often conducted.
Some of the preventative measures you can take in estate planning include drawing up a Mutual Will Agreement, which is an agreement that goes with a will and enables parties to agree on the final distribution of assets no matter who dies first. A Mutual Will Agreement is usually in the form of a deed which is attached to the will and signed at the same time. Experts say Mutual Will Agreements are especially well suited to blended families and provide an extra layer of certainty over how assets should be treated. They can also be incorporated into the terms of a Binding Financial Agreement, and it’s highly recommended that they are, in order to help protect premarital assets.
People are also often advised to also minimise their estate as much as possible by moving assets into trusts or putting assets in joint names so they automatically pass to a surviving spouse. Putting assets in trust should also be considered if leaving assets to a married descendant, to protect in the event the married descendant goes through a divorce. Similarly, putting assets into a trust with trustees to manage funds is also an option for dealing with an adult child who may one day have a legitimate needs-based claim on the estate—thereby safely making provision for them.
With superannuation, “binding nominations” can be made which direct where funds are to go and prevent them becoming part of the estate. (Note that this has to occur before signing over a power of attorney, and while there is still capacity for decision-making.)
Finally, don’t forget to review your estate plan regularly and always obtain independent legal advice.
Source: The Australian (subscription)
If you need assistance with a will, estate planning, or another family law matter, please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Legal Services on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Legal Services.