As previously noted in this column, disputes in relation to Wills are on the increase, particularly in cases where the deceased was in a second marriage or a de facto relationship. In such cases, it is not uncommon for a family provision claim to be made, either by the second spouse or by the children of the deceased.
In some cases, the nature of the assets or the small size of the estate make it difficult to balance “adequate provision” for the party seeking further provision with the interests of other beneficiaries under the will.
By way of example, consider the following scenario:
The assets of the deceased comprise a house worth $400,000 and bank accounts worth $100,000;
The deceased dies leaving a de facto spouse of 20 years and his two adult children from a prior relationship;
The deceased’s last Will leaves the whole estate to his two children and makes no provision for the de facto spouse;
The de facto spouse has lived in the house with the deceased for the last 20 years. She has nowhere else to live and no assets of her own to support herself;
The de facto spouse has no children of her own;
It is likely that the de facto spouse will need to move into a retirement village or residential aged care in the near future.
Societal attitudes generally support the idea that a person owes their spouse a primary moral obligation to make adequate provision for them after their death. In the scenario above, adequate provision has not been made for the de facto spouse and a family provision claim is likely to be made and will be successful.
Faced with the scenario above, the Court may consider ordering provision for the de facto spouse from the estate but in such a way that the children are not ultimately deprived of their entire inheritance. Making provision in the estate available to the de facto spouse to meet her immediate needs does not necessarily mean that she should receive an absolute interest in the estate property. In order to meet her needs, and still preserve an inheritance for the children, the Court may consider making a Crisp order.
A Crisp Order, named after the decision in Crisp -v- Burns Philp Trustee Company Limited, usually takes the form of an order from the Court that grants the applicant for provision a portable life interest in particular estate assets. Such an order allows the applicant to use the value of specific estate assets to secure appropriate accommodation and to meet ongoing maintenance needs.
Using the scenario outlined above, a Crisp order may mean that the de facto spouse is able to stay in the house for as long as she needs and then, if required, use the value in the house to fund an accommodation bond at a retirement village or aged care facility. Upon the death of the de facto spouse, the estate assets, whether the original house or the accommodation bond, may then be distributed to the children as was the testator’s original wish.
The flexibility that Crisp orders offer parties seeking to negotiate or settle disputed wills matters, makes them worth considering, however, there can be traps. It is important that you get the right advice, whether you are seeking to make a claim for provision or whether you are required to defend a claim. DDCS lawyers provide specialist advice in relation to estate disputes and have a specialist team who are able to provide advice and assistance in all aspects of estates disputes. For further information, contact a member of the Estates Team at DDCS on 6212 7600
Phillip Davey is a partner of the firm.
18 Kendall Lane, New Acton, Canberra phone 6212 7600
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www.ddcslawyers.com.au