Leaving Assets in your Will ‘equally’ is not Always Fair

People often think that leaving their assets ‘equally’ to those who have a claim on their estate is fair and will guarantee avoiding disputes after your death.  That is not necessarily the case.

If the terms of the will are challenged the court will consider the gifts. The court has wide discretion when determining cases about whether adequate provision has been made for all parties involved.

In the court, there is no presumption that "fair" means "equal."

The court looks at a range of factors when deciding if adequate provision has been made for the parties. The court will consider many factors including:

• the needs of the parties, including their income and assets,
• their age and health,
• future needs,
• working capacity,
• size and nature of the estate, and
• the needs of competing parties at the time of your passing.

In a large estate, equal shares among children beneficiaries may be more achievable as this will meet everyone's needs.

In smaller estates, this may not be the case as dividing assets equally will often leave a surviving spouse or dependent without sufficient support.

An example:

A good example of this is a recent Queensland court case where the wife and adult daughter (the wife’s stepdaughter) were left an equal split of the husband/father’s estate assets which included a house worth $1 million and some cash. All up the estate was worth about $1.18 million. The wife and deceased husband had been married for 40 years and had been living together in the home that was registered in the husband’s sole name for nearly two decades. The wife was 70 years of age at the time of her husband’s passing.

The wife’s assets compromised $22,000 cash at bank and $184,000 in superannuation. The wife also received a pension of $1,000 per fortnight and had some casual work to meet expenses of $850 per fortnight. The wife also had need for surgery to address health issues and was nearly retired with limited assets.

In accordance with the terms of the will of the husband, the wife would have received a sum of approximately $600,000.

The court found this to be insufficient to meet the wife’s needs.

The court ordered that the wife receive 85% share of the estate (and a right to reside in the house for 10 years) and the daughter to receive a 15% share of the estate (subject to the wife’s right to reside in the house for 10 years and the wife pay the rates and taxes and maintain and repair the property during that time).

The court also ordered the daughter to pay the wife’s legal cost of bringing the application to the court - fixed at $24,000.

This is a reminder to get legal advice from an experienced Wills and Estates Lawyer when preparing your will.