I am often asked the question, “Why should anyone bother to invest time and money into making a Will when it can be challenged anyway? or “Why bother with a Will at all?” It seems that they don’t uphold the person’s wishes even if there is a Will, so why bother?”
The short answer is – you should bother, for many reasons. Most importantly, so that your family doesn’t end up saying “Oh Bother!” when a mess eventuates in estate administration. That’s a cheesy joke, but the consequences often mean the end of close family relationships and unnecessary legal fees to boot.
But first, what is estate planning and why should you do it?
Estate planning involves a holistic view of a person’s wealth and putting in place tailored measures to allow the person to plan out the division of their wealth when they are no longer alive.
This may involve a combination of a Will (which may or may not incorporate discretionary testamentary trusts), family trust structures, and tax planning.
If you DO have a Will then you have a say in who distributes your estate as the executor and how your estate is divided. With a solid estate plan, your executor will be able to administer your estate in a tax-effective way.
If you DON’T have a valid Will, the law sets out the way your estate will be distributed based on your circumstances when you die. Different divisions of the estate depend on who survives you. One or more of your family members could make an application to the court as an administrator of your estate, and your estate would be divided according to the prescribed statutory formula.
The problem is… this division may not be what YOU had in mind for your family and your circumstances. Would you feel comfortable about your estranged (but not yet divorced) spouse, or your estranged parent, child, or (half-)sibling taking a share of your estate? How about those gifts to your nieces and nephews who treated you so well? How about the forgiving of debts? What about family heirlooms? What if you wanted to make sure your own mother who lives with you gets to continue living in your house after you’re no longer around? How do you adequately account for asset protection for your children and their children after them if they come into a large amount of cash or assets, particularly if there are risks of marital breakdowns or if your beneficiaries fall into bankruptcy?
All that we’ve just mentioned can be covered in your Will and in your holistic estate plan.
But yes, I hear you! “That’s all well and good, but why set this up if it can just be torn down at a moment’s notice? If I don’t want to benefit certain people, or if I want to give more to some rather than others, that should be my choice!”
Yes, even if you did everything right, and made a Will, then your Will can still be challenged to say that they want more.
However, this does not mean that just anybody can make a challenge on your Will and any challenge will result in your Will being changed. This is not the case.
Firstly, the legislation provides that only certain persons, such as children, spouses, can make challenge on your Will. This law exists to ensure that you provide adequately for people for whom you have an obligation to provide. It is, however, not easy for the person challenging the Will to show that the Court should intervene to fix it.
This brings us to our second point. It is difficult for someone to make a challenge on the estate even if they are an eligible person, particularly if their only intention is that they have their eyes on a larger pay-out from the estate without showing that there was an existing dependency or that they have not been adequately provided for. The Court has no power to equalise the estate, distribute it ‘fairly’, or re-write the Will just because someone kicks up a fuss. The Court will, as much as possible, try to maintain the terms of the Will and will only disturb the terms to the minimal extent necessary to adequately provide for the applicant.
Even if it is a relatively easy for an eligible person to challenge to a Will, it is not an easy journey. The good news is, proper estate planning will give you the opportunity to address the potential issues that may arise by ensuring you adequately provide for everyone who needs to be and put in place measures that will act as shields to allow your executor to be able to defend your wishes in the face of a challenge to your Will.
So, you should bother – don’t leave it up to chance. You should bother to invest in your peace-of-mind. You should bother to ensure that those who you leave behind know what you want to happen. And you should bother to plan this early.
Here at Farrar Gesini Dunn our specialised estates team deals with starting or defending challenges to Wills every day. If you need advice about a challenge to a Will in Canberra or in New South Wales, then give us a call on (02) 6181 2050.