Recent Family Protection Act Decisions
In 2019, I wrote an article headed “Obligations when making a Will”. In particular, I focussed on the provisions of the Family Protection Act (“the Act”) – who could claim, the evidence required from the claimant and the criteria that the Court had to consider. Two recent cases are referenced here:
Adequate provision “for the proper maintenance and support” – allowance for gifts during lifetime
Section 4 of the Act provides for the Court to make a provision out of the deceased’s estate for a claimant where there has been inadequate provision in the Will for the claimant’s “proper maintenance and support”.
In an appeal to the High Court, from a Family Court decision, some adult children of the deceased (M) had made a claim against the estate as they received nothing in the Will. M’s reason for making no provision in her Will had been recorded before her death, being that those children had received gifts during her lifetime.
The High Court considered “that proper support is a matter of judgment in the circumstances of the particular case and may take the form of lifetime gifts. It follows that inter vivos dispositions (gifts between living persons) can be taken into account when considering whether a testator (will-maker) has discharged his or her moral duty”.
The Court further considered that it needed to undertake a proper assessment of each claimant’s financial needs when considering whether M had made proper provision for their maintenance and support. The Court accepted that it had to determine the adequacy of each claimant’s financial circumstances and the ability to alleviate those circumstances by making an appropriate provision.
In this decision, the Court determined (from an estate worth $791,000) that a notional share of $79,000 per child should apply. From that notional amount the Court deducted amounts (“benefits”) that each child had previously received during M’s lifetime. The Court awarded the sums of $75,000, $70,000, $$40,000, $20,000 and $15,000 respectively. The balance of the estate went to the remaining beneficiaries named in the Will.
What moral duty does a father owe his children and his grandchildren?
In another High Court case, the deceased had a significant Lotto win some 6 years before his death. He had separated from his wife many years before, had little contact with his children since that time and had no contact with his grandchildren. At the time of his death his estate was worth $17 million. He had made a Will but left nothing for his children or grandchildren. However, he had created a Family Trust that had, amongst its beneficiaries, his children and his grandchildren. His Will provided for the vast majority of his estate to go to his Family Trust.
The Court observed that the deceased’s “wishes as reflected in the Will, Trust and Memorandum are to be disturbed to the least extent possible after making proper provision for the Children and Grandchildren pursuant to the Act”. The Court identified that it is not authorised to re-write a Will. There must be testamentary freedom relative to claims by adult children. Any Court order “had to be limited to the amount required to repair the breach of moral duty”.
In this case the 4 children sought $3 million each. The Court held that the deceased “exhibited disinterest in the Children”. The Court assessed that “a wise and just testator in [the deceased’s] position would have made provision of $1,250,000 for each of the Children in light of the circumstances”.
The Court made no provision for the grandchildren. It said “while a loving grandfather might well make some provision for his grandchildren in his Will, that does not mean he fails in his moral duty towards them if he does not do so”. It concluded “with each of the Children receiving $1.25 million, their financial positions will be significantly improved and they can be expected to provide for their own children”.
This decision effectively left about $10 million for the Family Trust out of which the children and grandchildren could benefit as well.
Testamentary freedom (freedom to bequeath your assets by Will as you wish) is important but this does not override your responsibility to consider and, in appropriate cases, provide for immediate family members. The Family Protection Act is always in the background and is a consideration we always raise with clients when taking Will instructions.