Strategies to help prevent your will being challenged

A will may be contested on the grounds that the willmaker was not of testamentary capacity, that is, at the time of preparation of the will, the willmaker was suffering from dementia or was otherwise mentally incapacitated so that he or she could not remember his or her assets or the persons to whom they would ordinarily be left.

Further, a will may be the subject of a challenge if there is evidence that it was prepared under duress, or undue influence was used to pressure a person into making a will contrary to the willmaker’s true wishes.

However, the most common “challenge” to a will is by members of the deceased’s family when a Court is asked to assess whether a will makes adequate provision for the proper maintenance of the deceased’s spouse, children, divorced or de facto spouse, parents or grandchildren.  In such cases, the Court will take into account, among other things, the size of the estate, the relationship between the deceased and the applicant, the age and health of the applicant, and the deceased’s obligations to the claimant as well as other beneficiaries.

Sometimes we are asked, during the willmaking phase to assist a client to prevent a claim being made against his or her estate by close family members who might be disgruntled as to the extent to which they have been provided for under the will.

There are several strategies which may be adopted, individually or in combination, to reduce or eliminate the risk of a claim being made against an estate by a family member who believes that he or she has been inadequately provided for under the will.

Some strategies which may be utilised to reduce or eliminate the risk of a claim being made against an estate are:
  • gifting property before death;
  • transferring property into joint names;
  • transferring property into a trust;
  • using a superannuation fund to direct assets out of an estate.
Such strategies, if used judiciously, can be an effective method to reduce or eliminate the risk of a claim being made against the estate.  These strategies are focused upon removing assets from a deceased estate so as to render a claim against the diminished estate, a fruitless exercise.

However, these strategies need to be carefully considered as they will invariably have other consequences and may introduce other risks.  Some of the pitfalls which may be encountered in employing these strategies include:
  • triggering a stamp duty and/or capital gains tax liability;
  • a land tax liability may arise;
  • the willmaker could lose control over the use of the asset, which may present financial difficulties if, say, the asset is needed to support the willmaker in his or her retirement.
In summary, the use of strategies to avoid claims being made against your estate need to be carefully considered so that the benefits of employing the strategy are not outweighed by unwanted adverse consequences.
Charles Beresford
5 December 2016