Executive Summary
This article provides a comprehensive overview of will contests and estate disputes in Western Australia. It outlines the legal avenues for challenging wills, details who can make family provision claims, explains common reasons for estate disputes, discusses executor duties and potential liabilities, and offers practical strategies to minimise potential disputes. The information covers testamentary capacity challenges, family provision claims under the Family Provision Act 1972 (WA), notable Western Australian cases, and preventative measures that can be taken during estate planning.
1. Introduction
In Australia, legal avenues are available to individuals who wish to contest a will or challenge the distribution of an estate. Although regrettable, such disputes are often unavoidable and sometimes essential to ensure fair outcomes. Understanding these legal processes and why estate disputes arise can help individuals navigate these challenging situations.
2. Validity Challenges
One avenue for disputing a will is to challenge its validity. This can occur if there are concerns about the deceased's mental capacity when making the will. A challenge based on testamentary capacity questions the deceased's mental competence to understand the nature and consequences of making a will at the time of its creation.
a. Testamentary Capacity Test
In Western Australia, the courts apply the Banks v Goodfellow test to determine testamentary capacity. This longstanding test requires that the will-maker:
i. Understands the nature of making a will and its effects
The testator must comprehend that they are making a will and what that means to dispose of their property after death.
ii. Comprehends the extent of the property being disposed of
The testator needs to have a general understanding of the nature and value of their assets, including what they own and what they can leave behind.
iii. Is aware of the persons who might reasonably have a claim on their estate
The testator must understand who would typically be expected to inherit, such as family members, and be aware of their moral obligations to certain individuals.
iv. Is free from any delusion that might influence their decisions about distributing their property
A person must not suffer from a medical or mental condition that prevents them from making rational decisions about their estate.
b. Other Grounds for Contesting a Will
A will may also be contested if there is evidence of: i. Undue influence or pressure on the deceased to change the terms of the will ii. Fraud iii. Failure to comply with the required legal formalities during the will-making process
The Wills Act 1970 (WA) sets out these formal requirements, including the need for the will to be in writing, signed by the testator, and witnessed by two people who are present at the same time.
3. Family Provision Claims
In every Australian state and territory, eligible individuals may claim they have not been adequately provided for in a deceased person's will. These claims seek a court order for provision or a larger estate share.
a. Legislation and Eligibility
In Western Australia, family provision claims are governed by the Family Provision Act 1972 (WA). The rules about who can make such a claim vary across jurisdictions.
b. Eligible Persons
Those eligible to make a claim include:
i. Spouse or de facto partner
The deceased's current or former spouse or de facto partner can challenge the will.
ii. Children
Both biological and adopted children of the deceased can contest a will.
iii. Stepchildren
A stepchild will be an eligible claimant in the following circumstances:
A stepchild of the deceased who was being maintained, wholly or partly, or was entitled to be maintained, by the deceased immediately before the deceased's death or
A stepchild of the deceased, if:
The deceased received or was entitled to receive property from the estate of a parent of the stepchild, other than as a creditor of that estate and
The value of that property at the time of the parent's death is greater than the "prescribed amount". Currently in WA, the prescribed amount is $517,000.
The first scenario typically involves demonstrating financial dependence, which is generally more straightforward to establish. This commonly applies in situations where younger stepchildren resided with and were financially supported by the step-parent at the time of death.
To illustrate the second scenario, consider a situation where a biological parent dies and bequeaths their entire estate to their spouse (the step-parent of their children). Later, when that step-parent dies and leaves everything to their own biological children, the stepchildren might reasonably have expected to receive some portion of what was originally their biological parent's estate, now incorporated into the step-parent's larger estate.
iv. Former Spouse
A former spouse receiving or entitled to maintenance from the deceased can contest the will.
v. Dependents
Anyone who was receiving or entitled to maintenance from the deceased can contest the will.
vi. Parents
The deceased's parents can also contest a will, but only in limited circumstances where the parent was being maintained by the deceased.
vii. Grandchildren
In certain circumstances, a grandchild of the deceased may be able to contest the will:
If the grandchild was wholly or partially dependent on the deceased grandparent for maintenance immediately before their death.
If the grandchild's parent (who was the child of the deceased) died before the grandparent, the grandchild can claim against the estate in place of their deceased parent.
c. Time Limits
It's important to note that any family provision claim must be made within 6 months from the date of the grant of probate or letters of administration. The court may extend this time limit in exceptional circumstances, but this is discretionary.
d. Assessment of Claims
In Western Australia, the "adequacy test" for family provision claims under the Family Provision Act 1972 involves a two-stage process:
The court first determines if the deceased made adequate provision for the applicant's maintenance, support, education, or advancement in life, and if not, then
The court decides on the appropriate provision to be made.
When assessing a family provision claim, the Supreme Court considers factors such as:
i. The relationship between the applicant and the deceased
ii. Any obligations or responsibilities the deceased had to the applicant
iii. The size and nature of the estate
iv. The financial circumstances, needs, and obligations of the applicant
v. The applicant's age, health, and capacity for self-support
vi. Any physical, mental, or intellectual disability of the applicant
vii. Whether the applicant received any gifts, transfers, or other provisions from the deceased during their lifetime
Family provision claims are often successful if a close family member has been disinherited and can demonstrate financial need. Such claims are often resolved privately between executors and claimants and/or through mediation without involving a court hearing.
4. Significant Western Australian Cases
Several recent Western Australian cases illustrate how the courts approach family provision claims:
a. Mead v Lemon [2015] WASC 71
This high-profile case involved the estate of mining billionaire Michael Wright. His estranged daughter, Olivia Mead, made a successful claim against his $1 billion estate after being left $3 million in a restrictive trust. The Supreme Court initially awarded her $25 million, which was later reduced on appeal to $6.14 million. The case demonstrates the court's willingness to make substantial awards where the estate is large and the provision inadequate.
b. Christie v Christie [2016] WASC 45
In this case, a testator bequeathed her entire estate to her granddaughter, completely excluding her sole surviving son from among five children. The son initiated legal proceedings to contest the will, contending that he faced financial hardship at 68 years of age with no assets and limited future prospects. While the granddaughter acknowledged these circumstances, she defended the will by asserting that the son's previous conduct satisfied the "disentitling conduct" provisions under section 6(3) of the Act, which provided reasonable grounds for his exclusion from the estate.
5. Reasons Estate Disputes Arise
a. Family Dynamics
Perhaps the most significant reason that estate disputes arise is that there was an existing negative family dynamic. When a loved one passes away, the emotional burden of the loss can complicate already difficult or strained relationships. Disagreements and conflicts between family members, especially in blended families or when there is an estranged relationship, can lead to challenges and disputes over the deceased's intentions. Family provision claims often arise when individuals believe that the distribution of assets was fundamentally unfair.
b. Outdated Wills
Another reason estate disputes commonly arise is that the deceased's will was out-of-date when they died. If a will is not regularly updated to reflect changes in circumstances, such as marriages, divorces, or new family members, it can create confusion and disputes regarding the deceased's wishes. Similarly, vague or ambiguous terms in a homemade will can often cause disagreements among beneficiaries.
c. Executor Issues
Disputes can also arise if an executor or trustee fails to carry out their duties properly, including mismanagement of the estate, conflicts of interest or allegations of misconduct.
6. Executor Duties and Liability in Western Australia
Executors in Western Australia have significant responsibilities and potential liabilities that can become sources of dispute. Their key duties include:
i. Identifying and collecting the deceased's assets
ii. Paying the deceased's debts and liabilities
iii. Distributing the estate according to the will or intestacy rules
iv. Acting in the best interests of the beneficiaries
v. Maintaining proper accounts and records.
a. Standard of Care
Executors must act with reasonable care and diligence, similar to the standard expected of a trustee. They can be personally liable for:
i. Loss resulting from improper distribution of assets
ii. Failure to protect estate assets
iii. Breach of trust or fiduciary duty
iv. Acting beyond the scope of their authority
b. Legal Protections
Under the Trustees Act 1962 (WA), executors can seek directions from the Supreme Court if they are uncertain about their powers or duties. They may also apply to the Court for relief from personal liability if they have acted honestly and reasonably.
c. Removal of Executors
Beneficiaries who believe an executor is not fulfilling their duties properly may apply to the Supreme Court to remove the executor or seek an account of the executor's administration.
7. Minimising Potential Estate Disputes
You can take several steps to reduce the chance that your estate will become the subject of a dispute.
a. Professional Assistance
The first step is to engage the services of a qualified and experienced estate lawyer when drafting a will. This will ensure that the will is not only adequately drafted, taking into account legal requirements, but that you consider potential sources of conflict.
b. Statutory Wills
Consider a statutory will application under section 40 of the Wills Act 1970 (WA) if you are concerned about a loved one who lacks testamentary capacity. The Supreme Court can authorise a will to be made for a person lacking capacity in appropriate circumstances.
c. Superannuation Planning
For superannuation assets, which often form a significant part of many estates, ensure you have valid binding death benefit nominations (BDBNs). When properly made, these nominations direct your superannuation trustee to pay benefits to your nominated beneficiaries and can help avoid disputes.
d. Business Succession
If you have a family business or farm, consider succession planning strategies specific to these assets, such as family trusts, buy-sell agreements or life insurance arrangements to provide liquidity.
e. Open Communication
It can also be helpful to establish open and transparent communication with family members about the intentions and contents of the will. Discussing decisions in advance can provide an opportunity to flag and address concerns and potential conflicts. Such communication can help manage expectations and reduce the likelihood of disputes.
f. Clear Documentation
When drafting a will, it is essential to use clear and specific language to avoid ambiguity and confusion. Clearly articulating the intended distribution of assets, including specific gifts and the reasons for them, can help minimise potential disputes.
g. Supplementary Documentation
Consider including a statement of wishes or explanatory letter with your will (though not part of it) explaining your decisions, particularly if you exclude eligible persons or divide assets unequally among children.
h. Regular Reviews
Regularly reviewing and updating the will as circumstances change can also help ensure its relevance and accuracy. This includes considering changes in relationships, births, deaths and significant assets.
i. Alternative Dispute Resolution
In cases of potential disputes, exploring alternative dispute resolution methods, such as mediation or arbitration, can provide a more amicable and cost-effective resolution compared to litigation.
8. Conclusion
Will disputes and estate challenges can be emotionally and financially draining for all parties involved.
Understanding the legal avenues available for disputing a will or estate under Western Australian law, the reasons these disputes arise and implementing strategies to minimise the potential for disputes can help navigate these challenging situations with greater clarity and efficiency.
Seeking professional advice and engaging in open communication can contribute to a smoother estate administration and reduce the likelihood of prolonged and contentious disputes.
This is general information only, and you should obtain professional advice that is relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on 0421 145 637 or email val@crystallawyers.com.au
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