Family Provision Claims – How much is enough in the context of a large estate?
On 26 February 2015, the Western Australia Supreme Court handed down a significant and reinforcing judgement in the context of family provision claims in large estates.
What were the facts?
The facts of the case are as follows:
- the plaintiff was the 19 year old daughter of iron ore magnate, the late Michael Wright (the deceased);
- the size of the deceased’s estate was described by Master Sanderson as “colossal” with a speculated estimate of being in excess of $1 billion;
- the plaintiff’s relationship with the deceased was not the best, with contact being sporadic. The extent of the deceased’s financial support to the plaintiff was child maintenance (paid to the plaintiff’s mother), private schooling and occasionally some pocket money;
- the plaintiff’s entitlement under the will of the deceased was the entitlements from a trust. The terms of the trust included:
- the capital of the trust was not to exceed $3 million;
- upon a request by the plaintiff to the trustee of the trust for funds, the trustee was entitled to refuse, without providing any reasons;
- if the plaintiff was ever affiliated with drugs (either herself or through someone else), became a drug addict or alcoholic she would be excluded from the trust completely; and
- if the plaintiff changed her religion to that which was anything other than Roman Catholic, Anglican, Presbyterian, Baptist or a similar traditional faith, she would be excluded from the trust completely;
- the plaintiff relied on evidence that the amount needed for the plaintiff during her lifetime was estimated between $15 million and $20 million, depending on certain factors.
What was the outcome of the plaintiff’s claim?
Master Sanderson set aside the trust, and awarded the plaintiff a cash payment of $25 million.
What influenced the decision?
In handing down this judgment, Master Sanderson confirmed that the Court’s discretion when considering a family provision claim is unfettered. The words of the Western Australian legislation, the Inheritance (Family and Dependents Provision) Act 1972 (WA) state that “the Court may, at its discretion…order that such provision as the Court thinks fit” from the deceased’s estate. The wording in the Queensland legislation is the same.
Master Sanderson reiterated that there are three common factors which arise for a Court to consider when exercising its discretion:
- the size of the estate;
- the needs of the plaintiff; and
- the interests of other parties having a legitimate call on the bounty of the deceased.
In awarding the plaintiff a cash payment of $25 million, Master Sanderson stated that his discretion to award this amount was based on two authorities in respect of the moral duty placed on a testator to provide for those who should “expect to benefit from his bounty”.
These two authorities include:
- What a wise and just testator would do in the position of the deceased; and
- The community expectation test that is what amount should be left to a person in the plaintiff’s position which would meet community expectations.
It was upon this basis Master Sanderson exercised his discretion to award the plaintiff $25 million. Ultimately, the residuary beneficiaries of the estate would each receive approximately $10 million less, on top of the $400 million they already had.
Family Provision Claims – the next steps
Before making an application for further provision from someone’s estate, it is important to remember that there are a number of issues to consider. Please do not hesitate to contact me for further advice if you wish to contest a will or have any questions about Family Provision Claims.