Can I exclude my stepchild from my Will?
With the growing number of blended families, the need for parents to financially assist their children and stepchildren in purchasing property, the aging group of baby boomers, the growing number of Self-Managed Superannuation Funds and aging family businesses, Australians are experiencing a significant increase in the number of family provisions claims and contested estates.
Statistics have indicated that the Will maker’s children or stepchildren bring many family provision claims.
Consider the following scenario:
Your client inherited 100% of his partner’s estate a few years ago and now wishes to update his will to leave the majority of his estate to his biological children and to completely exclude his stepson.
He informs you that during his relationship with his partner, they spent a substantial amount of money supporting the stepson. This included putting a roof over his head, paying for his education and living expenses and an advancement of a loan of $30,000.00 to assist with the purchase of an investment property.
Your client shares further details on how his stepson has never respected him, cared for him, or contributed to the estate and he has not spoken to the stepson for the past five years since the passing of his partner. The loan of $30,000.00 has never been repaid as promised and there is no written agreement in place.
How can you assist?
Whether you are a financial planner, accountant or an advisor, estate planning is often a crucial and yet difficult topic to openly discuss with your clients. A common problem advisors experience which limits their ability to create long lasting client relationships stems from the inability to engage with their clients regarding their estate planning affairs and simply not asking the right questions.
Family Provision Claims
As an advisor, to ensure that an open discussion can occur to address potential claims with your client, you must ensure your client is aware of the following individuals that potentially may have a claim on their estate:
- A spouse or former spouse partner;
- A person whom the Will maker was living in a de facto relationship with at the time of their death (including same sex partners);
- A biological child;
- An adopted child;
- A child whom the Will maker had long-term parental responsibility for;
- A grandchild who was also a member of the Will maker’s household;
- A person who was dependent on the Will maker; and
- A person who was living with the Will maker in a close personal relationship at time of death.
If your client has intentions to make provisions in their Will to limit or exclude the above class of individuals, significant care must be taken to ensure that the client seeks proper estate planning advice from an estate planning lawyer and considers whether they can take steps to mitigate the risk and protect their estate.
If you inform your client that he is entitled to leave his estate to whomever he wishes you must ensure he is properly advised that that the Court has the power to alter the provisions of his Will, if the Court is satisfied that the Will has not made adequate provisions for the proper maintenance, education or advancement in life of the person in question.
Succession Act 2006 (NSW)
In NSW, pursuant to the Succession Act 2006 (NSW), a stepchild of a deceased person might be classified as an eligible person to make a family provision claim for provisions from the step parent’s estate. The stepchild, would be predominately required to describe the present or past circumstances that would warrant the making of a family provision application. Commonly, the stepchild would need to prove that they were at any particular time wholly or partly dependent upon the Will Maker.
There is no one size fits all strategy to prevent an individual from making a family provision claim, however, there are certain steps to be considered to seek to mitigate and minimize the chances of a successful application being made which may include reviewing or changing:
- the ownership structure of certain assets;
- the holding or transferring of assets into a discretionary or unit trust;
- the binding death benefit nominations for Self-Managed Superannuation Funds or retail superannuation funds and life insurance policies;
- the structure of interests held within a company;
- the making of gifts and loan agreements entered into by the client; and
- the estate plan, including their Last Will and Testament, Enduring Power of Attorney, and Enduring Guardian.
As an advisor, you must ensure that proper estate planning advice is firstly obtained before a decision is made to alter their financial affairs as the Succession Act 2006 (NSW) enables the Court to treat certain property transferred (within 3 years of death) prior to the deceases death to form part of a deceased estate as being notionally part of their estate. The Court not only looks at the assets that were actually part of the deceased’s estate on death but also the assets of the notional estate. This can increase the prospects of a family provision claim succeeding, as well as the potential sum (including costs) that the Court may award to the claimant.
Estate Planning Advice
At MistryFallahi Lawyers & Business Advisors, our estate planning lawyers work closely with advisors to navigate the complexities of succession and estate planning. We will work closely with you to ask the right questions and to engage with you at a deeper level to ensure we implement the right estate planning strategy.
Feel free to contact us to assist you and your team in developing strategies and estate planning questions to ensure that you are providing your clients with a comprehensive estate planning solution.
You can contact our legal team to discuss your estate planning questions and how we can help you and your team on (02) 8094 1247 or email us at firstname.lastname@example.org.