Your will is your way?

Preparing a will means that a person can be reassured that on their death, their assets will be distributed according to their wishes. You should draft your will as you think is appropriate for your family. However, as a will maker, you must be mindful of your legislative duty to make adequate provision for all members of your family.

Under the Family Protection Act 1955 (“Act”) a will maker has a moral duty to make adequate provision for the “proper maintenance and support” for the following family members:

(a) their spouse or civil union partner;
(b) their de facto partner (if the couple were in a relationship at the time of the will maker’s death);
(c) their children;
(d) their grandchildren;
(e) their stepchildren (if they were being maintained by the will maker at the time of their death); and
(f) their parents (if they were being maintained by the will maker at the time of their death).

The order is hierarchical – the will maker’s primary duty is to their spouse or partner and then to their children and so on. However, depending on the will maker’s family, for example if they have remarried and have children from a previous marriage, the hierarchy of duties can become less clear.

If on the will maker’s death, a family member feels that the will maker did not make adequate provision for them they may make a claim under the Act against the estate. It is important to note that “adequate provision” for “proper maintenance and support” is not the same as making a fair or equal distribution. When a claim is made, it is the court’s task to decide what provision is necessary to discharge the will maker’s duty to their family. If necessary, the court will adjust the distribution of the estate to ensure this duty is met.

In the case of children (the most common claimants under the Act), the court will consider what is necessary to ensure that the children are recognised as valued members of the family and financially supported. There is no set formula for what is necessary. Instead, the court will carefully consider the family circumstances of each case before making an award.

The fact-specific nature of what is necessary is demonstrated by two recent cases – Ormsby v Van Selm and Talbot v Talbot. In both cases children of the deceased made claims against the estate for an interest in the family farm, however the outcomes were very different. Ormsby v Van Selm demonstrates the court’s willingness to award large percentages of an estate to children to correct the breach of the deceased’s moral duty to those children.

Elizabeth Ormsby died in 2007 leaving her estate to her three surviving children. Her son, Alan received the family farm amounting to a 93.5% share in the estate. Her two daughters, Janine and Tia each received bequests of $91, 489 or 3.2% of the estate. Janine and Tia made a claim under the Act for the provision of proper maintenance and support from the estate. Their application was successful and the Family Court re-divided the estate into three equal shares. Alan appealed the division of the estate to the High Court.

The Ormsby children had suffered neglectful childhoods. Alan moved to Australia in his early twenties and continues to reside there. Despite their early lives, Janine and Tia were dutiful daughters and continued to care for and support their parents until their deaths.

The High Court found that Elizabeth had not only breached her moral duty to her daughters to recognise their position in the family, but had also disregarded their needs. This failure was made more profound by Elizabeth’s “shortcomings as a parent and the serious deprivations the children suffered during their childhood”. Neither daughter had substantial assets – Janine house-sat on Waiheke Island and Tia had only nominal equity in the house she shared with her husband and four children. The Court agreed that on the facts, the appropriate amount to correct the breach would be enough for them to purchase a property and have a modest contingency fund.

The estate was divided 30% to Janine, 25% to Tia and 45% to Alan. Jutice Katz concluded “awards at this level are the minimum that is required to address Mrs Ormsby’s egregious breach of moral duty”.

Alan then tried to appeal the decision to the Court of Appeal. However, the Court of Appeal held that the High Court decision was an “illustration of the application of well-settled principles” and refused to hear the appeal.

Talbot v Talbot shows that the Court will endeavour to uphold a person’s testamentary intentions and will only amend the will to the extent necessary to remedy a breach.

The family farm had been in the Talbot family for four generations. Edwin and Pamela Talbot raised their three children on the farm. On their deaths, they left the farm worth approximately $4million to their son Graham and gave to each of their two daughters, Jillian and Rachel, gifts of $1.1million. Jillian made a claim under the Act, arguing that her parents had failed to make adequate provision for her proper maintenance and support and had failed to recognise her position in the family.

Since unequal distribution is insufficient to disturb a testamentary disposition, the Court had to determine whether the Talbots had breached their testamentary duty in light of the circumstances.

The Court found that the Talbots had always intended for the farm to go to Graham, to keep the farm in the family, and for their daughters to share in the residue of their estates. Graham had left school at 17 and spent 25 years working on the farm purchasing increasing amounts of the farm off his parents. The Talbots had expressed the same testamentary intentions for over 20 years and had actively built their non-farm assets to ensure the residue would provide appropriately for their daughters. The children were aware of these intentions.

Jillian was found to be financially stable with the ability to support herself. Furthermore, the High Court found, even if Jillian was in financial need the inheritance of over $1million would adequately provide for her proper maintenance and support.

The Court concluded that the Talbots had met their moral duty to recognise Jillian as belonging to the family. The Talbots left all of their estates to their three children and worked to ensure there were assets to give to their daughters. Jillian and Rachel were given equal recognition, receiving 16% of the total estates.

Ultimately, not only was Jillian unsuccessful but she also had significant costs brought against her.

For further information on Wills please contact our team on 09 375 8700 or email lawyers@heskethhenry.co.nz