Competing Claims: Spouses v Adult Children

In Australia, around 1 in 3 first marriages are ending in divorce, and as a result we are seeing a substantial rise in the prevalence of blended families. This rise in blended families is also bringing with it a rise in Estate disputes between spouses from the second marriage and adult children from the first.

Parents entering these second relationships are often unwittingly jeopardising their children’s entitlement by simply relying on the good faith of their new partner if they were to die, rather than producing a properly constructed Will. The problem is that more often than you would be surprised, the new spouse does not adhere to this ‘good faith’ principle, and very quickly a nasty Estate dispute is on the cards.

Case Law

Adult Children Generally

Under Victorian law, a child of the deceased, whether being a minor or an adult, is always eligible to make a claim under a Will. Generally speaking however, a parent will not be expected to look after their child for the rest of the child’s life. Yet, if a child remains dependent of a parent or it can be established that they for example are financially insecure, have a disability themselves or have a vulnerable child to support, the court will ensure adequate provision has been made for their proper maintenance and support. There is no set criteria for what is considered ‘adequate’ and what is not, it is always relative to the case itself, with the Court “taking into consideration the claimant’s needs but also the capacity and resources for meeting them”.[1] 

Spouses Generally

Regarding spouses, the general duty of the deceased to his or her spouse is to ensure that he or she is secure in the matrimonial home, has sufficient income to permit him or her to live in the style to which he or she is accustomed and provide him or her with enough funds so to meet any unforeseen contingencies in the future. As you can see, unlike an adult child, a spouse does not need to prove any such ‘extra’ need.

Clark v Ro [2016] NSWSC 1877

Although with each Estate law case, much depends on the specific relationships in issue, the major issues that tend to arise in spouse v adult children cases have been well illustrated in the recent Supreme Court of NSW case – Clark v Ro.[2]

General Facts:

The deceased left an Estate approximately to the value of $1, 069, 258. He separated from his first wife with whom he shared a child with (the plaintiff in the proceedings) in 2000, commencing a new relationship with his second wife (the respondent in the proceedings – “Anna”) that same year. The deceased divorced his first wife in 2001, married his second wife in 2008 and remained married to her until his death in 2015. The relationship between the deceased and Anna spanned about 15 years, there were no children of their marriage, although Anna did have a disabled child of an earlier relationship.

The deceased left his entire Estate to Anna, making no provision for the plaintiff.

The Second Wife:

Anna submitted that she had made a significant contribution to the welfare of the deceased both financially and emotionally over the 15 years, this was established. She also submitted that she needed funds to care for her disabled son, and to fix the house her and the deceased had lived in as it had become dilapidated. She owned an investment property worth $1.35 million from which she received rent, but had no other assets of great significant

The Child:

The plaintiff was unemployed due to an anxiety condition, had debts of about $103,000 and wished to enrol in a university course to change careers. He lived in rental accommodation with his wife who earned about $54,000 per year, they were both members of a self-managed super fund that owned a parcel of real property that had been purchased for $340,000.

The plaintiff sought $555,000 from the Estate so that he could pay his existing debts, cover the cost of the proposed university course and any expenses occurring over the four year period whilst he studied, as well as to put a deposit on the family home, and to have some left over funds for contingencies.

Principles:

The Court laid out some general principles concerning Family Provisions Claims of this nature. Regarding adult children, as aforementioned, they are not to expect to be looked after for the entirety of their life, but if they remain dependent on a parent, have fallen or hard times, do not have money to meet demands of ill health, or are unable/has a limited means of earning income this could give rise to an increase call on the Estate of the deceased. The child as an applicant does not need to show a special need, but has the onus of satisfying the Court that on the balance of probabilities their claim is justified, which evidentially usually involves some sort of ‘need’.

Regarding spouses, the position of a surviving spouse does not automatically attract supremacy over competing claims, but the deceased does have an obligation to provide him or her with effectively the matrimonial home and a ‘nest egg’. Further, where competing factors are more or less equal, an elderly widow will be seen to take paramountcy because they will be permanently unable to increase their income in comparison to an adult child who is treated as having the capacity to improve their financial position in the future.

Findings:

The court held that in light of Anna’s circumstances, the plaintiff was not entitled to the sum of $555,000 as requested, particularly because that would amount to Anna having to sell her matrimonial home.

The Court instead awarded the plaintiff a sum of $130,000, as the deceased had an obligation to the plaintiff to make provision for exigencies of life, and this could be used to pay off his debts.

Conclusion:

This case demonstrates that it truly is a balancing act between the situation of the spouse against the child, but the Courts are moving more in favour of spouses rather than adult children. This is also suggested by the recent changes in intestacy law as outlined below.

Intestacy Law

Ever since November 1 2017, for every person who dies without a Will, their Estate is subject to the amendments made to the Administration and Probate Act 1958 (Vic).

It was previously the case that if the intestate left a partner and a child or children, the partner was entitled to the first $100,000, and one third of the Estate, leaving the child or children two thirds of the balance.

New Law – Spouse v Children:

Now however, the law makes a distinction between children of that partnership and children of a previous relationship, whilst weighing the division dramatically more in favour of the surviving spouse.

As a result, if a partner and a child or children of that remains, then the partner is entitled to the whole of the estate, and the children receive nothing.

Alternatively, if an intestate leaves a partner and a child or children not of that partnership, then the surviving partner will receive all the intestate’s chattels and the “statutory legacy” which previously was $100,000 but has now increased to $451,909 and 50% of the residuary estate. The children of the intestate then share in the other 50%, but if the estate is worth no more than $451,909 then the child(ren) receive nothing.

Conclusion:

What both the case law, and reform of intestacy law together demonstrate is that the Courts are leaning dramatically more in favour of the surviving spouse rather than the children. In fact, State Attorney General Mr Martin Pakula in the second reading speech of the intestacy law amendments stated that the aim was to do exactly that; with the changes being made so to “improve the position of a deceased’s partner in the event of an intestacy”.

Now, although the law does provide increased certainty for a surviving partner, if this is not the outcome you deem fit do not hesitate to give our team of Estate Lawyers a call today and we can assist you in contesting a will.

[1] Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19
[2] [2016] NSWSC 1877