How to Prevent Someone from Receiving Part of Your Estate

By 25 September 2019 Wills & Estates
Estate

No matter what you do, it’s unlikely that you’ll be able to keep your family from bickering over your will. Inevitably, a family member will be upset about what they did or didn’t “get”. Things can be even more complicated if you’ve left an eligible recipient out of the will altogether. This is because there’s no way to keep someone from receiving part of your estate.

Making reasonable provisions for eligible persons

Laws throughout Australia give certain relatives the ability to make a claim against an estate, but only in limited circumstances. To bring a claim, the person who wishes to do so must be an eligible applicant and prove that:

  • they are a qualified applicant under the law;
  • they have bona fide financial needs;
  • the deceased should have made actual/additional provision for them in the estate.

Claims are often made because the person who made the will failed to make sufficient provisions for the applicant, or elected not to make any provisions for them at all. This is usually because the will-maker no longer had a meaningful relationship with the applicant for any number of reasons. Although the will-maker probably thought that he or she was well within her rights to exclude the applicant under the circumstances, the law tends to favor the ostracized person.

To determine whether the applicant has a valid claim against the estate, the court weighs:

  • the applicant’s financial and personal situation;
  • the type and extent of his or her relationship with the deceased;
  • whether there are any other applicants;
  • the financial and personal circumstances of any other applicants (if applicable);
  • the legitimate responsibility the deceased had to provide for the applicant(s).

Misconceptions about will provisions

A lot of people are confronted with tricky family dynamics when making their wills. In this situation, it’s easy to see why some of them try to take the easy way out. For example, some people may think they can accommodate a child (or another relative) that they’ve fallen out with by making a token provision for him or her in their will. That way, they hope, the recipient won’t pursue a claim against the estate.

Unfortunately, this could well have the opposite effect, and the recipient may very well make a claim. What’s more, he or she will prevail if the court finds that what they initially received doesn’t meet the standard for a ‘reasonable provision’.

Another misconception is that a will-maker can lessen the chances that his/her children will pursue a claim against the estate if each of them receives equal provisions. By taking this approach, the testator may honestly believe that he or she is being ‘fair’. But this doesn’t necessarily mean the recipients won’t contest the will. And it doesn’t mean the court will find that the provisions are ‘reasonable’. Remember, the court’s decision is based on all of the criteria detailed above.

With all that being stated…

Having said all of that, a good lawyer can help you devise a plan to ensure that your assets are distributed in accordance with your wishes. A key component of this is identifying ways to make these distributions through means other than your will.

a. Open a Joint Bank Account or Transfer your Property into a Joint Tenancy

Depending on your specific circumstances, one strategy may be to purchase property as a joint tenant. This way, when you die your share in the property is transferred directly to the surviving tenant, eliminating the need for any reference to your will.

If you want some of your money to go to a certain person after you die, opening a joint bank account with them could be a good way to ensure that will happen. This is because, under the law of joint bank account survivorship, the benefit or ownership of the joint bank account is usually transferred directly to the surviving joint account owner upon death. This also eliminates the need for any reference to the will or the estate.

b. Make a Binding Nomination with your Superannuation

If you are concerned about the allocation of the proceeds from your superannuation or life insurance policy, you can choose the person you’d like to receive these payments by making a ‘binding nomination’. Bear in mind, however, that there are strict criteria for nomination of a beneficiary. It is also critical that the binding nominations are executed correctly, and that you make sure your insurance policy allows you to nominate someone.

Finally, you may also want to consider transferring some or all of your assets before you die. This way you can make sure that you are fully in control over who gets them and when it happens. However, if you pursue this option without the proper legal and financial guidance, it could have an adverse effect on your pension. There may also be tax implications in terms of capital gains.

c. Get Legal Advice in relation to a Testamentary Trust

In certain circumstances, a testamentary trust might be suitable to ensure that your estate is held on trust to the exclusion of certain people, or for the benefit of specific people without those people actually owning the asset. Testamentary trusts are useful to protect your assets from bankruptcy, divorce, and other nasty legal proceedings.

In summary, the best way to prevent an eligible family member from making a claim against your estate is to make a reasonable provision for them in your will. A highly skilled wills and estates lawyer can quickly assess your personal and family situation to determine what this may be, and draft your will accordingly.

An experienced lawyer can also provide advice about the allocation of your assets by means other than your will. This can help ensure that your assets are allocated as per your wishes.

Twohill Lawyers offers professional, problem-solving, reassuring advice in this vast area of law. For help drafting your will or with any similar legal matters, contact us today on (07) 5571 1450 or email admin@twohilllawyers.com.au.