The difficulties of making a Will when a person is in a “blended family” are clearly evident in the recent High Court case of Fry v Fry.
The important facts in that case are as follows:
- Lawrence Fry (“Lawrie”) had three children from his first marriage, one of whom was Jason (the applicant in the High Court proceedings).
- Following the dissolution of his first marriage, Lawrie entered into a new relationship with Carol.
- Carol purchased what became the family home using her own money, with no borrowings and no contribution from Lawrie. The title was registered in Carol’s own name.
- Lawrie and Carol established a successful company. The initial capital for the company was provided by Carol from the sale of her share portfolio. Lawrie and Carol held the shares equally.
- Lawrie’s son, Jason worked for the company for a number of years, working closely with his father. Lawrie died in 2009. About three and a half years later Jason had a serious falling out with Carol and left the company’s business.
- Lawrie’s last Will was completed on 12 November 2007. As with previous Wills he appointed Carol his sole executor and trustee. He left his entire estate to Carol with a provision that if Carol did not survive him the residue of the estate was to be divided into two equal parts: One part to be divided between Lawrie’s children and the other part between beneficiaries named by Carol.
- At the same time as Lawrie made his Will, Carol also made a Will, which was the mirror image of Lawrie’s. In particular it provided that in the event that Lawrie did not survive Carol, her estate was to be divided in the same shares as Lawrie’s
- Lawrie subsequently died
- Because Jason did not have confidence Carol would provide for him in her Will, he commenced proceedings in the District Court, and subsequently appealed that decision in the High Court.
In very general terms, a Willmaker is entitled to provide as he sees fit, but the Family Protection Act 1955 significantly restricts that freedom. Under that Act a Willmaker must consider persons to whom he or she owes a “moral” duty (i.e. the Willmaker’s spouse or partner, his or her children, grandchildren, dependent parents and dependent step-children).
There are numerous cases before the Courts where claimants argue there has been a breach of the “moral” duty owed and seek a distribution from the Estate. The test in these cases is whether adequate provision has been made for proper maintenance and support for the claimant.
THE COURT PROCEEDINGS
In this case the District Court Judge held that Lawrie’s trust that Carol would provide for Jason in her Will adequately discharged his moral duty to Jason. However Jason was not satisfied with the District Court decision and appealed to the High Court.
The High Court Judge decided that Lawrie’s agreement with Carol that she would provide for his children if he predeceased her “is palpably uncertain and entirely dependent on events and variables over which there can be little or no ability to control, and as a result “this agreement, through its inherent uncertainty” does not discharge the moral duty owed to” Lawrie’s children.
The difficulty the High Court Judge identified was that Carol could not be compelled to retain her Will in its current form, nor could she be restrained at any time in the future from changing the provision for Jason in a way which would exclude him. In fact, during the proceedings, Carol amended her Will to provide that Jason would receive nothing from her Will if he was successful in the Court application.
Because the High Court found that Lawrie had not fulfilled his moral duty owed to Jason, Jason was entitled to a lump sum payment of $175,000.00 together with a costs award made against Carol.
It is clear that a Willmaker in a “blended family” has a very difficult balancing exercise to fulfil the moral duty owed to his or her spouse or partner and children from prior relationships. It is not sufficient to rely on the trust that the surviving spouse or partner will take care of those children, in the surviving spouse or partner’s Will.
Options include the completion of mutual Wills by both spouses/partners (refer to Michael Wenley’s article on this website “Mutual Wills” (2 September 2010) or the completion of “Life Interest” Wills or perhaps the payment of legacies to balance the competing claims. Each Will must be tailored to suit the particular circumstances.
Do not make your final gift to your family, acrimonious court proceedings! Take professional advice from any of the lawyers at Willis Legal.