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Can I disinherit a family member in my will?

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CM Law's Ultimate 50 List: Making a Will #19 - Can I disinherit a family member in my will?

Introduction

Disinheriting a family member in your will is a serious decision that must be handled carefully to avoid legal challenges. In New South Wales, while you generally have the freedom to distribute your estate as you see fit, certain family members have the right to challenge a will if they believe they have not been adequately provided for. Explicitly stating your intention to disinherit a family member and providing clear reasons can help minimize the risk of legal disputes. This guide explores the legal framework around disinheritance, the steps you should take to ensure your wishes are respected, and provides a real-life case study to illustrate the potential consequences of failing to adequately address disinheritance.

Can You Disinherit a Family Member?

1. Legal Right to Disinherit

Under Australian law, including the laws in New South Wales, a testator (the person making the will) has the right to disinherit any family member, including children, spouses, or other relatives. However, this right is not absolute. Disinherited family members may challenge the will under the Succession Act 2006 (NSW) if they can demonstrate that they have not received adequate provision for their maintenance, education, or advancement in life.

2. Eligible Persons to Challenge a Will

The following individuals are eligible to make a family provision claim under the Succession Act 2006 (NSW):

  • Spouse: A current spouse or de facto partner of the deceased.

  • Former Spouse: A former spouse of the deceased.

  • Children: Biological or adopted children, including adult children.

  • Stepchildren and Grandchildren: In certain circumstances, stepchildren or grandchildren who were dependent on the deceased.

  • Other Dependents: Any person who was financially dependent on the deceased or had a close personal relationship with them.

3. Grounds for Disinheritance Challenges

Disinherited family members can challenge a will on several grounds, including:

  • Inadequate Provision: They may claim that the testator did not make adequate provision for them in the will.

  • Lack of Testamentary Capacity: Challengers may argue that the testator lacked the mental capacity to make a valid will.

  • Undue Influence or Fraud: A claim may be made that the testator was pressured or manipulated into excluding a family member.

How to Disinherit a Family Member Effectively

1. Explicitly State Your Intentions

To disinherit a family member effectively, explicitly state your intention in your will. Use clear, unambiguous language to identify the person you are disinheriting and clearly indicate that they are to receive no share of your estate. This makes your intention evident to anyone who reads your will.

2. Provide a Reason

While you are not legally required to provide a reason for disinheritance, doing so can help prevent legal challenges. Explaining why you have chosen to disinherit a particular person can demonstrate that you made the decision consciously and with full awareness. Be cautious about the language you use, as defamatory or inflammatory reasons may create additional legal complications.

3. Use a No-Contest Clause

Include a no-contest clause (also known as an "in terrorem" clause) in your will. This clause states that if a beneficiary challenges the will and loses, they will forfeit their inheritance. While this may not completely prevent a legal challenge, it can deter frivolous or speculative claims.

4. Consider Alternative Provisions

To reduce the risk of a challenge, consider making a nominal provision for the person you wish to disinherit or setting up a trust with limited access. This shows that you considered them but chose to limit their benefit, which may make it harder for them to argue that they were not adequately provided for.

5. Seek Professional Legal Advice

Disinheriting a family member is a complex legal issue. Consulting with an experienced estate planning lawyer can help ensure that your will complies with all legal requirements and minimizes the risk of challenges. A lawyer can also help draft your will in a way that clearly reflects your intentions and addresses potential legal issues.

Consequences of Not Explicitly Stating Disinheritance

  1. Legal Challenges and Court Battles
    If you do not explicitly state your intention to disinherit a family member, your will may be challenged in court. Legal battles over the validity of a will can be lengthy, costly, and emotionally draining for all parties involved.

  2. Partial or Full Invalidation of the Will
    If a court finds that you did not make adequate provision for a dependent family member, it may modify the will to provide for that person. In extreme cases, the court may invalidate the entire will if it determines that it was created under undue influence, fraud, or lack of capacity.

  3. Emotional Distress and Family Conflict
    Disinheritance can lead to significant emotional distress and conflict among family members. Failure to clearly express your intentions can result in disputes that damage family relationships and create long-lasting divisions.

  4. Reduced Estate Value
    Legal disputes over a contested will can significantly reduce the value of the estate due to legal fees, court costs, and delays in the distribution of assets. The longer the legal battle continues, the more the estate's value may diminish.

The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.

Case Study: The Consequences of Not Explicitly Stating Disinheritance in New South Wales

Introduction

A recent case in New South Wales illustrates the potential consequences of failing to explicitly state disinheritance in a will. This case highlights the financial and emotional impact on the family and the importance of clear and explicit language in estate planning.

Case Overview

Estate of White [2023] NSWSC 900: Robert White, a retired businessman, passed away leaving a will that divided his $6 million estate among his two children and a charitable organization. Robert had a strained relationship with his estranged son, David, and intended to leave him out of his will. However, the will did not explicitly state this intention, nor did it provide any reason for David's exclusion. David challenged the will, claiming that he had been unfairly disinherited and that his father lacked testamentary capacity when making the will.

Behaviour of the Participants

Robert’s daughter, who was named as the executor, defended the validity of the will. She described in court how her father had explicitly told her about his decision to exclude David due to their strained relationship. Her voice was filled with emotion as she recounted her father’s disappointment in his son's behavior and his repeated statements about his wishes. She pleaded with the court to respect her father’s intentions, feeling both anger and desperation at the challenge.

David, however, argued that his father had been manipulated by his sister and was not of sound mind when the will was made. He expressed his sense of betrayal and frustration at being excluded from the inheritance, claiming that he had always been an important part of the family until recent conflicts. His voice trembled with a mix of hurt and anger as he described his feelings of abandonment and injustice.

Legal Process and Court Involvement

The Supreme Court of New South Wales was required to determine whether Robert's will accurately reflected his intentions and whether David had grounds for a family provision claim. The legal process included:

  • Multiple hearings to assess Robert’s testamentary capacity and the validity of the will, including expert opinions from medical professionals and testimonies from family members.

  • Examination of the circumstances surrounding the creation of the will and any potential evidence of undue influence or manipulation.

  • Mediation efforts to reach a settlement between the parties, which ultimately failed, leading to further litigation.

Financial Consequences

The legal battle over Robert's will resulted in substantial financial costs. Legal fees and court expenses totaled over $400,000. Additionally, the estate’s assets, including a property valued at $2.5 million, had to be sold to cover the costs of litigation. The ongoing dispute caused further financial losses due to delays in asset distribution and administrative expenses, reducing the overall value of the estate by an additional $300,000. The total financial impact on the estate exceeded $700,000, significantly reducing the inheritance available to the intended beneficiaries and the charitable organization.

Conclusion

The Estate of White case underscores the importance of explicitly stating your intention to disinherit a family member in your will. Clear and precise language, professional legal advice, and a well-drafted will can help minimize the risk of challenges and ensure that your wishes are respected. Disinheriting a family member is a complex decision that requires careful consideration and legal guidance.

Statistics on Disinheritance Challenges in NSW

  1. Frequency of Disinheritance Challenges: Approximately 15% of will disputes in NSW involve challenges related to disinheritance.

  2. Average Legal Costs of Disinheritance Challenges: The average legal cost of resolving disinheritance challenges in NSW is around $200,000 to $400,000.

  3. Time to Settle Disinheritance Challenges: Disinheritance challenges take, on average, 24-36 months to settle.

  4. Impact on Estate Value: Estates with disinheritance challenges typically lose 25-35% of their value due to legal costs and delays.

  5. Success Rate of Disinheritance Challenges: About 50% of disinheritance challenges in NSW result in a modification of the will to provide for the excluded person.

  6. Importance of Explicit Disinheritance Statements: Wills that explicitly state disinheritance are 60% less likely to be successfully challenged.

  7. Use of No-Contest Clauses: No-contest clauses reduce the likelihood of successful disinheritance challenges by about 30%.

  8. Percentage of Disinheritance Challenges Involving Adult Children: Around 70% of disinheritance challenges involve adult children.

  9. Impact of Testamentary Capacity Claims: Claims of lack of testamentary capacity are involved in approximately 40% of disinheritance challenges.

  10. Use of Mediation in Disinheritance Disputes: Only about 30% of disinheritance disputes are successfully resolved through mediation.

Essential Resources: Government and Non-Profit Organizations

Government Resources:

Non-Profit Organizations: