People who are planning a will are expected to make adequate provisions to certain loved ones that ensure they are financially secure in the event of the testator’s death.
Spouses, de-facto partners, children and dependants are among the family members that individuals should include when estate planning. In some cases, however, the testator may fail in their duty to provide for those closest to them, leading to a family provision claim.
A recent case that went before the NSW Supreme Court involved a widow who received only a life estate in the matrimonial property she had shared with her deceased husband. This meant she received no other provisions in the will other than being allowed to stay in the family home.
However, a life estate ceases to apply once the individual moves out of the dwelling, at which point the asset is usually passed on to other beneficiaries. Due to the plaintiff’s advanced age and health, the judge believed the chances that she would need to relocate to a care facility in the near future was fairly high.
“There is a need to provide accommodation for her and to provide a fund which will act as some sort of buffer to assist her in her later years,” Justice Robert McDougall stated.
Family provision claim decision
According to Justice McDougall, the plaintiff had not been entirely honest about the disclosure of her assets. Nevertheless, he felt it necessary to increase her provisions from the will.
She therefore received a $150,000 lump sum and a Crisp order on the matrimonial home. These orders are named after the Crisp v Burns Philp Trustee Company Ltd case of 1979.
Crisp orders typically give the plaintiff a portable life interest for real estate property in which they currently reside. In other words, the woman will be allowed to stay in the home until she needs to move, whereby she’ll receive money from the property in order to secure new accommodation.
Justice McDougall placed a $700,000 cap on the order, with any residual value of the real estate divided between the remaining beneficiaries. He noted that approximately $250,000 would be available to distribute to other people in the will following the family provision claim.
“I hope the plaintiff’s changing circumstances in life can be met with a degree of support for exigencies, which we all know may occur but which at present are no more than possibilities,” the judge added.
The usual order for costs was made, which often means the executor’s expenses for defending the case will be subtracted from the estate.