Can your Will be challenged? By whom?
Anyone demonstrating some moral claim against you can challenge your Will. They may challenge:
– the validity of your Will
– the executors chosen to control your estate
– how much they are gifted under your Will.
As your estate usually pays their costs, win or lose, this encourages those aggrieved to make a claim.
Claims against the validity of your Will might be that:
– you were not capable of signing it
– you did not know what you were signing
– you were pressured to sign your Will.
If your mental health is in question, have your doctor confirm your health or sign as a witness. If your lawyer prepares your Will, they should ensure you understand it and take detailed notes. If your English is not good, an interpreter should explain it to you and confirm this in writing. Also, always make your own arrangements with the lawyer rather than have someone organise this for you, to avoid the argument that you were pressured.
Your chosen executors may be challenged as being:
– unfit for such office
– conflicted with their own personal interests, which affects the beneficiaries
– grossly neglectful or negligent.
There need to be strong grounds to prove the above, such as acts which endanger assets or show dishonesty or inability to carry out duties.
The most common challenge is how much is left to someone. The risk is highest when there is unequal treatment of children, for example:
– different amounts to children from first and second marriages
– leaving the family business to those that worked in it.
If your Will is challenged, the court will consider:
– your relationship (e.g. child, grandchild)
– their financial need
– the size of your estate.
How can you protect your Estate?
The best protection is not to have any assets in your name at your death. You might gift assets during your lifetime, or put them in a trust you control until death. This can have tax consequences. There are several strategies to protect assets or deter claims, without unnecessarily paying tax.
What about assets held in a trust – are they protected?
Trust assets are generally protected from claims against your estate. The same applies to your superannuation, unless paid to your estate. It is important that you leave control to the right people, however.
In a recent case, wealthy Italian parents left control of a trust to one son instead of to both sons equally. The son without control owed several million dollars to the trust. Although the parents wanted both sons to benefit equally from the trust, the son with control could not be stopped from making the other son repay the debt to the trust and taking the money for himself.
The parents could have avoided the expense and stress of three court cases and the destruction of their sons’ relationship. They should have discussed their estate plan with their lawyers.
Unfortunately there are too many families with simmering tensions between siblings, which explode after the parents’ death. The long-term emotional consequences for the family are generally irreversible once litigation starts. The lawyer needs to be aware of potential familial issues and help you plan in advance to avoid this happening.
* If you have any questions or require further information please contact Harry Giannakidis on hgiannakidis@millsoakley.com.au