Testamentary​ Freedom, Moral Obligation, and the Nominal Estate

Hubert Harris died in October 2015. Hubert was married to his second wife Jennifer for nearly 35 years; Jennifer was appointed sole executrix by Hubert’s last Will of December 2013.

Hubert’s son Andrew applied to the Court for family provision out of the estate or notional estate as the Court thinks ought to be made for the maintenance, education or advancement in life of an eligible person, having regard to the facts known to the Court at the time that the order is made, pursuant to s 59 of the Succession Act 2006 (NSW) (the Act).

Hubert’s estate was valued at a little under $8,000. However, a retirement village lease and superannuation benefits from which provision could be made were said to total some $600,000, almost entirely what is described in the Act as “notional estate”.

Halliday Shores Retirement Living Pty Ltd owns and operates the retirement village (“ retirement village”) where Hubert & Jennifer had a 99-year lease; and where Jennifer remains living, as lessee, of the balance of a 99-year lease, Hubert’s interest having passed on his death to Jennifer by survivorship.

The superannuation fund Hubert belonged to transferred the superannuation benefits to Jennifer in accordance with his binding death nomination and therefore does not form part of the estate.

At first instance, the Court held that a capable testator’s judgement as to who should benefit from their estate should be respected if it can be seen that the testator has duly considered the claims on the estate.

However, the Act interferes with the freedom of testamentary disposition; and courts have a duty to interfere with the Will if the provision made for an eligible applicant is less than adequate for his or her proper maintenance and advancement in life. The Court has to consider that the deceased was in a better position to determine what provision for a claimant’s maintenance and advancement in life is proper than when it is called on to determine that question months or years after the death of the person best able to give evidence on that question.

Accordingly, if the deceased was capable of giving due consideration to that question and did so, considerable weight should be given to the testator’s testamentary wishes in recognition of the better position in which the deceased was placed: subject to the qualification that the court’s determination under the Act be made having regard to the circumstances at the time the court is considering the application, rather than at the time of the deceased’s death or Will.

The Court believed that in the present case Hubert was faced with the moral obligation he owed to Jennifer to ensure she was secure in her retirement accommodation and protected against contingencies that might affect her in old age; balanced against the needs of his adult children.  However, it cannot be seriously suggested that community expectation would be that Hubert should put Jennifer in a position where she is required to vacate her villa in the retirement village (in which she feels secure and which is her home); nor did Andrew seek this arguing that the nominal estate was sufficient to cover his claim.

The Court believed that Hubert had made adequate provision for the proper maintenance, education, and advancement in life of Andrew and did not grant a family provision order. Similarly, the requirements in the Act for making a notional estate order as to costs were not met. Therefore, each party was ordered to pay its own costs in the matter.

Recently the Court of Appeal rejected Andrew’s challenge to the primary judge as being without substance. Agreeing that Jennifer’s circumstances were not as comfortable as Andrew suggested and an order for $100,000 would significantly diminish her welfare.

 

 

 

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