The growing trend for people to challenge Wills is set to continue as baby-boomers leave significant wealth behind – but perhaps not in the way that family members expect, says Anna Hacker, Wills & Estates Accredited Specialist at Australian Unity Trustees.
“It’s a sad fact that we are seeing more and more challenges to Wills, as it is a course of action that can irrevocably tear families apart, and often result in hard-earned wealth being spent on legal costs, with little left for the remaining family members.
“To help avoid this kind of unpleasantness, we often recommend to clients, if the circumstances are appropriate, that they take steps before they pass to ensure their family understands why they have made certain decisions or distributed their estate in a certain way in their Will.
“This kind of personal explanation can go a long way towards preventing challenges, and avoiding family disputes and rifts.”
There are a number of options for people to help manage expectations among family members, Ms Hacker says.
“If the family is on good terms and there are no estrangements, a useful first step is to hold a family meeting. This provides an opportunity to explain the bequests that have been made in the Will, and why.
“For instance, people may decide to leave their estate in a trust for their grandchildren, and nothing directly to their children, because they see that their children are in good jobs and well set up financially.
“But if this isn’t explained to the children, it could come as a nasty shock.
“People may also want to leave amounts to charitable causes, which their family might not be expecting. But explaining why a cause is important to them, and why they have chosen to support it, can help overcome any resentment in the family.
“We have seen cases where family members have sought to challenge any gifts made to charities. If a charitable gift had been set up during a client’s lifetime in a structure such as a sub-fund within a pubic ancillary fund or a private ancillary fund, such challenges could have been thwarted,” Ms Hacker says.
Ms Hacker said a letter of wishes is also a good idea.
“We usually recommend to clients that they don’t go into too much detail or explanation in a Will – it should be kept as a legal document that outlines what they want to happen to their assets.
“If clients believe some kind of explanation is necessary, it is better to do this in a letter of wishes, which doesn’t need to be presented as part of the Will in the application for a grant of probate but which can be used, if necessary, in a courtroom.
“For instance, explaining in writing that less money has been left to one child than another, because the first had received more money during the parents’ lifetime to, say, set up a business, may be useful – but these explanations must be given careful consideration. Any statements that are untrue or may change over time can actually assist in strengthening a case when a person later challenges a Will.
“Another situation we have come across is where a family member is appointed executor but takes their responsibilities a bit too seriously.
“If a person is unaware that they are an executor but find out in their time of grief, there are instances of them taking actions that are unnecessary and counter-productive to their role, perhaps because they are feeling so emotional.
“This, in turn, can affect their relationships with the family members of the deceased. For example, if an executor closes down utility services – which we have seen happen – when the surviving partner and their children still require access, this can cause huge strain on their relationship and make a stressful time even more burdensome for the surviving family.
“Unfortunately, such actions can cause rifts with family members and trigger estrangement between them. There may then also be a trickle-down effect with nieces, nephews and grandchildren with contact restricted due to these estrangements.
“If an executor is aware of their duties and understands what their responsibilities are, this generally leads to a more favourable outcome for all.
“Avoiding family problems is one of the main benefits of having a properly thought-through Will and estate plan. It’s not just about the financial considerations but also the emotional and personal ones,” Ms Hacker said.
Australian Unity Trustees was established earlier this year to provide a range of trustee services to all Australians including: estate planning; executor appointments and estate administration; financial attorney; financial and legal administration; and the establishment and management of personal, native title, community and charitable trusts. It is the first traditional trustee financial services licence issued since the establishment of a national licensing framework for traditional trustee activities.