As published in CK Momentum Issue 2 (Click here to download)
For most of us, the idea of our family members having a dispute over their entitlements under our Will is distressing.
Litigation & Insolvency Partner, Sarah Davies, looks at some of the steps you can take to avoid a dispute arising after you pass away.
Generally, a Will is contested because it hasn’t been correctly signed, it is forged or fraudulent, the testator lacked capacity at the time it was made or was subject to undue influence. Even if the Will is otherwise beyond reproach, a spouse, child or dependant may bring a family provision claim if they feel that adequate provision has not been made for their proper maintenance and support.
With that in mind, a number of steps can be taken to minimise disputes after your passing:
- HAVE A WILL: While this is obvious, many people don’t have a Will. A well drafted Will can ensure your assets go to the right people, that they are managed in accordance with your wishes (including, in appropriate cases having a testamentary trust, which is established under your Will to minimise tax and protect assets) and the potential for disputes to arise is minimised.
- CREATE AN ESTATE PLAN WHILE YOU ARE HEALTHY AND OF SOUND MIND: Don’t leave it until you are unwell to think about your estate plan, as you may have other more important things on your mind and emotions are likely to be high. Wills made when the testator is unwell or nearing the end of their life are more likely to be challenged. If there might be doubt about your mental capacity, then take the precaution of having your lawyer and doctor involved in the signing of your Will, so they can give evidence later if required that you had capacity at the time you signed it. You might also consider getting a medical assessment done before you give instructions for your Will to be prepared.
- SEEK INDEPENDENT LEGAL ADVICE: Make sure you make your own choice about which lawyer you’ll use. Importantly, don’t take any of the beneficiaries with you when you are giving instructions for the preparation of your Will or signing it – as this will ensure the chances of anyone alleging undue influence are minimised. If the Will is done with proper independent advice, as part of a well thought out estate plan, then it will be difficult to challenge. A good lawyer will also make sure the formalities for signing your Will are complied with.
- CONSIDER WRITING A MEMORANDUM OF WISHES: A Will is a formal document, and there are lots of matters that it cannot adequately record: such as your wishes in relation to your funeral and your reasoning behind the division of your assets. Recording these things in a letter to be placed with your Will can give your beneficiaries a better idea of your wishes so that these are not misconstrued later. This can be particularly important if you are excluding someone who will expect to inherit or if you are leaving a larger than expected amount to someone. Explaining your reasoning won’t stop a family member from making a family provision claim if they think they have a right to maintenance, but it can help to minimise the chance of other types of claims and will be useful evidence for you executors to rely on.
- CONSIDER DIVISION OF SENTIMENTAL ITEMS: Listing personal effects and dividing them between your beneficiaries can reduce the likelihood that they will fight over their distribution. This is particularly the case if certain items have sentimental value within the family. Carefully considering personal gifts and discussing your thoughts with your beneficiaries can help to set their expectations well before the event.
- DEAL WITH LIFETIME GIFTS AND LOANS: If you’ve advanced money to your children during your lifetime, then it is a good idea to be explicit about how those advances are to be treated. Are they gifts that don’t need to be repaid or loans? Should they be considered an advance on inheritance which might be the reason for leaving that child less under the Will? In the same vein, make sure any assets that are held jointly with your family members for convenience are properly dealt with, otherwise they might end up as an unintended gift.
- REVIEW YOUR ESTATE PLAN: Your Will needs to be reviewed regularly, particularly if there are changes within your family because of births, deaths, marriages or divorces. As your assets change over time, it will be necessary to review what provision you’ve made for any dependents and whether or not they are adequate. You also need to review the state of your superannuation, and how this will impact on the amount family members will receive.
