Updating your Will to prevent legal Problems

By Natalie Lewis, Lawyer

The recent Victorian Supreme Court case of Re Finnie; Petrovska v Morrison [2021] VSC 153 serves as an important reminder of the costly implications of significantly delaying the review of your Will when major changes have occurred in your life such as entering a long-term relationship.     

Facts of the case

James Finlay Finnie (‘the deceased’) died on 12 September 2017.  He was survived by his partner of nearly twenty years (‘the plaintiff’) and three adult children from his former marriage. He had a fourth child who died in 2008 leaving three surviving children. 

Under his Will, dated 25 June 1992, the deceased left his estate equally to his four children with provision for grandchildren to take the share, per stirpes, of any child predeceasing him.

At the time he made the Will all four of his children were under eighteen years of age, three of whom were living with him. 

The deceased met the plaintiff in 1998. They lived together for most of the relationship, and whilst they maintained separate accounts and investments, they shared their expenses.  In 2004 they jointly financed the purchase of the Darriwill Street unit. The deceased paid most of the mortgage whilst the plaintiff paid for renovations. 

Early in the relationship, the deceased was diagnosed with cancer and received treatment from 1999 to 2003.  There were periods in which he was unable to work.  The plaintiff took time off work or reduced her hours in order to look after him. 

Despite their ‘committed and long-lasting relationship’, the deceased failed to update his Will to make provision for the plaintiff.  It was accepted that this may not have necessarily been a deliberate failure on his part attributable to a lack of concern for the plaintiff’s future wellbeing. 

However, it resulted in the plaintiff commencing proceedings under Part IV of the Administration and Probate Act 1958 (Vic) (‘the Act’) seeking provision from the estate.        

At the time of the proceedings, it was estimated that the net value of the estate (before costs) was approximately $1,015,859. 

The plaintiff sought orders in the form of:

• The transfer to her of the deceased’s property at 1/69 Darriwill Street, Bell Post Hill (‘the Darriwill Street unit’), which was estimated to be worth approximately $385,000;
• A cash payment of $182,500 to enable her to discharge her current debts; and
• Her costs in the proceeding which were approximately $103,000.

Threshold requirements under the Act

There was no issue concerning the plaintiff’s eligibility, as the deceased’s partner, to make an application for further provision.  Nor was it disputed that the deceased owed the plaintiff a moral duty to provide for her proper maintenance and support which he failed by not making provision for her by Will.    

The principle that a testator owes a moral duty to provide for the proper maintenance and support of her or his partner or spouse is well embedded in the common law.

The Court in this case referred to a number of authorities where it has been held that generally adequate provision for the proper maintenance and support of a spouse or partner requires that the spouse or partner is left with:   

• Secure accommodation often in the form of either an outright gift of property to live in, sufficient funds to enable the purchase of a home or a life interest or right of occupation over a property; and
• Secure income; and
• A nest egg or fund to cover future unforeseen contingencies; and
• The ability to enjoy such provision with ‘independence, self-respect and autonomy.’

Relief must be proportionate to the size of the estate and the competing needs of the beneficiaries and others to whom the deceased owed a moral duty

What was difficult for the Court in this case was determining the quantum and nature of relief for the plaintiff in circumstances where all of the deceased’s children had competing needs.  All of them were impecunious, suffered chronic mental and physical health conditions and were unlikely to be able to financially support themselves in the future. None of them were employed or had partners to support them.  Two of them lived in Scotland in social housing and their prospects of gaining employment in the future were dismal.  The deceased’s adult granddaughter also faced unfortunate social, economic and health impediments. 

Importantly also the Court emphasised that it was not for the deceased’s children (and grandchildren by representation) as the beneficiaries named in the Will to justify their entitlements.  The deceased had decided to provide for them by his Will and therefore, from an evidentiary point of view, they had no case to answer.  It was for the plaintiff to justify her position.   

Whilst acknowledging that the plaintiff had health concerns of her own (including type 2 diabetes) and could not reasonably be expected to work much further beyond retirement age, the Court accepted that she was in a far better financial position than the beneficiaries.  She had recently purchased a home valued at around $550,000 (with a mortgage of approximately $178,915).  She had cash savings of $23,000 and $130,000 in superannuation.  She worked as a carer at an aged care facility and gave evidence that she was a hard worker and intended to continue working as long as she could. 

The tenor of the plaintiff’s case was that the estate had sufficient funds to grant her the relief she sought, and further, that the case law supports the view that claims by spouses or partners take priority of those of children and others to whom the deceased owed a moral obligation. 

The Court rejected this and held that what the authorities actually establish is that in circumstances where the spouse or partner is competing against the claims of adults, usually the deceased’s children, who are considerably younger and are able to work and financially support themselves independently, then the needs of the spouse or partner will generally take priority. 

This was articulated by Ipp JA in Bladwell v Davis [2004] NSWCA 170:    

… where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy.

However, for the reasons set out above, this was not the case here and so the Court, in determining the plaintiff’s relief, needed to balance her needs with the relatively more compelling needs of the deceased’s children.

Decision of the Court

In the circumstances, the Court held that the plaintiff was entitled to 40 per cent of the net value of the estate (approximately $322,809) which was to be paid by a monetary distribution. The Court refused to order the transfer of the Darriwill Street unit to the plaintiff.  The Court noted that the plaintiff had her own home and would only use the unit as a source of income.  Further, if she were given absolute title to the unit, she would be at liberty to leave it to her own children, at the expense of the deceased’s children. 

The 40 per cent payment would enable the plaintiff to discharge her debts, including her mortgage, and leave her with a fund of $140,309.  Should she require further income to meet future contingencies and changing circumstances, she could rely on her own assets, including an unencumbered house – which was likely appreciate in value – as well as income from her work. 

The Court acknowledged that the relief granted may not enable the plaintiff to enjoy the lifestyle she and the deceased intended.  However, it was quick to point out that it is not the Court’s role in family provision matters to re-write the Will by giving effect to a spouse or partner’s hopes, but to correct abuses of testamentary freedom by making just and fair orders tailored to the circumstances of the case, including the size of the estate and the competing needs of the beneficiaries and any other claimants.  The Act itself mandates that in fixing the amount of provision, the Court ‘must not provide for an amount greater than is necessary for the eligible person’s proper maintenance and support.’ 

The importance of reviewing your estate plans

This case highlights the importance of regularly reviewing your Will to ensure that it appropriately deals with changing circumstances. 

The deceased’s failure to make a new Will in light of his relationship with the plaintiff resulted in extremely costly litigation.  The combined costs of the plaintiff and the defendant in this matter were approximately $197,835, equating to nearly 19.5 per cent of the estate; not to mention the emotional toll and fracturing of relationships this type of litigation often involves. 

Estate planning in the context of subsequent relationships can be a complex area requiring expert legal advice. 

If you have any questions about this article or about your estate planning, please feel free to contact one of our LIV accredited Wills and Estates specialists.

You can contact our team on (03) 8540-0200 or at wills-estates@mst.com.au