Reducing the Risks of a Challenge to Your Will

Posted by - - Will & Estates.

We have written on previous occasions about how a person can challenge a will under the Inheritance (Family Provision) Act 1972 (SA). When drafting a will it must be borne in mind that the members of the will-maker’s family will not always agree with the intentions of the will-maker as expressed in the will and that an Inheritance (Family Provision) Act (IFPA) claim may sometimes result. This article will consider some of the steps can be taken to minimise the likelihood of such a claim being made.

The simplest technique is to bear in mind the test which is applied by the courts when considering IFPA claims: would a wise and just will maker have considered it to be his moral duty to provide for that person? If so, and the will-maker does provide for that person, then the likelihood of that person bringing such a claim will diminish. But often the will-maker will consider, for whatever reason, that the person ought not to be provided for by the will, or that they ought not to be provided for to a greater extent than stated in the will, irrespective of the ‘wise and just’ test. (And after all, your view of ‘wise and just’ might just be different to the view of a judge.)

The other way of solving the problem is to reduce the size of the estate against which a claim can be made, and there are many devices for achieving that end. For instance, the will-maker might transfer some of his or her assets to a discretionary trust, which they would control until their death. The assets in the trust would not for part of the estate, and would not be available to satisfy a claim under an IFPA claim. This process can have disadvantages, particularly in the nature of capital gains tax (for the transfer of existing assets) or the loss of the principle place of residence exemption (for the family home).

Other devices include transferring property to joint ownership so that it devolves to the survivor and does not form part of the estate of the will-maker and binding death benefit (BDB) nominations and binding financial agreements (BFAs). The principle is this: if something does not form part of the estate of a will-maker, then it cannot be used to satisfy an IFPA claim. In NSW, steps have been taken to reduce a will-maker’s autonomy by inventing a fictitious ‘notional estate’, and that will be the topic of an upcoming discussion in this paper.

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