Can I make a binding will
that nobody can challenge?
The short answer to this is yes, but it will cost you.
Estate planning is more than Wills.
If you want your Estate not to be challenged then you need to do more than prepare a Will, you need to set your assets up in a certain fashion.
So what can I do?
If you want to protect against challenges to your Will (and your estate), you can do several things, such as:
- Leave a written statement to assist in defending your Will
- Enter into Mutual Contract Wills
- Set up a trust
- Obtain consent from the Supreme Court
- Enter into a Financial Agreement covering what would happen in the event that your relationship ended, and what would happen when one of you died
Set out below is a short summary in regard to those options.
Mutual contract wills are one option when you are setting up your Estate.
While these documents have some inherent problems, many clients want to create a contract to ensure that they leave their assets to their current spouse but on the death of that spouse, their share goes to their children. If this is your intention then a mutual contract will is what you have in mind. What this contract would provide is that neither party can revoke the Will without serving notice on the other, and that notice can’t be served after the party had died or lost capacity.
This would allow the surviving spouse to use the Estate as they please, for instance to sell it to buy into a retirement village, or mortgage against it. But on the death of that surviving spouse, all property owned in that person’s name would have to be dealt with in accordance with the mutual contract wills. Unfortunately mutual contract wills are still considered to be open to a family provision claim. Again, they are binding until that challenge is made. If the deceased had changed their Will then the beneficiaries could approach the Court and seek enforcement of the contract, but if there is an eligible person under the family provision legislation such as a new spouse the contract will not always defeat that future claim.
A more effective way to ward off a family provision claim is to set up a family trust in your mutual contract wills, appointing your spouse as trustee, and allowing them broad powers to use and invest the assets during their life but on their death the assets held in the trust would pass to your beneficiaries. They have to serve notice on you during your life, or if the spouse is going to make a family provision claim, they need to do it within a year of your death. It is less likely that your spouse would challenge your will, than that their new spouse would challenge their will.
In relation to mutual wills, the Court has suggested that a Capital Gains Tax liability may arise as a result of the mutual contract wills. There would also be costs associated with setting up a Trust. Before entering into them you would need to obtain tax advice about that. You would also need to sever any joint tenancies, for instance in real estate or bank accounts.
You can seek the approval of the Court for an agreement. The Court will not ‘rubber-stamp’ a release, there must be some advantage, financial or otherwise, to the parties. A classic example of this consideration might be, a family law financial agreement (dealt with below), a payment or gift to one party, or perhaps changing a Will from leaving assets to the children, to leaving all assets to the spouse but on the basis that the assets would then go to the children. This court approval will not preclude the Court from taking into account future life changes, such as a future spouse.
We are often asked to act for an Executor who is defending a Will, but we do not have the information necessary to assist the Executor. If there is a person who is likely to make a claim, such as an estranged child, then we could assist you to prepare a statement in relation to that person setting out the factors that are relevant when you are preparing your Will. Your executor may not know this information, or if they know the information the person making the claim may say that their understanding is incorrect. A statement from the deceased person can be very helpful and in some respects powerful.
Family Law Financial Agreement
It is possible to enter into an Agreement under the Family Law Act providing what would happen if your relationship came to an end, and what would happen on the death of either party. These Agreements also are not binding on the Court, but are taken into account and have the benefit that both parties have received independent legal advice. You can approach the Court for approval of the Financial Agreement, but this would probably only work for the death of the first spouse, and not the death of the second spouse. The Court will not be bound in the approval by circumstances that are not yet known to them (that is, the further spouse of the widow).
The other use of a Family Law financial agreement is, if you are the surviving spouse, you should obtain one of these agreements upon entering into a new relationship, and if necessary seek Court approval for that later agreement. This means you trust that your spouse will do if you die, it is more effective because the Court would at the time of giving the approval be aware of the circumstances of the widow/er’s new spouse and could bind that new spouse.
There are many different types of trusts that you can set up under your Will.
You could set up a life estate, so that your spouse has the right to continue to live in the property but upon their death your share of any property reverts back to your children.
You could set up a more complex testamentary trust, mimicking what is known as a 'Crispe Order' because of the eponymous case, where the surviving spouse can sell the house and buy another house, or even use the sale proceeds to fund a retirement village space, but the proceeds still revert to the beneficiaries upon their death.
These options all have different benefits and costs, and you should discuss that with your lawyer.
Inter Vivos Trust
This is a trust created during your life. It has the benefit of being binding even against family provision claims. It has the disadvantage that it is usually expensive, not only in terms of advices from lawyers and accountants but also stamp duty that would have to be paid on changing the ownership of the assets into the name of the trust.
So what do I do?
All of these options have pros and cons. You need to get proper legal advice regarding your whole estate, not just your Will.
Come to us to get your Estate sorted out. It is so important, and it is so much more than Wills.
We are walking distance from Penrith Train Station, and we have ample parking.
We serve real coffee.
We speak plain English.