A NSW estate litigation case decided earlier this month starkly illustrates the problems with the way in which estate disputes are handled in Australia.
The matter involved a mother and her estranged son. The mother’s estate was worth around $1 million and was left entirely to her older son, with whom she still had a good relationship. She expressly excluded her younger son from receiving anything under her will and he made a claim against the estate following her death.
The Court heard that she had signed a statement at the time she wrote her will explaining she had decided to exclude him because, following his marriage in 1991, they had become estranged and she had virtually no ongoing contact with him or his children (her grandchildren). Indeed, she explained that in the last 10 years she and her (now deceased) husband had significant medical issues and her older son had been solely responsible for their care, with their younger son failing to provide them with any support or comfort.
In challenging the estate, the younger son argued amongst other things that he had been sexually abused by his mother as a child. This allegation had never been raised with his mother during her lifetime and as the Court noted, she could not rebut the claim now that she was deceased.
In assessing the younger son’s claim against the estate, the Court heard that he and his wife owned a property worth around $1 million (with a $400,000 debt owed against it) and made a combined income of around $110,000/annum.
The Court ultimately granted $75,000 to the younger son (out of the estate of $1 million).
As an estate planning lawyer, the outcome here is discomforting on two levels.
Firstly – it appears to largely ignore the question of whether the younger son had a true financial need for further provision from the estate. One might argue that a person living in a million dollar house and earning a (combined) six figure income is relatively financially independent and secure, without needing further financial provision from their parents.
Instead of starting from the basis that the will-maker’s intentions should be honoured unless there is a compelling reason to the contrary, the judgement appears to imply that the younger son has an automatic entitlement to a share of the estate, with his conduct and relationship with his mother then reducing what he might otherwise be entitled to.
Just as concerningly though, the judgement notes (with a level of disquiet) that the combined legal fees of the two brothers involved were in the vicinity of $300,000 – despite the final grant to the younger brother being just $75,000. As the judge notes at the conclusion of his judgement, ‘They [the legal costs] are disproportionate to the outcome of the proceedings’.
Unfortunately, my experience is that the outcome here is not uncommon. Given the highly emotive nature of estate disputes, there should be an obligation on lawyers to ensure their clients are acting in a financially responsible manner and not being ruled by their emotions, rather than allowing substantial legal fees to be accumulated over relatively insignificant disputes.
The lesson to be learnt here is that where there is a risk of an estate being challenged, it is important for the client to seek specialist advice on the best way to mitigate that risk, which may include steps such as producing affidavits or statements regarding the reasons behind their decisions and potentially transferring assets to ensure they are not treated as part of the estate (subject in New South Wales to the ‘notional estate’ rules).
For those who are interested, the case is Re Estate McNamara [2018] NSWSC 1661.
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