Giving it away to keep it safe: what a recent Court of Appeal decision means for protecting your estate from family disputes

Many parents worry about what will happen to their hard-earned assets after they die. Some worry, in particular, that one of their children may challenge their will and unravel the careful plans they have made. One approach (but fairly extreme strategy), is to restructure assets during their lifetime, transferring property or control of family trusts to a trusted child so that there is less in the estate for anyone to fight over. But can those lifetime transfers themselves be unwound later, on the basis that the parent was taken advantage of?

That question was at the heart of a recent decision of the New South Wales Court of Appeal, McLennan by his tutor Kennedy v McLennan [2026] NSWCA 102. The Court's answer offers both reassurance and important lessons for families planning their estates, and for the adult children who often help their ageing parents manage their affairs.

The story behind the case

John McLennan, a retired pharmacist, and his wife Karen built up substantial wealth over a long marriage: a beachside family home on the Central Coast, commercial properties held in two family trusts, and a self-managed superannuation fund worth over $7 million. They had two adult children. Their son Ruskin gave up his business interests in Japan and returned to Australia at his father's request to manage the family's financial affairs. Their daughter Susannah had experienced long-running personal difficulties, and her parents were concerned that she might one day challenge their wills.

Working with their solicitor, accountant and financial planner over 2019 and 2020, John and Karen took two significant steps. First, John handed Ruskin the role of “appointor” of one of the family trusts, the position that carries the power to control who acts as trustee. Second, John and Karen transferred the family home to Ruskin, keeping a legal right to live there for the rest of their lives. The openly stated purpose of these steps was to put as many assets as possible beyond the reach of any claim Susannah might bring against their estates.

Karen died unexpectedly in 2022. After her death, John's relationship with Ruskin broke down. John made a new will leaving everything to Susannah, and then commenced court proceedings seeking to undo both the trust appointment and the transfer of the home. He argued that Ruskin had engaged in what the law calls “unconscionable conduct”, in effect, that Ruskin had taken unfair advantage of an elderly and dependent father.

What does the law require?

Courts of equity have long had the power to set aside transactions where one party takes unconscientious advantage of another's “special disadvantage”, something that seriously affects a person's ability to judge what is in their own best interests. As the Court explained:

“…unconscionable conduct occurs where “a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage…The special disadvantage must be such that it “seriously affects the ability of the innocent party to make a judgment as to his own best interests”

Age, illness, cognitive decline, emotional dependence and a lack of proper advice can all play a part. Importantly, it is not enough that a transaction looks generous or one-sided. The person challenging it must show that they were under a real disadvantage, that the other party knew of it, and that the other party exploited it.

John's central argument was that he had never received truly independent advice about whether the transactions were a good idea. He accepted that the family's solicitor had explained what the documents did, but said no one had given him “evaluative” advice, in other words, advice weighing up the merits and wisdom of the strategy, including the risk that he might one day change his mind.

What the Court decided

The Court of Appeal rejected John's claim, and in doing so made several points of practical significance:

1. First, the Court confirmed that there is nothing improper about restructuring your assets during your lifetime to reduce the prospect of a family provision claim after your death. The judges accepted that John and Karen's goal was to put their assets beyond their daughter's reach, and held that this did not make the transactions suspect. The loss of control that John complained about was not a hidden trap; it was, in the Court's words, “the very purpose of the two transactions”.

2. Second, the Court held that “there is no rule or principle” that requires a solicitor to provide “evaluative” advice on whether a transaction is wise before it can stand. What matters is that the person had the opportunity to obtain, and did obtain, advice of the right kind from someone capable of giving it. The role of legal advice is to cure ignorance about what a document actually does. Whether to proceed is, ultimately, the client's decision. John was a well-educated and experienced businessman who clearly understood that he was permanently giving up control of the trust and ownership of the home. The Court found he was perfectly capable of weighing the merits for himself.

3. Third, the Court was influenced by the quality of the paper trail. The solicitor had met with John separately, asked him directly whether he was sure he wanted to transfer the home during his lifetime rather than under his will, recorded John's answer that he understood and was comfortable, and made a detailed file note assessing his capacity. When the transactions were challenged years later, that contemporaneous record proved decisive.

4. Finally, the Court noted that there was no evidence Ruskin had pressured his parents at all. Although he passed on their instructions to the lawyers and was closely involved throughout, the evidence showed his parents changed their minds more than once along the way, and Ruskin faithfully reported each change. Far from keeping his parents away from advisers, he helped them obtain advice.

Some takeaways

If you are a parent considering restructuring your assets in a manner similar to what was undertaken by John, this decision offers some reassurance. Lifetime planning by transferring assets to manage the risk of a future family provision claim is a viable, but extreme strategy.  If such steps are taken on good legal advice and properly documented, they are difficult to unwind, even if relationships later change. But the case also carries warnings that should not be overlooked.

Decisions of this kind are permanent. John gave up control of a valuable trust and ownership of his home, and when his relationship with his son later deteriorated, the law offered him no way back. Before transferring assets during your lifetime, you should think carefully about how your circumstances, your needs and your relationships might change, because the courts will generally assume you were the best judge of those risks at the time.

The form of any retained rights also matters. John and Karen kept a right to live in their home for life, but questions were raised in the case about whether a different legal structure, or approach, may have protected them better or addressed the risk they were concerned to address. These are technical distinctions with real consequences, and they deserve careful advice.

If you are an adult child assisting your parents, ensure your parents deal directly with their own advisers, encourage independent advice, and let the professionals do their job, including by creating a clear record of your parents' instructions and understanding. The McLennan transactions survived challenge in large part because the advisers documented, at the time, that John knew what he was doing and wanted to do it.

Ideally, an adult child who stands to benefit from a transaction should take a step back from the process altogether, limiting their involvement to connecting their parents with appropriate independent advisers and then allowing those advisers to deal with their parents directly and independently. The less the benefiting child is involved in the process, the decisions made, the harder it will be for anyone to later argue that the outcome was anything other than the parents' own free and independent choice.

Every family's circumstances are different, and so too are the solutions. The strategies available to manage the risk of estate disputes, including lifetime transfers, trust restructures, carefully calibrated wills and combinations of all three, each carry their own benefits, limitations and risks. What works well for one family may be entirely unsuitable for another, and the right approach will always depend on the particular facts: for example, the composition and value of the estate, the nature of family relationships, the needs of all those involved, and a range of personal factors that no two families share in the same way.

Ultimately, decisions of this kind call for an individual evaluative judgment, formed with the benefit of advice tailored to your own circumstances, rather than the application of any one-size-fits-all strategy.

Author: Raffael Maestri

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