15 Challenges to your Will - bear these in mind when considering the effectiveness of a Will
In this Newsletter we list fifteen ways a will can be challenged, and the basis on which the challenge can be made. Persons contemplating their will may be unaware their intentions for the distribution of their estate after death can be thwarted for various reasons, and as set out below.
1. Most common – family provision claims by eligible persons under the Succession Act, 2006
Since 1916 legislation has existed in NSW to provide for certain family members to challenge a will, on the grounds it left the claimant without adequate provision for his or her proper maintenance, education or advancement in life.
The plaintiff must prove the will fails to make such provision, based on his circumstances at the time of the hearing, and generally means financial needs.
Categories of eligible persons who may claim are:
- Spouse at death of deceased
- De Facto spouse at death
- Child of deceased
- Former spouse
- A person:
- who was, at any time, wholly or partly dependent on the deceased, and
- who is a grandchild of the deceased or was, at any time or at any other time, a member of the household of which the deceased was a member
- A person with whom the deceased was living in a close personal relationship at the time of death.
2. Challenge to Testamentary capacity
If proven it affects the essential validity of the Will. Capacity to make a valid will (stated in Banks v Goodfellow (1870)) requires the Testator to:
- be aware of and appreciate the significance of the act of making and executing a Will;
- be aware of, in general terms, the nature, extent and value, of his assets and liabilities;
- be aware of those family members, friends and other acquaintances for whom he cared and who may reasonably be thought to have a claim upon his bounty; the basis for, and nature of, the claims; to evaluate, and discriminate between, the strengths of the claims;
- to not be suffering from an intervening disorder of the mind: ‘that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties – that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been wound, would not have been made.’
A will made when the deceased lacked capacity will be declared null and void, and the immediately prior valid will then applies, or in the absence of a prior valid will, the estate will pass on intestacy.
3. Knowledge and approval of the contents
If circumstances exist which excite the suspicion of the Court (for example if the will is meaningless, or the testator was blind, illiterate or ignorant, or if the will was signed by another person at the testator’s direction, or prepared by a beneficiary) the person seeking to propound the will must remove the suspicion and prove affirmatively the testator knew and approved the contents of the will. These matters go to essential validity.
4. Undue influence
In probate, undue influence requires proof that the pressure ‘exerted (was such) as to overpower the volition without convincing the judgment’ such that the will produced was not that of a free agent. If undue influence is proven the will is declared null and void, as in cases of a lack of testamentary capacity.
Where the signature on the Will is not that of the testator. If proven, the will is declared null and void.
6. Revocation by a subsequent Will
Also a matter of essential validity.
7. Informal documents
A document (including electronic) which does not comply with the formal requirements of a will as to execution under S. 6 Succession Act, 2006, but which purports to state the testamentary intentions of a person may be declared a valid will under S.8, if the Court is satisfied that the person intended it to form his will, or an alteration to his will or a full or partial revocation of the will.
8. Automatic Revocation of a will by marriage
Under S. 15 Succession Act a will is revoked by the marriage of a testator.
The exceptions are:
- A will made in contemplation of a particular marriage, whether or not that contemplation is expressed in the will, is not revoked by the solemnisation of the marriage concerned.
- A will that is expressed to be made in contemplation of marriage generally is not revoked by the solemnisation of a marriage of the testator.
A will made in contemplation of marriage may either be made conditional on the marriage taking place, or not conditional.
9. Agreements to make mutual Wills
A contract to make mutual wills can be enforced, provided there is clear evidence of intention:
- That the wills are not to be revoked; and
- To enter legally binding relations.
If one party dies leaving a will containing provisions inconsistent with the agreement, the will still operates as a valid testamentary instrument, but the intended beneficiaries may seek damages for breach of contract.
10. Implementation of a Will Depends on how, by whom, and what assets are held at death
Practically speaking, the provisions in a will can only have effect if the assets held at death, or at the time of the completion of the estate’s administration, are in such form, quantity, or ownership which enable the provisions dealing with them in the will to take effect. The terms of the will can fail where the assets are not held, or are held in trust, or in joint names, or by another entity, or where claims on the estate consume the assets.
Trusts - where you are the trustee and not the beneficiary your will cannot transfer the beneficial interest; where you are the beneficiary of a discretionary trust any entitlement is at the trustee’s discretion.
Joint property - passes by survivorship to the other joint owner by operation of law, does not form part of your estate nor can your will have effect in relation to it.
Corporate vehicles - Owning shares in a company does not give the shareholder (or director) a beneficial interest in the company’s assets. A gift by will of the company’s assets is ineffective. Your will can appoint a managing director in your place if the Company’s Rules permit. Shares can be passed by will, subject to rights of first refusal or Shareholders Agreements.
Liabilities - If claims are made against your estate reducing your available estate, it may defeat the intentions of your will. This includes costly litigation arising after your death.
If a beneficiary predeceases the testator and no substitute beneficiary is named the estate can pass as on intestacy, or a partial intestacy. Legislation specifies who will inherit, and may not be persons intended. This particularly applies to a residuary gift, requiring careful drafting.
A will should always take account of alternate positions depending on whether you predecease or survive beneficiaries.
12. Construction suits
The Executor or beneficiaries may apply to the Court to construe the will where the meaning is unclear or ambiguous. The intended meaning may be thwarted according to rules of construction, and whether extraneous evidence of intention is allowed.
13. Charitable gifts
Gifts to charitable institutions should:
- Ensure the charity’s correct legal name at the date of the will is stated;
- Provide for substitution if at death the charity ceased to exist, changed its name or amalgamated with another entity; and
- Contain a general charitable intention to uphold the gift to such charitable institution which in the executors’ opinion most closely meets the objects and aims of the named charity.
A gift to a Charity which ceased to exist at death, or was misdescribed, and no such entity fits exactly the wording, may lead to intestacy.
A gift to a specified charitable institution that never existed must lapse unless it can be inferred the testator intended to benefit a charitable purpose that enables the gift to be applied cy-pres. In other words, did the Will display a general charitable intention.
A gift to a particular institution that ceased to exist, and therefore a particular charitable intention, may lapse.
Charitable gifts are assisted by presumptions in the Charitable Trusts Act 1993.
Requirement for general charitable intention of donor:
- ‘This part does not affect the requirement that trust property cannot be applied Cy pres unless it is given with a general charitable intention;
- However, a general charitable intention is to be presumed unless there is evidence to the contrary in the instrument establishing the charitable trust.'
Where the will contains a misdescription of an existing charity, the Court needs to determine whether there exists a charity which was the intended beneficiary but which had been incorrectly described or named.
14. Statutory or Court Authorised Wills
An application to the Court before death but after loss of capacity of a testator may be made on the basis the proposed will is reasonably likely to be one the person would have made if he had testamentary capacity.
The Court can make orders revoking the last will, or create a codicil or prevent intestacy.
15. Forfeiture Rule
A person who unlawfully killed another is precluded from benefiting from the deceased person’s estate.
The Forfeiture Act 1995 permits an application to the Court to modify the effect of the forfeiture rule in the event of unlawful killing, but not murder.
‘Unlawfully killing’ means homicide, and includes aiding, abetting counselling or procuring a homicide or a suicide.
The above fifteen ways in which a will can be challenged arise from time to time in the course of the management of deceased estates, and need to be borne in mind when considering the effectiveness of a Will after your death. For that reason, when considering the preparation and execution of a will, the advice of specialist lawyers experienced in these matters should be obtained.
Christine McPhillips, Special Counsel