Estate disputes: are verbal promises made before death legally enforceable?

An individual can change the entire trajectory of their life based on a verbal agreement. Major decisions can be influenced by the belief that they will be inheriting certain assets, such as a family property.

When so much can ride on both party’s commitment to what was discussed, in the event of one’s passing, seeing that this hasn’t been honoured in their final Will and testament can make it feel as though the rug has been pulled out from under you.

For those in this position who are already mourning the loss of a loved one, the confusion that comes with unexpectedly being excluded from their Will can be devastating.

What’s more, you may have relocated, accepted or quit a job, or even provided the testator with services free of charge with your promised inheritance in mind. Because of this, the deceased’s Will could completely uproot your plans, which you were led to believe would be a certain thing.

All of this considered, there are options you can pursue if you are unsatisfied with the inheritance bequeathed to you by the testator, based on a verbal promise that was made.

Your options for disputing the estate

When the Will is unfair

The most conventional approach for contesting a Will is pursuing a family provision claim. In such cases, the claimant believes the deceased failed to provide them with adequate provision for proper maintenance and support.

Before the matter is resolved through mediation or court proceedings, it must be established that the applicant is an ‘eligible person’. The legislation detailing this, under Section 91 of the Administration and Probate Acts 1958 (Vic), underwent reform in 2015. Based on this, only the following people can contest a Will:

1. Spouse or domestic partner (registered or unregistered) at the time of death;
2. Child of the deceased (including adopted or step child, or someone who believed the deceased to be their parent and was treated as such) who at the time of death, was:
   • Under the age of 18
   • A full-time student under the age of 25; or
   • Suffering from a disability
3. Adult children
4. A registered caring partner
5. A grandchild
6. A person who was (and was likely to be in the near future) a member of the deceased’s household.

When a verbal promise has been made

If you believe you are entitled to a certain portion of the deceased’s estate based on a verbal promise that was made, you can make an ‘equitable’ claim.

While only an ‘eligible person’ can make a family provision claim, when it comes to equitable claims, this is not a requirement.

Another difference in these approaches is how a successful applicant’s provision is decided. In Will contest cases, the Court determines how much provision is fair for the claimant to receive, whereas a successful equitable action sees them gain what they were promised by the testator.

These claims can generally be categorised under one of two core legal principles; equitable estoppel and/or constructive trusts.

Estate disputes: legally enforcing verbal promises made before death

If verbal promises made between yourself and the deceased were not honoured in their Will, you can dispute the estate. The approach you take will be dependant on the specific details of your case and what was promised.

Equitable Estoppel

Your first option is a claim based on equitable estoppel. This legal principle is based on the notion that a party acting in a way that’s inconsistent with their prior action of conduct ought to be prevented.

Recently, amendments were made to the Administration and Probate Act 1958, which further restricted the categories of people who are eligible to lodge family provision claims against a deceased estate. Since this, equitable estoppel has become a growing area of estate litigation because, as mentioned, you do not need to be an ‘eligible person’ to make a claim of this nature.

Equitable estoppel can be broken down into two types; promissory estoppel and proprietary estoppel.

Promissory Estoppel

Promissory estoppel is relevant in instances where:

• The deceased made a verbal promise to the claimant;
• The claimant believed this promise was true;
• The promise was not honoured in the deceased’s Will;
• The claimant relied on this promise and, because it was excluded from mention in the testator’s Will, they were disadvantaged.

For claims of this nature to be successful, it must also be shown that, given the claimant’s reliance on the promise, it would be unconscionable for the deceased estate to not be bound by this promise. While case technicalities can vary, if this can be done, then the claim will likely hold merit if pursued legally.

The fundamental purpose of this area of law is to remove the harsh consequences at play when there is no written contract, but the involved parties have conducted themselves in a way that demonstrates there was an agreement.

Proprietary Estoppel

While proprietary estoppel also covers cases where a promise wasn’t reflected in the deceased’s Will, it looks more specifically at the legal rights of landowners.

In cases that would fall under proprietary estoppel, the deceased led the claimant to believe they have some entitlement over a certain property or properties. Both parties then acted in a way that was based on the verbal promise that was made and understood.

A common example of this is if the claimant made some form of improvement or alteration to the land or property, believing they would inherit it. This is often seen when a child works on their parent’s farm over a period of time without a working wage or the like, as they have been promised they will eventually inherit the farm.

When this promise then isn’t honoured in the testator’s Will, the plaintiff can be left feeling as though they have sacrificed their time, money, future plans and more for nothing. This is where current legislation has the potential to help them achieve a fairer outcome, which is the outcome they were promised in the first place.

Case Law: McMillan J in Re Mahoney [2015] VSC 600

A prime example of how proprietary estoppel principles are applied can be seen in the recent Victorian case of McMillan J in Re Mahoney [2015] VSC 600.

This case saw the deceased provide for all six of her children; two sons and four daughters, in her Will. Her farm was left to one of her sons, the defendant. On the same day the deceased’s Will was executed, ownership of the farm, livestock and chattels was transferred to him.

The remainder of her estate assets were divided equally between the other five children. One of these beneficiaries; the deceased’s son, later became the plaintiff. He argued there was a common understanding between the family members that, when the testator died, the defendant and plaintiff would inherit the farm, livestock and chattels, along with the estate’s residue.

The plaintiff claimed that, based on this promise made by the deceased, they were entitled to half of the specified farm assets, which the defendant was not providing them with. This sparked the estate dispute.

The Court came to the final outcome of this case by considering the following:

• The deceased promised the plaintiff he would inherit a portion of the farm, livestock and chattels in the event of her passing;
• The plaintiff worked on the farm for more than 20 years, without wages, because of what was promised to him. The defendant and plaintiff had entered into a partnership together, which later fell through. As a result of this, the plaintiff stopped working on the farm, but continued to provide contract shearing services to the family with the deceased’s blessing;
• When relying on the promise made by the deceased, the plaintiff acted reasonably;
• The deceased intended for the plaintiff to rely on her promise, or otherwise knew that they would;
• The plaintiff suffered detriment because the deceased did not adhere to this promise. In this case, the detriment they suffered was the loss of their share in the farm and related assets.

During the proceedings, the Court also found that the transfer of property and farm assets to the defendant was unconscionable, as the deceased was under undue influence.

With all of the above in mind, the plaintiff’s claim was successful. Because of this, as promised by the deceased, he received half of the farm property, chattels and livestock from the defendant.

Constructive Trusts

The final option is a constructive trust, which again is based around the notion that promises made by the deceased that another individual relies on to their detriment ought to be upheld in their Will.

In these cases, the claimant is found to have an interest in the deceased’s property, whether that’s real property, money, a car, a bank account or similar. The Court then determines whether a trust is implied, even though there is no formal trust document. If this is the case, the asset’s owner is found to be a constructive trustee for the benefit of the true owner.

Contact our estate lawyers

At Hentys Lawyers, we have over 25 years of handling will disputes. If this article has brought up any questions or you believe you have a valid claim relating to the topics covered, get in touch with our estate lawyers.