Things can get complicated when disputes arise as to which family member will get to inherit the property. This is especially the case when it comes to family members outside the scope of your traditional family structure, such as your stepchildren or grandchildren.
Luckily, this article will you guide you through the steps the Courts will take to determine whether certain family members may challenge your estate by way of a Family Provision Claim. This article will also discuss the requirements that the Testator should follow to ensure that certain family members are covered, and of recent cases demonstrating how the NSW Courts have dealt with the issue.
Eligibility
The first step is to determine whether the claimant is an ‘eligible person’. This is legislated under section 57 of the Succession Act 2006 (NSW), and states that it covers:
- The current spouse or de facto partner of the deceased,
- A child of the deceased,
- A former spouse of the deceased,
- A grandchild who was wholly or partly dependent on the deceased, or
- A person with whom the deceased person was living in a close personal relationship with at the time of their death.
The determination of a ‘close personal relationship’ is to be performed with reference to section 3(3) of the Succession Act, which must be read in light of sub-section (4). These list that:
- A ‘close personal relationship’ is a close personal relationship (other than a marriage or a de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care.
For the purposes of subsection (3), a close personal relationship is taken not to exist between two persons where one of them provides the other with domestic support and personal care:
- For fee or reward, or
- On behalf of another person or an organisation (including a government or government agency, a body corporate or a charitable or benevolent organisation).
Section 59(1) sets out additional hurdles for eligible persons who only meet the criteria by reason of paragraph (d), (e), or (f) of the definition. In these cases, the Court must have regard to all the facts and circumstances of the case (whether past or present) which warrant the making of the application.
In Re Fulop deceased (1987) 8 NSWLR 679, the Supreme Court of NSW held that:
‘such factors are factors which, when added to facts which render an application for family provision relief an eligible person, give him or her the status of a person who would generally be regarded as a natural object of testamentary recognition by the deceased’.
Stepchildren
Although stepchildren are not explicitly listed as ‘eligible persons’, they may still make a Family Provision Claim in circumstances where they were living in a ‘close personal relationship’ with the step-parent at the time of their death.
Grandchildren
Grandchildren are considered as eligible persons under subsection (e) to make a Family Provision Claim over a deceased’s estate. In some circumstances, subsection (f) may also be made out if the grandchild is found to have been in a ‘close personal relationship’ with their grandparent at the time of the deceased’s death.
Other Requirements – Sections 59 and 60
As we have looked at in our previous blog posts with estranged children, the Courts will consider other requirements under sections 59 and 60 of the Succession Act to see whether other family members may contest the estate. For more information on the requirements, check that blog post out!
In short:
- Section 59 looks at whether the Family Provision Claim is ‘for the proper maintenance, education or advancement in life’ of the claimant; and
- Section 60 looks at other considerations, ranging from the deceased’s obligations and financial circumstances, the claimant’s current financial state and the location and value of the Estate.
Can grandchildren contest deceased estates?
In our previous blog post, we looked at a Family Provision Claim from an estranged daughter over her mother’s estate, valued at an estimate of $1.2 million. In this article, we will be looking at the second half of the case – a Claim from the second plaintiff, the deceased’s grandchild.
This case demonstrates how stepchildren may succeed in challenging a deceased’s estate when it is fair and equitable to do so.
Held
Justice Lindsay of the Supreme Court found that the deceased’s grandson could successfully contest the Estate. While the home was to be sold, the grandson was entitled to a sum of $200,000.00 from this claim.
To arrive at this decision, the Court considered three main factors:
- Whether he was an eligible person
- Whether there were any additional factors to consider with the claim
- Whether arrangements had been made for the proper maintenance, education, or advancement in life of the second plaintiff.
Eligibility
Firstly, the Court found that the grandson was an eligible person under sub-section (e). He also lived in the same household for a decade before her passing.
The main issue was whether he was a person ‘who was, at any particular time, wholly or partly dependent’ on the deceased. To address this, the Court drew on the common law case of Page v Page [2016] NSWSC 1218 to assert that the word ‘dependent’ meant:
‘a person who relies upon support of another, financial and/or emotional, in circumstances which include an element of being beholden for material or physical held’.
Effectively, the grandson was to be viewed as a ‘surrogate son’ to the deceased – he had provided companionship, if not protection, to his grandmother upon her husband’s passing, as well as a meaningful family experience for him. The relationship between the grandmother and grandson was ‘direct, immediate, socially intimate and sustained’. Moreover, the second plaintiff was not asked to pay rent for his stay, but nonetheless paid outgoings, including water rates and electricity charges that were levied on the property, out of his own free will.
For the sake of completeness, the Court also addressed sub-section (f) to emphasise that the grandson had a close personal relationship with the mother. This was founded on his willingness to move in, that there were no commercial interests involved, and that the two shared a strong familial bond.
As the grandchild only satisfied the eligibility requirements through sub-sections (e) and (f), the Court was also required to consider additional factors warranting the making of the Claim under section 59(1)(b). This included how he became a father days after his grandmother had died, and how he gave up work to look after the baby.
Proper maintenance, education, or advancement in life
Secondly, the Court found that adequate provision had not been made for the grandchild’s ‘proper maintenance, education, or proper advancement in life’, providing further incentive to approve his Claim.
The grandson was in a financially difficult spot at the time of his grandmother’s passing – he had a savings account of $3,000.00, a credit card debt of $5,000.00, ongoing mortgage repayments on his investment property totaling up to $187,000.00 which could not be covered by the rent received, and a dependence on Centrelink payments. He had also requested the co-investor to sell the investment property in the near future so that he could have the funds to take care of his young daughter and to arrange alternative accommodation.
Ultimately, the Court found that the stepson could contest his grandfather’s estate.
Can stepchildren contest deceased estates?
As the case of Harris reveals, a stepchild is unlikely to be successful when it can be shown that they were self-sufficient, and that a grant of the estate would not be for the ‘proper maintenance, education or advancement in life’. However, as demonstrated through Warton, where it is clear that the Testator intended for a stepchild to inherit the estate, the chances of success are high.
Case Study 1: Harris v Harris [2018] NSWCA 334
Facts
Mr Hubert Estes Harris (“the Testator”) died in October 2015, leaving his estate to his widow (“the Respondent”). In October 2016, the Testator’s son (“the Appellant”) made a Family Provision Claim over the estate.
Primary Judgment
The primary judge was not convinced that an inadequate provision had been made by the Testator for his son’s proper maintenance, education and advancement in life under section 59 of the Succession Act 2006 (NSW), though a legacy of $15,000.00 was provided to allow the Appellant to discharge his loan obligations.
Court of Appeal
The Appellant brought a claim to the Supreme Court, claiming that the primary judge had erred in holding that a provision should have been made under section 59 in his favour. This was argued on two grounds:
- The Appellant was suffering from mental health problems, which might have been the result of an earlier drug addiction, and now relied on disability support pension. He was, at the time of trial, 43 years old and could not find regular gainful employment; and
- The Appellant’s stepmother was comfortably provided for in her old age, and the provision would not substantially diminish her welfare or quality of life.
However, Justice Basten of the Appeal Court disagreed, arguing that the section 59 provision was still not satisfied.
On the first ground, the Court said that the Appellant had remained financially independent since the age of 18, and that there had been no material changes to his circumstances since the deceased’s Will was formed in 2013, or since the deceased has passed away in 2015.
On the second ground, the Court argued that the stepmother’s ability to live off her income would be significantly diminished if the Appellant’s request of $100,000.00 was to be approved. The Appellant had also not been cut from the family and was free to call his stepmother for financial assistance if he needed it.
Lastly, The Applicant also failed to attend a mandatory settlement conference, providing further weight to the stepmother’s case.
Hence, the Court dismissed the appeal and ordered that the Appellant pay the Respondent ’s costs.
Case Study 2: Warton v Yeo [2015] NSWCA 115
Facts
The deceased was one of four children. He was never married and had no children. In his final Will, he listed under clause 6(b) that 25 percent of his residuary estate was to be left to his sister, Ailsa, with a gift in terms that
“if she should die before me, then to such one of her children shall survive me and if more than one in equal shares”.
The deceased had an interest in a retirement village unit that was still to be sold as an asset of the estate. Ailsa predeceased the deceased. The issue now before the Court was that Ailsa had one natural child and four stepchildren from her husband’s first marriage. The deceased’s Will had not clarified whether ‘children’ under clause 6(b) included stepchildren.
Two of Ailsa’s stepchildren (“the Appellants”), also representing the two remaining siblings, sought a Family Provision Claim over this particular Estate.
Primary Judgment
The primary judge held that Ailsa’s share of the property was only to pass onto her natural child. This was based off clause 5 of the deceased’s Will, which specifically mentioned that any children would be either his ‘niece’ or ‘step-niece’, or ‘nephew’ or ‘step-nephew’.
The judge also referred to the definition of ‘stepchild’ laid out in the Macquarie Dictionary and of s 40A of the Succession Act 1981 (Qld) (to which no equivalent provision existed in the NSW legislation), to find that a stepchild did not count as a ‘child’.
Supreme Court Decision
The Appellants brought the case to the Supreme Court, arguing that the use of the plural word ‘children’ in clauses 6(b) and 9(c) in the Will meant that it included the stepchildren, and that the deceased would have just mentioned the second Respondent rather than using the phrase ‘such one of her children’.
Justices Ward and Emmett allowed the appeal, stating that Wills are to be read as a whole and give rise to the intention of the Testator at the time of the Will’s formation. This is legislated for under section 32 of the Succession Act 2006 (NSW), which states that extrinsic evidence may be used to construe wills when it is either:
- Meaningless, or
- Ambiguous on the face of the will, or
- Ambiguous in the light of the surrounding circumstances.
Justice Basten also referred to the ‘armchair principle’ laid out in the British common law case of Allgood v Blake (873) LR 8 Ex 160, in which Justice Blackburn stated that:
“the Court is to put itself in the position of the Testator and consider all material facts and circumstances known to the Testator, with reference to how he is to be taken to have used the words in the will”.
Ultimately, the Court found that there was a strong indication that the use of the plural word meant that the deceased had intended to include his step-nephews and step-nieces in the residual gift. This was because:
- The deceased was aware that his sister had more than one child and reflected this through the phrase “her children”, and
- The phrase “her children” itself is predicated on the existence of more than one child.
Hence, the estate was partially distributed, with costs payable from the proceeds of sale of the deceased’s estate.
Hire the Best Wills and Estate Planning Lawyers Today
If you are seeking help with your next Family Provision Claim or with any other Wills or Estate Planning matter, it’s time to find a reliable and experienced Wills or Estate Planning lawyer.
Here at JB Solicitors, we will make the process as pain-free as possible. We have fixed-free pricing for Wills & Estate Planning, giving you a clear sense of the costs from the start and will be sure to help you out every step of the way.
With years of experience under our belt, we pride ourselves in making each client’s Wills & Estate Planning experience as positive as possible.
Contact JB Solicitors to get started on your Wills and Estate Planning matter, or for assistance with any other legal matter.
