HENTYS LAWYERS: VICTORIA’S WILL DISPUTE SPECIALISTS

There are three common types of Will Disputes:

Will Contest

This is when a dispute arises because someone has been left out of a Will, or feel they have been inadequately provided for by the Will. In Victoria they would then launch a Family provision claim under the Administration and Probate Act 1958 (Vic). There are very similar Acts governing this right to contest in each State.

Example
Estate of Brown (Decd) [2016] VSC 258
This is a perfect, Victorian example of an application for family provision which as a result created a Will Contest.

Facts: The applicant was a domestic partner of the deceased at time of death. The respondents were the executrixes –  his adult daughters. The deceased’s Will left the applicant with a life interest in property in which they resided together and income from investment but nothing else. The applicant sought absolute interest in property and additional amount from the Estate as the deceased had a responsibility to make adequate provision for applicant’s proper maintenance and support

Decision: It was held that a life interest and income from investment did not make adequate provision for applicant’s proper maintenance and support considering the Estate was worth $1.7 million. Thus, an order that ownership of property be transferred to the applicant and for her to be given an additional $500,000 from the Estate was granted.

Administrative Disputes

These are Will disputes that relate directly to how the Executor is administrating the Estate. There are several types of ways an executor can breach his or her duties, but the most common are: (1) Misappropriation; the executor uses an Estate’s assets to pay his/her personal liabilities or fraudulently disposes of them for a profit. (2) Maladministration; where assets have been dealt with in a manner other than provided in the Will or by law. (3) Breach of trust; the executor generally breaches his or her duty of care towards the state – e.g. they failed to demand and enforce payment of a debt owned to an estate, or failed to observe the provision or directions in the Will.

Example
Skaftouros v Dimos [2002] VSC 198
This is another great Victorian example, but this time demonstrating how if an Executor fails to perform his or her duties it creates an administrative dispute.

Facts: The beneficiaries sought the defendant’s removal as executor on basis of: Serious and inexcusable delays in obtaining probate and administration of estate; failure to properly administer estate; failure to provide accounts and information to beneficiaries when requested; and failure to pay estate’s creditors.

Decision: The application to remove the defendant as executor was granted. This was because there was evidence that the defendant terminated the Estate’s accountant and real estate agent without explanation, left property vacant, refused to provide beneficiaries with Estate’s books and accounts to allow them to inspect trust account records, and the Estate was still not finalised three and a half years after the testator’s death.

Construction Disputes

These disputes relate directly to the wording and meaning of the Will. If there is an uncertainty in the wording of the Will, then one can apply to the court to have the court decide what the deceased intended when they were writing their Will.

Not every asset is considered part of a deceased’s estate. Instead, there are ‘estate assets’ which can be included in a Will and ‘non-estate assets’ which cannot. Knowing which assets are estate or non-estate will help the will-maker undertake the best estate planning possible, and will also help a will-disputer to determine whether they have an adequate claim.

Estate Assets as a broad rule of thumb include anything the deceased has sole ownership over. This includes:

• Any type of real property, i.e. real estate, land and buildings.
• Unproductive property, i.e. valuables such as motor vehicles, jewellery, furniture.
• Cash of any kind, i.e. savings, term deposits.
• Intangible personal property – items which cannot be held but are of worth, i.e. stocks, business ownership and digital assets (Facebook, Twitter, Instagram).
• Intellectual property, i.e. patents, copyrights, royalties.

Non-estate assets on the other hand are things that the deceased does not have legal ownership over, or has joint ownership over with another party.

Jointly Owned Assets: Jointly owned property will pass automatically to the other joint owner(s) after death, irrespective of the deceased’s Will. For example, if you own a home with your spouse as joint tenants, upon death of a spouse full ownership will automatically revert to the surviving spouse. The exception are assets owned jointly as ‘tenants in common’. Here the tenants are free to dispose of their shares of the land as they see fit under their Will. The difference being that tenants in common have defined shares and interests in the asset as appear on the Certificate of Title. For example, if you own a property with another as tenants in common and both have equal shares, then upon your death your 50% ownership of that property will flow to your estate and then to your beneficiaries as set out under your will.

Discretionary / Family Trusts: Any discretionary/family trusts controlled by the deceased do not form part their estate as they are owned by the trust and considered a separate legal entity. The only way to ensure that the trust can be dealt with by the deceased’s Will is if their trust deed allows for the control of the trust to be passed on under a Will. Unless that is the case, the trust will be continued to be managed by whoever is nominated on the deed.

Company Assets: Although the company may be the deceased, they do not directly own its assets. The company, like trusts are considered a separate legal entity. The only part of the company which form part of the deceased’s estate and therefore can be allocated under the Will are their shares in it.

Life Insurance: Life insurance policies operate so that the insured person nominates the beneficiary of their policy. The policy is then paid directly to the stipulated beneficiary or beneficiaries and do not form part of the deceased’s estate. To enable the life insurance policy to become part of the deceased’s estate, they must nominate their estate as the beneficiary of the policy so that the proceeds can be managed by their Will. If the deceased did not stipulate who is to benefit from their policy after death, then the proceeds will not pass through the estate as it is owned by the fund. The fund will then act with discretion in accordance with the terms of the fund deed.

Superannuation: Superannuation monies are tied to a superannuation fund which has a trustee who decides on payments. Thus superannuation funds act as separate legal entities and do not automatically form part of the deceased’s estate. Superannuation will only be dealt with as an estate asset via the deceased’s Will if a binding death benefit nomination form (“BDBN”) has been completed. Here, they have the right to nominate a particular person to be the recipient of their superannuation fund. However, if a BDBN has not been completed then it is left to the trustee’s discretion to decide on the recipient of the funds. A BDBN to be valid must be updated every three years.

If you feel you have not been adequately provided for within the deceased’s Will, then the team at Hentys Lawyers would look to launching a Part IV claim.  Nevertheless, a Part IV claim can only affect estate assets.  You are not entitled to dispute the deceased’s division of non-estate assets through a Part IV claim, as aforementioned, they do not form part of the Will.

However you can still dispute entitlements to some non-estate assets, independent to Part IV claims. Seeking provision for such assets is simply governed by matters outside Wills or intestate scheme of distribution.

Life insurance is more commonly than not becoming a Non-Estate Asset.  This means that a loved one’s life insurance policy has been structured in such a way to keep it separate from a person’s Estate and as a consequence will not be vulnerable to a Family Provision claim should one eventuate after their death.

However, just because you cannot dispute the provision of life insurance through Testators Family Maintenance, this does not mean it is the end of the road…and most definitely not, when working with Hentys Lawyers.

Will Disputes & The Provision of a Life Insurance Policy

The situation is such: Before their death, the deceased determined an individual as beneficiary of their life insurance policy. As a result, this nomination is binding, the policy does not form part of the Estate and the pay-out goes directly to the nominated individual regardless of who they are. However, you believe that it is unjust for the nominated beneficiary to receive such provision and ask – is there anything I can do?

The answer: Yes – but we will be honest with you. Challenging a life insurance beneficiary designation is not easy. This is because unlike a Will, life insurance does not go through probate so there is no automatic court scrutiny of the document. Instead, an insurance policy is a contract between the insured person and the issuing company, it is designed to be irrefutable. For a third party to gain enough proof to show that the nominated beneficiary is the wrong one is rare. However, rare does not mean impossible!

When May A Dispute On Life Insurance Be Successful?

The two most common examples of a possible dispute are (1) major life changes, or (2) a sudden change of beneficiary before death.

1. Major life changes include: Marriage, divorce, re-marriage, the birth of a child or an adoption. I.e. you have been married to your husband for 10 years, however this is his second marriage and he has forgotten to remove his first wife as beneficiary of his death. It is possible that you could be successful in claiming that his first wife should not be the beneficiary of his policy. Although, you will have to prove that he did not intend for her to be the beneficiary despite your marriage, and it was purely an oversight.
2. A sudden change: e a seriously ill policymaker has made a change in his/her beneficiaries towards the end of their life. This change does not favour you, where his/her earlier policy did and you may argue that the policyholder was not of a sound mind when making the latest changes. You would be arguing undue influence in that the newly named beneficiary took situational or constitutional advantage of the policyholder and convinced him/her to change the policy.

When Will disputes arise they are dealt with in two ways; negotiation between the parties or by costly litigation. At Hentys Lawyers, whether you come to us to contest a Will, or defend a Will – our end goal does not change: We aim to settle your claim by negotiation at mediation… and for you to never have to step foot inside a court room.

There are 5 key reasons why we will always prefer negotiation over litigation

Greater Control

During the negotiation, one of our experienced solicitors will lead the discussion, but you have the ability to communicate directly if you so choose. Thus, you have more control as you can determine the process/degree of formality to be followed. As a result, you maintain ownership of the issues and fully participate in the resolution. This is in direct comparison to litigation where the process is cemented and parties do not speak except by pre-written declarations and as witnesses when called.

A common form of negotiation is court appointed mediation where a neutral person (mediator) is present to assist with the decision making process. Here, both parties will be required to adhere to the rules of court; however, the process is still much more informal in comparison to litigation and you still have a large amount of control over the proceeding.

Finality, Speed & Cost

An agreed resolution can give parties finality in negotiations. At the end of the negotiation if a resolution has come about parties sign a fair, full and final (non-appealable) settlement agreement and you can move on resulting in a much speedier and cheaper outcome. However, in litigation, unhappy parties can file appeals and modifications of the outcome resulting in a much lengthier and costly process.

Confidentiality

Confidentiality is only available in a private proceeding. In mediations all communications are confidential, however in litigation, all speech is public and recorded.

No Win-Lose Paradigm of Court

With negotiation the main goal is to achieve the agreement of all parties to create a win-win solution. This is often desired in Will disputes as the proceedings generally involve family, close friends and loved ones. However, with litigation there is a winner and a loser and each party can be a loser on various issues causing a great deal of bitterness and furthering family disharmony

Relationships

Will disputes put a huge strain on family relations, especially when one family member feels they have not adequately been provided for and the executor (other family member) does not agree. Litigation can further this bitterness, causing a loss of relationship entirely and impede the ability to resolve issues together in the future. However, negotiation requires both parties to cooperate which can, whilst helping to come to a resolution for the Will dispute sooner, also help mend broken relationships in the process.

Ultimately, we choose negotiation over litigation because we endeavour to make the legal proceedings as simple as possible for our clients.  Rest assured that going to court is truthfully an absolute last resort and you will be in the safest of hands during the entirety of the process.

If there is no Will, or an earlier Will has been revoked without a new one being made, the person whose estate is to be administered is said to die ‘intestate’. Intestacy comes in two forms, total intestacy or partial intestacy. In the latter form, although a Will may exist detailing the distribution of part of the deceased’s estate, the remainder is left in a sort of ‘limbo’.

In such circumstances, the estate/remaining ‘limbo’ estate will pass to the next of kin according to statutory order as directed by the Administration and Probate Act 1958 (Vic). Further to last week’s blog on step-children and their legal right to dispute Wills, it should be noted that step-children are not considered ‘children’ according to intestacy law and therefore are not included in this statutory scheme. Thus, a step-child who has not been adopted by a step-parent will not be entitled to anything if the step-parent dies without a Will. Their only option is to try and dispute the division through a Testators Family Maintenance (TFM) claim, proving that they have not adequately been provided for and should be treated as/close to a biological child.

Can You Dispute an Intestate Division?

It is very difficult, but not impossible to dispute the strict order of potential beneficiaries through TFM. Once letters of administration have been made by a probate solicitor on behalf of one or more of the potential beneficiaries, they must distribute the assets in accordance with the intestacy rules.

An Example of a Common Intestacy Dispute

One of the more common disputes in intestacy is when there is a disagreement over whether a domestic partner exists. This being that the order of division falls first to the spouse or domestic partner and if the deceased had a spouse/domestic partner and children, the spouse/domestic partner will receive the first $100,000 of the estate and 1/3 of the residual estate, and the children will split the remaining 2/3rds. If no spouse/domestic partner exists, then the children receive the entire estate.

Evidentially, it makes a substantial difference to the children of the deceased if a domestic partner had been in the picture prior to their parent’s death. This is compounded by the fact there is a very large grey area over who truly classifies as a ‘domestic partner’. Section 3 of the Administration and Probate Act 1958 (Vic) loosely defines a domestic partner but generally it as at the discretion of a judge using case law as a guide.

If there is no Will, or an earlier Will has been revoked without a new one being made, the person whose estate is to be administered is said to die ‘intestate’. Intestacy comes in two forms, total intestacy or partial intestacy. In the latter form, although a Will may exist detailing the distribution of part of the deceased’s estate, the remainder is left in a sort of ‘limbo’.

In such circumstances, the estate/remaining ‘limbo’ estate will pass to the next of kin according to statutory order as directed by the Administration and Probate Act 1958 (Vic). Further to last week’s blog on step-children and their legal right to dispute Wills, it should be noted that step-children are not considered ‘children’ according to intestacy law and therefore are not included in this statutory scheme. Thus, a step-child who has not been adopted by a step-parent will not be entitled to anything if the step-parent dies without a Will. Their only option is to try and dispute the division through a Testators Family Maintenance (TFM) claim, proving that they have not adequately been provided for and should be treated as/close to a biological child.

Can You Dispute an Intestate Division?

It is very difficult, but not impossible to dispute the strict order of potential beneficiaries through TFM. Once letters of administration have been made by a probate solicitor on behalf of one or more of the potential beneficiaries, they must distribute the assets in accordance with the intestacy rules.

An Example of a Common Intestacy Dispute

One of the more common disputes in intestacy is when there is a disagreement over whether a domestic partner exists. This being that the order of division falls first to the spouse or domestic partner and if the deceased had a spouse/domestic partner and children, the spouse/domestic partner will receive the first $100,000 of the estate and 1/3 of the residual estate, and the children will split the remaining 2/3rds. If no spouse/domestic partner exists, then the children receive the entire estate.

Evidentially, it makes a substantial difference to the children of the deceased if a domestic partner had been in the picture prior to their parent’s death. This is compounded by the fact there is a very large grey area over who truly classifies as a ‘domestic partner’. Section 3 of the Administration and Probate Act 1958 (Vic) loosely defines a domestic partner but generally it as at the discretion of a judge using case law as a guide.

There is a big difference between ‘contesting a will’ and ‘challenging a will’. Contesting a Will is when you have been left out of a Will, or feel you have been treated unfairly in a Will – to “right such wrongs” so to speak, you make a family provision claim.

To challenge a Will is to dispute a Will, or to say that the Will itself should be struck out. These types of cases usually arise when the person who made the Will was suffering from a mentally degenerating disease, or they were put under pressure to change their Will.

What is a Caveat?

The word caveat comes from the Latin and literally means ‘let him beware’.  Thus broadly, a caveat is classified as a legal notice to a court or public officer to suspend a certain proceeding until the notifier is given a hearing

What is Probate?

Probate means proof of the Will. Once the Will has been proven to the satisfaction of the Court, probate is granted to the executor of the Will. It authorises the executor to administer the Estate to the beneficiaries.

Caveats in Will disputes – Probate Caveats

In a Will dispute a probate caveat is a document that is filed in court to prevent probate of the Will being granted.

Usually in family provision cases, parties want probate to be granted, because you can’t contest the contests of a Will, or start distributing the assets for that matter, until this process has been achieved.

Yet, if you believe that the Will which has been filed for probate was not intended by the deceased to operate as their final Will because eg they were not of sound mind when they wrote it, it was forged, or the deceased was coerced to write it, then you would lodge such a caveat.

The Result of a Probate Caveat

After a probate caveat is filed, the proposed executors or administrators of the estate cannot administer the assets until (1) it has been proved by the court that the proposed Will is the last valid Will of the deceased person, (2) the caveat has run out, or (3) it is withdrawn by the caveator.

If it is proved that it is not the last valid Will, then that Will would be struck out and you would file probate of the previous Will. Alternatively, if there was no previous Will, the Estate would be divided according to Intestacy Law.