You can do what you want with your assets when you die, right? Wrong. Sufficient provision must be made in your will for certain members of your family, or else you may subject your estate to a court case.
Under the Family Protection Act 1995 the Court can award provision from your estate to certain family members if your will has not sufficiently provided for them.
What family members might the Court award money to?
- Your spouse or civil union partner;
- Your de facto partner (if you have been living together for over three years);
- Your children (natural or adopted);
- Your grandchildren who were alive when you died;
- Your stepchildren, if they were maintained by you when you died;
- Your parents, but only if they were maintained by you before you died and you had no living children or partners when you died.
What do you need to leave to family members to prevent this?
There is no requirement that your will is fair, or that people you leave money to are treated equally. What you are required to leave depends on your circumstances.
The act imposes a moral obligation to leave sufficient amounts of your estate to your family members to provide for their “proper maintenance and support” upon your death.
What is sufficient is generally measured as being the amount a “wise and just” testator would leave in the circumstances to fulfil their “moral duty” to the family member. The exact amount this is depends on the size of your estate, who you are leaving the rest of your estate to, the personal circumstances of the family member in question, and broader moral and ethical considerations as they are relevant.
Partners
You have a paramount duty to provide for the maintenance and support of your spouse, civil union partner or de facto relationship partner. For spouses and civil union partners, this may continue even after you are separated. The quantity you are required to provide depends on your partners financial needs now and in the future. They are normally entitled to enough to enjoy the same quality of life after your death that they enjoyed while you were alive.
Your obligation to provide for your second partner may be lesser than with other partners, so that you can provide for children from prior relationships.
If you do not wish to leave your assets to your partner, you may be able to reduce your obligations by contracting out of the Relationship Property Act 1976. You should talk to your lawyer if this is something you are interested in.
Children
If your children are still under 18, then you have an obligation to provide enough to support them to reach adulthood.
If your children are adults, then you are still required to provide for their “proper maintenance and support”. If they need financial support, then you have some obligation to provide it. If they do not need financial support, you will still need to consider a provision to recognise their place and belonging in the family.
The amount you leave to each of your children may be influenced by many factors, including the size of your estate, who else the estate is left to, if your child contributed to helping you build the estate (for example with unpaid work on the family farm), and if you supported your child financially and emotionally while you were alive. You do not have to treat each child equally.
Not liking your children or being estranged from them is not enough to disinherit them.
The Court will likely only accept you disinheriting your child when:
- You are leaving the estate to other family members that have stronger claims, particularly if you have a small estate; or
- Your child has done something seriously harmful to you and your relationship.
Grandchildren
Generally, if your grandchildren’s parents (your children) are still living, you will have no moral duty to provide for them. However, your specific circumstances may alter this.
What happens if you do not leave enough to a family member?
If your family member/s feel they have not been provided for in your will, they may take your estate to court to try and correct this. If they are successful, the Court can make a provision to them from your estate, outside the terms of your will.
The Court will not re-write your will entirely. They will only alter it enough to provide for the family member/s that you have not, to the minimum extent necessary to satisfy your moral duty to provide. If you have left part of your estate to people who are not family and you have no moral duty to provide for (for example charities or friends), then the Court is likely to take any awards from that.
If your estate needs to defend a Family Protection Act claim in court because you have not adequately provided for a family member, it will be costly and diminish the amount in your estate. This means less of your money will go to the people you want to have it. A court case will also cause conflict within your family at a time when they are already grieving your loss. It is important to ensure your will makes adequate provisions to necessary family members to prevent this happening.
How can you stop someone benefitting from your estate?
If you are trying to prevent someone from benefitting from your estate, you should discuss it with a lawyer. They will be able to advise you of your options depending on your circumstances.
One option may be to change the ownership structure of your assets, including through forming a trust, so that they are no longer within your estate. This will prevent a Family Protection Act claim against those assets.
It may also be helpful to the Courts if you write an outline explaining why you are choosing to disinherit a person. This helps inform the Court’s decision about if you have a moral duty to provide for that person or not.
If you have questions about making sure you are fulfilling your requirements, reach out to one of our team.
