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How do Wills work when giving outside the immediate family?

Discussion in 'Legal Issues' started by jaybean, 5th Aug, 2015.

  1. jaybean

    jaybean Well-Known Member

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    Here's a scenario:

    A person owns 10 houses. He leaves 5 to his wife (4 investment, 1 PPOR), and gives the other 5 to nephews, nieces, one to charity, and his best friend for 40 years Jim. These are parties outside the immediate family where the default rules would apply (sons, daughters etc).

    Now to keep it simple imagine they are all worth exactly the same value. So basically, the wife gets 50%, the other 50% is given away.

    But is this person allowed to give 50%? Had they been divorced before he died, he wouldn't have necessarily been guaranteed 50%, so how could he assume that he is allowed to do what he wants with "his" 50% when he dies?

    What I'm basically asking is, when divorcing, the determination of the asset split can be subject to so many factors. Therefore isn't dying subject to those same complexities? If so, how could anyone possibly plan a rock solid Will without lots of these problems cropping up? Or is dying a lot simpler, whereby there is a fixed percentage already designated by law that each person is allowed to allocate to whomever they want (i.e. 50/50)?
     
    Last edited: 5th Aug, 2015
  2. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Google family provision and that will help get your head around it.
     
  3. Samten

    Samten Well-Known Member

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    Essentially you still have to provide for your no good family even when you are dead.:)
     
  4. jaybean

    jaybean Well-Known Member

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    Yes I know. But my question is surely some of that is yours to give away? And if so, how much? You'd want to go to your grave knowing it was something more definitive than "somewhere between 0 and 100%"
     
  5. Samten

    Samten Well-Known Member

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    Hey look the way I look at it you can only say what you want to happen if they want to contest, not much you can do about it. I'm gone, hopefully having fun in my next life.:)
     
  6. jaybean

    jaybean Well-Known Member

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    That's true, they may not contest.
     
  7. D.T.

    D.T. Adelaide Property Manager Business Member

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  8. jaybean

    jaybean Well-Known Member

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    I see, so it's still at the discretion of the family courts based on a test of reasonableness. It's basically just like a divorce then, as I thought, except instead of husband vs. wife it's immediate family vs. immediate family. Sounds like wills are only to be used as a rough guide then, it's far from bullet proof.
     
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  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Testamentary freedom. You can give your property to whomever you like. However there are laws which allow certain persons who meet the definitions of 'eligible persons' to make a claim against your estate (whether you have a will or not) if you have not made adequate provision for them. As RPI says this is known as "family provision" claims and in NSW this comes under the succession act.

    But just because a person is eligible doesn't mean they would make a claim and even if they made a claim it doesn't mean they will get anything. Heaps of cases where family don't get anything.
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Not the Family Court but the Supreme Courts and nothing like divorce - completely different legislation and people other than spouses can make a claim.
     
  11. jaybean

    jaybean Well-Known Member

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    What I meant is that they seem similar from the perspective that someone (a judge) ultimately has the sole discretion to change it completely.

    So I guess there's no hard rules to play by when setting out a will. I guess if you're fair to all family members (anyone that can make a claim) then it should be ok for the most part.
     
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Oh, ok you are right - for the first paragraph

    For the second see s60 of NSW Succession Act for matters the court can consider:
    http://www.austlii.edu.au/au/legis/nsw/consol_act/sa2006138/s60.html
     
  13. jaybean

    jaybean Well-Known Member

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    Wow even this is pretty broad.

    Alright I think I get the gist of it. Just be fair, reasonable, and don't give everything to the cat* and your final wishes should be respected.

    *Remembering the story of that millionaire in NYC who gave everything to her cat and nothing to her children or grandchildren. Ha!
     
  14. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    One of the best cases I saw was a client who left $1 to her son with a good testamentary explanation in her will (it was very nasty but soundly written while she was in good health with witnesses such as her accountant and another.) The other children equal shares. He contested the will and lost. The court determined she was of sound mind and adequately considered her beneficiaries...

    The legal advice was to consider him and ensure it was in the will... It was. I recall her lawyer clearly indictating the risk if the will failed to consider him.
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I often get clients telling me they have to leave $1 or so to someone as it stops them challenging - this is totally untrue. $1 is hardly adequate provision.

    Incidently leaving assets to a child via a testamentary is also not adequate provision - they could still make a claim to bypass the trust - some would not like it if they had restrictions placed on them accessing money etc.
     
  16. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Thats what one of the lawyers said. Just happened to work as it wasnt silent and the will gave explanation as to a reason...Wasnt nice. I do .recall a recent case where a will gave a potential beneficiary a spray and the Court overturned it as it was harsh....