Who is Eligible to Contest a Will

Who can bring a claim will depend on what State or Territory the claim is made.

In NSW, the people who are eligible to bring a claim against the deceased’s estate are:

• spouse
• de facto partner
• child (including adopted child)
• former spouse
• a grandchild who was, at any time, wholly or partly dependent on the deceased
• a former member of the deceased’s household who was, at any time, wholly or partly dependent on the deceased; and
• a person with whom the deceased was living in a close personal relationship at the time of the deceased’s death.

In the case of the last four categories (former spouse; dependent grandchild; dependent former member of the household; or those with whom the deceased person was living in a close personal relationship) the person must also show that there are ‘factors which warrant the making of the application’. What this essentially means are circumstances which make the claimant someone who the deceased had a moral obligation to provide for.

Can you Stop someone from Contesting a will in Australia?

Although it is not possible to stop someone from contesting a will, there are steps a person can take to reduce the risk of a claim, in some cases, to nil.

Depending on the circumstances, the steps include:

1. Engage an experienced wills and estate lawyer to advise on and prepare a tailored estate plan.
2. Obtain a court-approve release from the disinherited person.
3. Gift assets to chosen beneficiaries before they die.
4. Restructure assets.
5. Sever Joint Tenancies.
6. Move to another State.
7. Use Binding Death Benefit Nomination forms.
8. Engage an Executor who you Trust to Defend your Wishes.
9. Have a Voice from the Grave.
10. Provide adequate provision!

Tip 1: Engage An Experienced Wills and Estate Lawyer When Drafting Your Will

A person wanting to disinherit a close friend or relative should avoid using an online will service or Post Office Will Kit. These services can be a recipe for disaster particularly in the case of disinheritance.

Instead, they should seek advice from a lawyer who practises solely in wills and estates law and who has the relevant experience in estate planning.

An experienced wills and estate lawyer will have the skills to identify and advise on the risks of excluding someone from a will and advise on the steps the person can take to best protect their estate against future claims.

Tip 2: Obtain a Release from the Disinherited person and have it Approved by the Court

In NSW, one of the best ways to obtain protection against a family provision claim is to obtain a court-approved release from the potential claimant.
In practice, what this usually involves is the person with the estate negotiates with the potential claimant and the parties enter into a written agreement within which the potential claimant waives their right to bring a claim against the estate. Once signed, the parties approach the Supreme Court of NSW to seek approval of the agreement under section 95 of the Succession Act 2006 (NSW). Once approved by the Court, the potential claimant will be completely barred from bringing a claim against the estate in the future.

In some cases, the person who seeks the release may need to pay the potential claimant to provide the release. However, the payment is negotiated between the parties and may be considerably less than what the estate may have to pay in legal costs and provision for the potential claimant, if they bring a successful claim in the future.

Tip 3: Gift Assets to Chosen Beneficiaries before you Die

Only those assets which a person owns at their death (solely or as tenants in common) fall into their ‘deceased estate’.

Other property and assets which do not ordinarily fall into a person’s deceased estate include those held:

1. in private companies.
2. in discretionary family trusts.
3. in superannuation.
4. as joint tenants (as the property passes automatically to the surviving joint tenant under the rules of survivorship).

Therefore, a person may choose to divest their assets to their chosen beneficiaries before they die to avoid those assets falling into their deceased estate.

Early gifting may, however, give rise to disadvantages including tax consequences, impacts on welfare entitlements, and in extreme cases may result in the person being left without adequate assets in old age.

In NSW, early gifting may be less effective in shielding assets from claims as assets gifted within 3 years of the deceased’s death may be clawed-back into the estate in certain circumstances.

Tip 4: Restructure Your Assets

Like early gifting, another way to reduce the risk of a claim against an estate is to restructure assets to reduce the number of assets a person holds at death.

Asset restructuring may involve transferring assets into a private company or discretionary trust and distancing oneself from control of that new entity.

Asset restructuring prior to death can be an extremely effective way of preventing future claims against an estate on the basis that claims are not likely to be made if there are no assets.

However, as with early gifting, asset restructuring can give rise to considerable tax consequences, may reduce the person’s control over the asset and their ability to benefit from it, and in extreme cases, may leave a person without adequate assets when they may need them the most.

As with early gifting, asset restructuring may be less effective in NSW as assets divested within 3 years of the deceased’s death may be clawed-back into the estate in certain circumstances.

Tip 5: Sever Joint Tenancies

A person may hold assets as ‘joint tenants’ or ‘tenants in common’ with another person.

In the case of ‘joint tenants’, where a joint tenant dies, full ownership of the assets passes automatically to the surviving joint tenant under the rule of survivorship.

In NSW, however, these assets are at risk of being clawed back into the estate in certain circumstances.

Therefore, a person who holds property in NSW as joint tenants with another person may consider severing the joint tenancy before death to avoid the whole of the asset being at risk of a family provision claim against the estate of the first to die.

Take, for example, a husband and wife who own a house as joint tenants. The husband was previously married and has children from the prior marriage. If the wife wants to protect her half of the house, she may sever the joint tenancy resulting in each of them owning 50% as tenants in common. This would result in her 50% share being protected from claims by the husband’s ex-wife or his children from the prior marriage.

This is often a simple and cost-effective way of protecting half of a family’s largest asset in a blended family scenario.

Tip 6: Relocate from NSW to another State

As set out above, in the case of ‘joint tenants’, where a joint tenant dies, full ownership of the assets passes automatically to the surviving joint tenant under the rule of survivorship.

In most States, this has the potential to place the asset outside the reach of a family provision claim. However, an exception is NSW where even assets held as joint tenants may be clawed back into the estate in certain circumstances.

Therefore, one strategy that a resident of NSW may adopt is to relocate to another State and purchase assets in the new State as joint tenants with the person whom they want the asset to pass to upon their death.

Tip 7: Use Binding Death Benefit Nominations

Superannuation is an asset held on trust for the member until retirement.

When a person dies, their superannuation is paid to beneficiaries in accordance with a Binding Death Benefit Nomination form (BDBN) or where there is no valid BDBN, in accordance with the trustee’s determination.

By ensuring a valid BDBN is in place, a person can ensure their death benefits (including life insurance proceeds) is distributed to their choice of beneficiaries (i.e. spouse or select children) and not to those who they did not choose.

However, an exception applies in NSW where a person’s death benefits may be clawed-back into an estate in certain circumstances, regardless of the BDBN.

Tip 8: Engage an Executor who you Trust to Defend the Claim

Among other roles, an executor is responsible for defending claims against the estate.

Therefore, it is important to choose an executor who is trusted to defend the will.

In practice, a person wanting to bring a family provision claim will usually notify the executor of their intention to bring a claim before they commence proceedings. The executor would then seek legal advice on the prospects of success of the claim and seek the views of the beneficiaries who may be impacted by the claim.

In some cases, the executor may, with the consent of the impacted beneficiaries, negotiate an outcome. Negotiations can often result in favourable outcomes to the claimant, but this may not be in accordance with the deceased’s wishes.

In other cases, the executor may defend the claim without concession and write to the claimant setting out the legal reasons why their claim is likely to fail including a detailed reference to any factors that may weaken the strength of the claim. The executor may also put the claimant on notice that should their claim prove unsuccessful, the estate will seek orders for the claimant to pay their legal costs.

Therefore, the choice of executor can often impact what direction a matter may take.

Tip 9: Have a Voice from the Grave

One of the factors a court may consider when a claim is made against the estate is the deceased’s wishes.

Whilst the deceased’s wishes can be gleaned from the will, the will does not usually include the reasons for the deceased’s specific dispositions. Therefore, it can often be helpful for the deceased to prepare a separate document explaining the reasons for distributing the estate in the manner they have or the reasons for leaving a particular person out of the will. It gives the deceased a voice from the grave. The executor can then rely on this document to defend future claims, should the need arise.

Whilst these documents may not provide absolute protection, they will go some way in helping to defend a future claim.

Great care needs to be taken when preparing these documents as they may be counterproductive if they contain the wrong information.

Tip 10: Provide Adequate Provision to all Who have Claim

It’s cliché to say that claims usually only arise where a person is disappointed with the amount they have received under the terms of a will.

Therefore, a person can usually protect against a claim by leaving everyone who may have a claim against the estate ‘adequate provision’ as opposed to a nominal amount or worse, nothing.

The difficulty, however, lies in determining what might constitute ‘adequate provision’ as this is only ever something that a court can determine at the time of determining an application. Simply stated, it is not something that a lawyer can calculate or forecast with any precision.

While a lawyer cannot advise a client how much to leave any particular beneficiary, a lawyer can advise a client of the risks of future claims against the estate and can advise a client whether the provision made for a particular beneficiary is likely to constitute ‘adequate provision’. The lawyer can give consideration to the factors that a court may consider when providing this advice. The client can then determine whether to adjust the provision for any particular beneficiary based on that advice.

Seek Professional Advice

Each of the above strategies have both advantages and disadvantages.

Any person interested in one or more of the above strategies should seek advice from an experienced solicitor, accountant and financial adviser before deciding on their chosen course.

How Can Empower Wills and Estate Lawyers Help?

We have extensive experience in designing estate plans which disinherit specific individuals.

If you would like to disinherit someone or need help to defend your will or estate from a claim, contact us now on 1300 414 844.

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Disclaimer: the information in this article relates to NSW law as at the date it was written and is general information only. It does not constitute legal advice and should not be relied upon as legal advice. It may contain information or links to sources which are no longer current. If you have a question or legal issue, we recommend you contact a lawyer and obtain legal advice that takes into account your specific facts, circumstances, needs and objectives.