April 2014

Courts warn - inheritance is not an entitlement for family provision claimants!

Recent Court decisions in NSW and Victoria should serve as a warning to all family provision claimants that it is wrong to have a sense of entitlement to an inheritance when making a claim.

Claim by Grandchildren

The cases of Wilcox v Wilcox [2012] NSWSC 1138 and Wilcox v Wilcox (No 2) [2014] NSWSC 88, dealt with claims by two adult grandsons.  The grandsons effectively challenged the right of their mother to receive her father’s estate.

There were three legal claims by the grandsons.  They argued there was a legally binding agreement with their grandfather that they would receive his extensive pastoral holdings.  They also argued that they had acted on their grandfather’s representations as to their inheritance from him, to their detriment.  The third argument was that they were entitled to a family provision order pursuant to s.59 of the Succession Act 2006 (NSW).

The 2012 case rejected the first two legal claims.  In relation to the second claim Justice Pembroke treated the evidence carefully and referred to two well established principles. The first principle was that human experience dictated that one should treat with caution the self-interest evidence of a party’s uncorroborated recollection of statements made many years ago. The second principle was the need for greater caution when considering uncorroborated statements attributed to a deceased person where that deceased person is the only person capable of rebutting the accuracy of the statements attributed to him. 

The judge also formed the view that the grandsons were unimpressive witnesses.  However, this did not preclude him from concluding that they were entitled to a family provision order. There was a need for a further hearing to determine what order should be made because of a lack of evidence about the financial needs of the grandsons.

Wilcox (No 2) related to the family provision claim by the grandson Robert.  The claim of the other grandson Benjamin was settled and did not need to be considered.  The defendant to the claim was Robert’s mother. 

Wilcox (No 2) received extensive coverage in the press. The comments of Justice Pembroke about Robert’s predicament attracted most attention. The judge said of Robert at [28]:

He has not made a financial success of his life, despite being given a better start than most   young men could have expected.  Among many other things, his grandfather ensured he received a sound education and paid his tuition and boarding fees at The King’s School.  No one is responsible for the position in which Robert …now finds himself, except himself.  He may not own his own home and he may not have made a lot of money from his employment over the years, but he has no one else to blame.  His unhealthy sense of entitlement may have constrained his ambition.  Like many an expectant heir before him, he has not made the most of his opportunities, imprudently assuming that he and his brother would inherit their grandfather’s estate.  And ....he gave no thought to the priority that his mother naturally deserved.”

The fact that the Court made an order for family provision for Robert from his grandfather’s estate should not detract from the general warning from the Court.  Inheritance is not an entitlement and the Court’s role is not to rewrite a Will to achieve ‘an overall fair’ division of the deceased’s estate.

Claim by Widow

The Victorian case of Patricia Morris v Smoel [2014] VSC 31 involved a widow’s family provision claim for further provision from her husband’s estate.  The widow was the second wife of the deceased.  There were three adult children of the deceased’s first marriage.  The two adult daughters were the executors and the defendants to the widow’s claim.

The deceased and the widow met in 1990 and married in December 1991.  At the date of the deceased’s death in 2010, the marriage was just under 20 years duration.

In his Will, the deceased left his widow a life interest in the matrimonial home, a holiday home, the contents of those homes and a Mercedes  Benz motor vehicle.  He also directed his executors to use their best endeavours to pay the widow a reasonable living allowance from the proceeds of a family trust and a superannuation fund.  The widow also had assets of her own of about $750,000.

The value of the deceased’s estate at the date of his death was estimated at $1,802,000.  Surprisingly, at the date of hearing, the estimated value of the estate was $200,000 - $300,000, largely because of the legal costs incurred in dealing with the claims of the widow.

The widow had a sense of entitlement to a larger share of her husband’s estate.  The way she pursued that entitlement resulted in the Court forming an adverse view about her character and conduct.  The widow incurred significant personal legal costs (over $600,000) and appeared to intentionally deplete the estate by having the executors incur legal costs in dealing with her claims.  Justice McMillan commented at [61]:

“Mrs Morris’ character and conduct are evidenced in her fierce pursuit of losing litigation against the estate of the deceased and in the superannuation proceeding.  She held a stubborn belief in what she considered to be her entitlements, as well as the correctness of her stand, no matter the ultimate financial or emotional cost was to her, to the estate of the deceased or to the defendants.”

The stubborn belief as to her entitlements did not help Mrs Morris.  The Court dismissed her claim.

Conclusion

Family provision claimants need to be aware that a sense of entitlement to an inheritance is unwise in the context of making such claims.  The role of the Court in considering such claims has been clearly stated in numerous cases.  The Court must respect the freedom of a willmaker to dispose of their assets to whom they choose, only interfering with that freedom to the minimum extent required to give effect to the purpose of family provision legislation.


This publication is intended as a source of information only.  No reader should act on any matter without first obtaining professional advice. 

Author: Gerard Basha